Market Insights
The Submarine market was estimated at US$ 21.3 Billion in 2021 and is expected to grow at a CAGR of 3.9% during 2022-2028 to reach US$ 27.5 Billion in 2028.
The international shipping industry accounts for about 90% of world trade per the International Chamber of Shipping. Moreover, as per NASA, 2.4 billion of the global population, about 40% remain 100 km/60 miles from the ocean coast. Since this topography, groundwater bodies adjacent to land have always been constantly protected and controlled by the defence sector of many economies worldwide.
Strengthening the military systems of a nation through technological advancements plays an integral role. The combination of technology boosts the application of submarines in the naval military segment. Additionally, emerging demand from the commercial segment, including cargo transports and others is expected to fuel the demand for submarines. Moreover, factors responsible are the rise in demand for UUVs (Unmanned Underwater Vehicles), increase in the use of nuclear energy, and surge in regional disputes, increasing the submarine market growth.
Among major economies involved in trade and cold wars for their interest and disinterest, which positively impacts market growth. For instance, the US in a trade war with China, which shattered in 1949 as part of the Chinese mainland, the delivery of technology that would allow Taiwan to produce its submarines.
Furthermore, the addition of 3D printing or additive manufacturing techniques creates opportunities for market players, increasing the demand for submarines.
The defense industry's growth directly impacts the Submarine market's growth. The high demand from the navy is closely attributed to the growth. Increasing submarine application in surveillance, detection of oil resources and Scientific Research will show the market growth during the assessment period.
The naval segment of defence is one of the most preferable segments for disrupting national integrity, which, in turn, pushes the demand for submarines. Submarines are generally manned ships that are deployed underwater and widely used for operations such as surveillance, monitoring, and combat operations. Therefore, the need to upgrade the existing military systems emerges. In addition, older and obsolete submarines incur a high maintenance cost, which, in turn, proliferates the demand to manufacture or procure new submarines with an efficient mechanism. Moreover, various government organizations speed up their defense segment investments to bolster their military status. Therefore, this drives the growth of the submarine market during the forecast period.
Several investments in the defence industry have been directed at submarines in recent years, which would boost the overall market. Some of them are:
- As per Stockholm International Peace Research Institute, in April 2022, global military expenditure rose from 0.7% in 2021, which is expected to reach $2,113 billion. The 5 largest defense spenders in 2021 were the United States, the United Kingdom, India, China, and Russia, accounting for around 62% of total expenditure.
- India is now continuing to invest in its naval forces, and last month, Union Minister of State for Defence had announced that expected orders for surface ships and submarines to be executed from 2020 to 2030 by the Indian Navy will be worth $51 billion.
- According to the Department for Promotion of Industry and Internal Trade (DPIIT), from April 2020 – June 2021, the Foreign Direct Investment (FDI) equity flow in the Indian Defense sector was valued at $10.15 million.
Segment Analysis
Based on the type, the market is divided into Nuclear Powered Submarine, Diesel Electric Submarine, and Ballistic Missile Submarine. The Nuclear Powered Submarine are expected to remain the largest market Submarine in the forecast period. The most important advantage of nuclear submarines over conventional ones is sustained high speed (for example, more than 20 knots, or 37 Kms/hour) for extended periods. This enables the nuclear submarine to transit from area to area much more quickly than conventional boats.
Application Type:
The market is bifurcated into Surveillance, Combat, Marine Environmental Monitoring, Detection of Oil Resources, Scientific Research, and others. The Surveillance are expected to remain the biggest market for submarine in the forecast period. Submarine are frequently used for Surveillance purposes to ensure safety in case of an ambush or attack. Moreover, with the increasing terror threats and border disputes, the demand for Submarine is expected to intensify.
Platform Type:
The market is segmented as commercial and military. The military accounts for the largest market share in 2021, owing to increasing demand for military submarines. The Navy is undergoing a 20-year plan that will cost $21 billion to upgrade its infrastructure. Furthermore, The US Navy is experiencing a 20-year plan that will cost $21 billion to upgrade its defence infrastructure. According to defence news, US Navy currently has 68 submarines in service. Moreover, US Navy planning to start shipbuilding on two to possibly three Virginia-class attack subs per year, and roughly one Columbia-class submarine per year until around 2035.
Regional Analysis of Submarine Market:
- North America is likely to maintain its supremacy in the Submarine market throughout the forecast period.
- This is mostly due to the high demand for nuclear-powered submarines and heave warfare technologies. The escalating inclination toward enhancing the defence sector (Navy, Military, Air) is creating an enormous opportunity for the North American submarine market. Furthermore, US has begun building its first advanced Columbia-class nuclear-powered ballistic missile submarine.
- The submarine is named USS District of Columbia, is to be authorized in 2027. The 12 Columbia-class subs will replace aging Ohio-class SSBNs and carry "70% of America's deployed nuclear arsenal.
- Concurrently, Asia Pacific is expected to witness the fastest growth in the Submarine market during the forecast period.
- The key factors responsible for the swift growth are increased demand for Submarine by the navy and a rise in overall military expenditure (especially in China and India).
- The increased defense and individual spending on security in countries such as China and India inject huge growth prospectus for the Submarine market in the Asia Pacific region.
Key Players
There is stiff competition in the Submarine market. The growth of the companies is directly dependent on the industry conditions and government support. These companies differentiate their Submarine based on their quality and penetration in the target and emerging markets. Also, some major mergers and acquisitions in the industry recently have significantly influenced the competitive dynamics. For example:
- In Feb 2022, Lockheed Martin was awarded a firm-fixed-price modification to the previously awarded delivery order for procuring submarine modernization kits, equipment, and installation. The US Naval Sea Systems Command has awarded the contract. The contract is valued at $15 million and expected to conclude by October 2024.
- In Feb 2020, JSC PO Sevmash Shipyard delivered Missile Cruiser Admiral Nakhimov to Russian Navy after upgradation. The Project 11442M heavy nuclear-powered missile cruiser Admiral Nakhimov become the Russian Navy’s most powerful surface ship after its repairs and upgrade at the Sevmash Shipyard.
- General Dynamics Corp’s subsidiary, Electric Boat, in March 2019 received UDS$ 2 billion in contract modification by the U.S. Navy for long-term supply for the main propulsion unit and ship service turbine-generator efforts. electrical and mechanical components of the system.
The overall competitive landscape has been affected due to these mergers and acquisitions. The following are the major players in the Submarine market:
- General Dynamics
- Navantia SA
- Kockums AB
- JSC PO Sevmash
- Lockheed Martin Corp
Research Methodology
This report offers high-quality insights and is the outcome of detailed research methodology comprising extensive secondary research, rigorous primary interviews with industry stakeholders and validation and triangulation with Stratview Research’s internal database and statistical tools. More than 1,000 authenticated secondary sources, such as company annual reports, fact book, press release, journals, investor presentation, white papers, patents, and articles have been leveraged to gather the data. We conducted more than 10 detailed primary interviews with the market players across the value chain in all four regions and with industry experts to obtain both the qualitative and quantitative insights.
