In this article we review some of the key defense industry news as the second quarter of 2015 comes to a close, covering radar, electronic warfare, weapons systems and communications. We also look enabling technology related news as well as discussing business event, product announcements, milestones and contract activity.

April saw demand for European radar technology based around solid-state and AESA architectures leading to contracts for Kelvin Hughes, Saab, Selex ES and Thales:

  • Kelvin Hughes was contracted to supply its SharpEye radars for the UK Royal Navy's new River class Batch 2 Offshore Patrol Vessels (OPV).
  • Saab will be upgrading the sensor on Norway’s Arthur (ARTillery HUnting Radar) weapon-location radar system to Saab's current production version of Arthur (ModC).
  • Selex ES will be supplying its Seaspray 5000E AESA surveillance radars for Australia’s search and rescue platforms.
  • The Netherlands MoD chose Thales for the supply of air defense systems and services to the Netherlands MoD, which will include the supply of SMART-L early warning capability (EWC) ground-based systems.

An emphasis on EW system development was underpinned by operational tests of Raytheon’s Miniature Air Launched Decoy-Jammer (MALD-J), and Exelis and L-3 partnering to provide electronic self-protection capabilities for an airborne platform.

There was an array of announcements in the weapons and communications sectors also, with both contracts and system developments. Optoelectronic and other sensor technology announcements included contracts for Northrop Grumman and Selex ES to provide LAIRCM and IRST systems respectively.

April also marked company financial announcements with a mix of results. Most companies were able to show growth in some, if not all of their different business groups, but the general trend showed revenues declining while profitability was being maintained through operational optimization. Cyber, RF and optoelectronics underpinned acquisition activity by the likes of Raytheon, API Technologies and Teledyne.

The defense industry’s endeavors to strike a balance between scale and capability were exemplified by significant acquisition and investment activity in the month of May. Harris completed its previously announced $4.75 billion acquisition of Exelis; the combined company is expected to generate combined revenues of over $8.21 billion leveraging the respective strengths of the two companies across areas including tactical communications, electronic warfare and night vision. Elbit Systems and Raytheon acquired capabilities in the area of cyber/intelligence with transactions with their respective transactions.

At the other end of the supply chain scale, suppliers of semiconductor components used IMS 2015 to introduce new products to the market place that they hope will underpin the next generation of radar, communications, electronic warfare and other systems. GaN semiconductor technology underpinned many of these announcements, with high power capability being married with other attributes such as linear performance and millimeter wave operation as showcased by a Ka-band GaN MMIC from Northrop Grumman. MACOM meanwhile introduced the next generation of its GaN-on-Si technology claiming performance parity with GaN-on-SiC, while Qorvo and Freescale introduced plastic packaging for their GaN devices to leverage the high power attributes typically associated with GaN-on-SiC with lower packaging costs.

At the module level, GaN underpinned offerings from API and Diamond Technologies and this extended through to the system level with Airbus Defense and Space contracted to provide an additional GaN-based TRS-4D AESA naval radar for the U.S. Navy’s Littoral Combat Ship (LCS) program. Raytheon completed the AN/SPY-6(V) Air and Missile Defense Radar (AMDR) critical design review confirming amongst other things the maturity, producibility and low risk of the GaN-based Radar Modular Assemblies that will underpin this next generation radar system.

The flip side of the unprecedented capabilities that will be offered by next generation radar systems is the challenge it represents to the Electronic Warfare community. To this end, Exelis and Leidos have been selected to continue to evolve advanced technology development for the DARPA Adaptive Radar Countermeasures (ARC) program which is designed to developed EW systems that will be capable of electronically defending assets against these emerging radar threats.

Directed energy systems took one step closer to being fielded as DARPA's High-Energy Liquid Laser Area Defense System (HELLADS) demonstrated sufficient laser power and beam quality to advance field tests against rockets, mortars, vehicles and surrogate surface-to-air missiles at the White Sands Missile Range over the coming months.

Contracts activity and other developments across radar, weapons systems, EW and communications/navigation remained robust through to the end of the June.

  • Thales’ Ku-band I-MASTER radar was selected by the Royal Jordanian Air Force and was also demonstrated on Textron AirLand's Scorpion Jet. The company also introduced the STAR NG S-band PSR system suitable for both civil and military ATC.
  • Selex ES received a contract from Embraer Defense and Security to provide an undisclosed number of X-band Gabbiano T20 radar systems for the Brazilian Air Force’s KC-390 transport aircraft. The company was also selected to provide a SAGE 600 digital Electronic Support Measure (ESM) system for the Indonesian Air Force.
  • Electronic warfare developments also comprised contracts for Boeing and Raytheon related to the NGJ program, with the former chosen to integrate the NGJ pod onto the EA-18G aircraft.
  • Weapons systems news involved Raytheon and Kongsberg signing an agreement to extend their partnership on the National Advanced Surface-to-Air Missile System (NASAMS). Raytheon’s Patriot system was overlooked by Germany however which appears to be leaning towards the MEADS systems developed under a joint project between Lockheed Martin, MBDA Italia and MBDA Deutschland.
  • Communications activity included Airbus Space and Defense being contracted to provide Skynet services to the Norwegian MoD. Skynet 5 is the UK MoD’s hardened X-band satellite constellation plus associated ground network that provides all BLOS communications to the UK MoD. Northrop Grumman meanwhile was contracted to provide BACN JUON payload operations and support, and was also highlighting milestones in the CANE program.
  • Rounding out the quarter at the technology level, Raytheon was highlighting the company’s GaN technology as it works towards upgrading the Patriot system with an AESA architecture populated with GaN-based transmit-receive units.

The second quarter of 2015 ended with more divestments, mergers and acquisition news. Transactions included Samsung completing the divestiture of its defense business, Samsung Techwin Co., along with joint venture Samsung Thales Co. to Hanwha Group for $2.35 billion, and United Technologies confirming that it is pursuing options to divest or spin-off the Sikorsky division.

Perhaps the most significant announcement from a RF technologies perspective involved Kratos Defense & Security Solutions and Ultra Electronics. Kratos Defense & Security Solutions acquired Herley Industries in 2011 for $270 million to augment the company’s C4ISR offerings with RF, microwave and millimeter-wave components and subsystem capabilities to support defense and aerospace systems including radar, electronic warfare and communications and other. While the theory behind expanding capabilities was sound, Kratos continuing losses appear to have catalysed a decision by Kratos management to sell these operations to Ultra Electronics for $265 million. This will allow Ultra to expand its capabilities with some reports suggesting a focus on tapping into the US electronic warfare sector.

Overall while operational challenges remain at the business level which will continue to lead to adjustments in industry structure, the underlying emphasis on enabling technologies providing the differentiation for next generation radar, EW, communications and other systems will continue to drive contracts and other activity moving forwards in 2015.

Thanks for reading and look forward to seeing you at one of these events over the coming months; Strategy Analytics will be speaking at Military Radar, the Defence, Security & Space Forum during European Microwave Week, as well as attending DSEI.