Smart Weapons Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Weapon Type (Missiles, Munitions, Guided Projectiles, Guided Rockets, Guided Firearms, Directed Energy Weapons), By Platform (Air, Land, Naval), By Technology (Laser, Infrared, Radar, GPS, Others), and By Region 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 21.22 Billion
CAGR (2026-2031)	11.12%
Fastest Growing Segment	Missiles
Largest Market	Asia Pacific
Market Size (2031)	USD 39.95 Billion

Market Overview

The Global Smart Weapons Market is projected to grow from USD 21.22 Billion in 2025 to USD 39.95 Billion by 2031 at a 11.12% CAGR. Smart weapons, defined as precision-guided munitions, utilize advanced guidance systems such as global positioning systems and laser designators to engage targets with high accuracy. The market is primarily driven by rising geopolitical instability and the subsequent requirement for military modernization programs that prioritize reduced collateral damage during operations. This expansion is evidenced by financial trends where, according to the Stockholm International Peace Research Institute, in April 2025, global military expenditure reached an unprecedented $2.7 trillion for the year 2024.

However, the market faces a significant challenge concerning the high development and procurement costs of these complex systems. The reliance on intricate supply chains for advanced electronic components elevates the price per unit, which can restrict inventory levels and impede widespread adoption among nations with limited fiscal resources.

Key Market Drivers

The escalation of geopolitical tensions and regional cross-border conflicts stands as the primary catalyst propelling the Global Smart Weapons Market. As nations pivot from counter-insurgency operations to near-peer deterrence, there is an urgent emphasis on replenishing depleted inventories and modernizing arsenals with precision-guided capabilities to ensure strategic readiness. This strategic shift is quantifiable in national budget allocations; according to the Stockholm International Peace Research Institute, April 2025, in its annual expenditure data release, United States military spending alone rose by 5.7 percent to reach $997 billion, reflecting the intensified global security environment. Consequently, the industry is witnessing a massive industrial ramp-up to meet these sustained engagement requirements. According to Rheinmetall, September 2025, in a press statement regarding its new Unterlüß facility, the company aims to reach an annual production capacity of 350,000 artillery shells to support European defense readiness.

The integration of artificial intelligence and autonomous capabilities constitutes the second significant driver, fundamentally altering the speed and efficacy of the kill chain. Defense forces are prioritizing systems that utilize AI for rapid target recognition and autonomous engagement, effectively reducing the sensor-to-shooter cycle in contested environments. This technological evolution is supported by targeted funding initiatives designed to bypass traditional procurement bottlenecks and accelerate innovation. According to GovCon Wire, January 2025, in the 'What's Next for the Pentagon's Replicator' article, the Department of Defense requested $500 million in Fiscal Year 2025 specifically to accelerate the fielding of attritable autonomous systems across multiple domains. Such investments underscore the market's transition toward network-centric warfare where software-defined capabilities are as critical as kinetic performance.

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Key Market Challenges

The expansion of the global smart weapons market is significantly restricted by the high costs associated with developing and procuring these precision systems. Smart munitions require advanced guidance units and specialized electronic components that demand intricate manufacturing processes. This reliance on a complex, multi-tiered global supply chain means that shortages of essential materials or microelectronics inevitably lead to increased production expenses. As a result, the elevated price per unit forces nations to limit their inventory sizes, often reducing the overall volume of procurement contracts to stay within fixed defense budgets.

These financial and logistical barriers directly impede the ability of the market to scale effectively. High unit costs make it difficult for countries with smaller fiscal resources to integrate these weapons into their arsenals, limiting the customer base. The impact of these structural issues is supported by recent industry data. According to the National Defense Industrial Association, in 2025, 54 percent of private sector respondents within the defense industrial base identified supply chain obstacles as a primary challenge affecting production capabilities and cost efficiency. This persistent strain on the supply network sustains high price points, thereby slowing the broader adoption of smart weaponry.

Key Market Trends

The proliferation of loitering munitions and kamikaze drones represents a transformative trend in the Global Smart Weapons Market, characterized by the widespread deployment of low-cost, expendable systems that offer tactical flexibility. Unlike traditional high-value missiles, these munitions enable armed forces to maintain persistent surveillance over target areas and engage time-sensitive threats with precision, effectively democratizing air support for ground units. This shift toward mass-producible, single-use air vehicles is reshaping procurement strategies, with defense agencies prioritizing volume and rapid replenishment capabilities. The scale of this demand is highlighted by industrial activity; according to AeroVironment, January 2025, in the 'AV Announces 2nd Delivery Order on $990 Million Contract' press release, the company received a $55.3 million order to supply Switchblade loitering missile systems to the United States Army, reinforcing the operational reliance on these versatile platforms.

Simultaneously, the industry is witnessing the adoption of modular open systems architectures (MOSA) to facilitate rapid upgrades and bypass traditional supply chain constraints. This trend addresses the need for adaptable weapon systems that can be quickly modified with new software or payloads to counter evolving adversarial countermeasures without requiring complete hardware redesigns. By decoupling software from hardware, manufacturers can implement iterative improvements and scale production velocity to meet wartime consumption rates. This industrial evolution is exemplified by major capital investments; according to Forbes, January 2025, in the 'Anduril Goes Big In Ohio With Arsenal 1 Hyperscale Drone Plant' article, Anduril Industries announced a $1 billion investment to construct a massive software-defined manufacturing facility designed to produce autonomous weapons and systems at hyperscale.

Segmental Insights

The missiles segment currently stands as the fastest-growing category in the global smart weapons market, driven by the increasing demand for precision strike capabilities that minimize collateral damage. Nations are actively modernizing their military inventories to address evolving geopolitical threats, leading to substantial investments in guided missile technologies. This trend is exemplified by procurement strategies from entities like the U.S. Department of Defense, which prioritize accurate long-range engagement systems. Consequently, the continuous integration of satellite and inertial guidance into projectile architectures remains a primary factor accelerating the adoption of these strategic assets.

Regional Insights

Asia Pacific holds the leading position in the global smart weapons market due to rising defense budgets and accelerated military modernization programs. Major economies such as China and India are prioritizing the acquisition of precision-guided munitions to address escalating territorial disputes and regional security challenges. Organizations like the Defense Research and Development Organisation in India facilitate this growth by advancing indigenous manufacturing and technology integration. This strong emphasis on enhancing naval and aerial combat readiness establishes the region as the central hub for market expansion and demand.

Recent Developments

• In December 2025, BAE Systems finalized a significant five-year contract with the U.S. Navy, valued at up to $1.7 billion, to provide Advanced Precision Kill Weapon System (APKWS) laser-guidance kits. This agreement, which included an initial order worth $322 million, was aimed at converting standard 2.75-inch Hydra rockets into guided, precision-strike munitions. The deal ensured a steady industrial supply of these smart weapons to meet the growing demand from U.S. forces and allied nations. The company emphasized that this production ramp-up would enhance the magazine depth and cost-effective lethality of naval and air platforms in global operations.
• In September 2025, MBDA officially launched its new Crossbow missile system during the Defence and Security Equipment International (DSEI) exhibition in London. Designed as a heavy "one-way effector," this ground-launched weapon was engineered to deliver a precision deep-strike capability against high-value targets such as command centers and radar sites at ranges exceeding 800 kilometers. The company highlighted that the system's modular design allowed for various kinetic and non-kinetic payloads, addressing the need for affordable, mass-producible solutions in contested environments. The unveiling underscored MBDA’s strategic focus on expanding its portfolio of long-range, smart munitions for NATO forces.
• In July 2025, Lockheed Martin and the Australian Defence Force successfully conducted the first Australian launch of the Precision Strike Missile (PrSM) at a training area in the Northern Territory. This event, where the missile struck a target at a range exceeding 300 kilometers, marked a major achievement in the collaboration between the United States and Australia. Concurrently, the two nations signed a Memorandum of Understanding to deepen their partnership on the co-development and sustainment of this long-range precision fire capability. The test demonstrated the weapon's interoperability and advanced performance, supporting its transition towards full-rate production.
• In January 2024, Raytheon, a business of RTX, secured a $400 million contract from the U.S. Air Force to manufacture and supply over 1,500 StormBreaker smart weapons. This network-enabled munition was recognized for its ability to engage moving targets in adverse weather conditions using a tri-mode seeker that included millimeter-wave radar, imaging infrared, and semi-active laser guidance. The agreement facilitated the continued production of these air-launched, precision-strike standoff weapons, which were fielded on platforms such as the F-15E Strike Eagle and tested on others like the F-35, enhancing the operational capabilities of the service members.

Key Market Players

• Lockheed Martin Corporation
• The Boeing Company
• Northrop Grumman Corporation
• General Dynamics Corporation
• BAE Systems plc
• MBDA Inc.
• Raytheon Technologies Corporation
• Thales S.A.
• Rheinmetall AG
• Elbit Systems Ltd.

By Weapon Type	By Platform	By Technology	By Region
Missiles Munitions Guided Projectiles Guided Rockets Guided Firearms Directed Energy Weapons	Air Land Naval	Laser Infrared Radar GPS Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Smart Weapons Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Smart Weapons Market, By Weapon Type:

• Missiles
• Munitions
• Guided Projectiles
• Guided Rockets
• Guided Firearms
• Directed Energy Weapons

• Smart Weapons Market, By Platform:

• Air
• Land
• Naval

• Smart Weapons Market, By Technology:

• Laser
• Infrared
• Radar
• GPS
• Others

• Smart Weapons Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE