The Mil & Aero Blog
Friday, February 15, 2008
  Market outlook positive among exhibitors at Components for Military and Space Electronics conference
Posted by John McHale

Despite shrinking research and development (R & D) funding within the Department of Defense Budget and uncertainty about who will take over as commander-in-chief in 2009, high-reliability component vendors are very optimistic about the future.

Ken O'Neil, director of military and aerospace marketing for Actel in Sunnyvale, says last year was very profitable for his company and he expects even better results in 2008.

Doug Patterson, vice president of sales and marketing, at AiTech also sees many opportunities in the defense and space market, especially with more platforms coming in for retrofits.

Some attendees mentioned how they were pleasantly surprised that the lower R & D budget is not having a more negative impact on their sales forecasts. They say they feel the depleted munitions stores and other supplies that use high-reliability electronics will take years to build-up, which means more opportunities for component vendors.

A lower R & D budget in the past has also affected our magazine, since it typically means fewer opportunities for our advertisers. Maybe R & D dollars are not the mitigating factor in our market that they once were.

Even if the overall budget shrinks, defense leaders will still rely heavily on technology - technology that is enabled by high-performance electronics - for surveillance and reconnaissance in times of peace as well as in the building of stockpiles.

In the meantime, these same leaders are shelving funding for long-term programs and projects in favor of technology they can field and put in the warfighter's hands today.

I'm reminded of what a prime contractor executive told me a little over a year ago in response to a question on shrinking R & D dollars. He said that despite the smaller overall budget, funding for technology for C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) technology is going up and will continue to do so.

C4ISR programs need high performance electronics for unmanned systems, which many market analysts see growing to more than a $30 billion market over the next 10 years.

All of this does sound pretty good. What is your opinion? Is the market trending up? Will a democrat in the Oval Office hurt the defense electronics market?

Tell us what you think.
You might want to check out the DOD's 2009 budget request before you talk about shrinking research budgets. It looks like DOD actually wants to increase R&D spending next year slightly, from $76.88 billion in 2008 to $79.62 billion in 2009. Maybe it's not all doom and gloom after all.
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