Military Electro-Optical and Infrared Systems Market Size, Share & Outlook to 2033

Military Electro-Optical and Infrared Systems Market Overview

The Military Electro-Optical and Infrared Systems Market size was valued at USD 14568.62million in 2024 and is expected to reach USD 22055.42 million by 2033, growing at a CAGR of 4.7% from 2025 to 2033.

The global military electro-optical and infrared systems market is experiencing substantial growth driven by increasing military budgets, rising demand for advanced surveillance, and the integration of sensor fusion technologies across combat platforms. In 2024, over 98 countries allocated more than 2% of their GDP towards defence, boosting procurement of EO/IR systems for strategic superiority. Electro-optical and infrared systems have become essential for threat detection, target acquisition, and enhanced situational awareness.

More than 70% of modern armorer vehicles and over 90% of 5th-generation aircraft rely on advanced EO/IR systems for battlefield efficiency. The deployment of drones and unmanned platforms equipped with multispectral imaging has surged, with over 45,000 EO/IR payloads installed globally in 2023. Furthermore, AI-integrated EO/IR sensors have seen adoption in over 60 tactical programs across NATO member states, improving real-time threat analysis. In the maritime domain, more than 2,000 naval platforms globally are retrofitted or built with IRST (Infrared Search and Track) sensors to counter stealth threats. With defense modernization programs active in over 30 countries, the demand for advanced EO/IR systems is expected to remain robust and technologically progressive.

Key Findings

Top Driver reason: Rising demand for advanced battlefield situational awareness systems in multi-domain operations.

Top Country/Region: The United States dominates the market with over 35% global military EO/IR system deployment.

Top Segment: Airborne EO/IR systems account for over 50% of the global market installations.

Military Electro-Optical and Infrared Systems Market Trends

The military EO/IR systems market is undergoing transformative shifts through integration with AI, hyperspectral imaging, and multi-platform interoperability. In 2023, over 22 countries initiated AI-enabled EO/IR sensor programs for border surveillance and autonomous targeting. The integration of EO/IR systems in unmanned aerial systems (UAS) expanded by 38% globally, with over 25,000 drones equipped with dual-band IR sensors. Countries like Israel, South Korea, and the US are deploying dual-mode visible and IR sensor pods on ISR aircraft for enhanced strategic surveillance.

Thermal imaging remains a vital trend, with more than 85% of deployed EO/IR systems featuring uncooled or cooled thermal sensors. These sensors are essential in low-visibility combat zones and night-time missions. In 2024, over 12,000 military-grade thermal sensors were exported globally, driven by demand from Southeast Asian and African nations.

Multi-sensor payloads are replacing traditional single-function optics, particularly in the naval segment. Over 800 newly commissioned vessels were fitted with 360° panoramic EO/IR suites. Border security applications in India, Mexico, and Eastern Europe saw a 40% increase in EO/IR sensor procurement. These trends highlight how militaries are embracing EO/IR technologies for both asymmetric warfare and conventional Défense operations.

Military Electro-Optical and Infrared Systems Market Dynamics

DRIVER

Rising demand for advanced battlefield situational awareness.

Global defense agencies are intensifying their investment in battlefield intelligence technologies. Over 65% of major global militaries have ongoing programs to upgrade legacy optical systems with EO/IR platforms. In 2024, more than 19,000 armored vehicles and 3,500 aircraft received EO/IR retrofits to improve tactical awareness. These systems provide real-time imaging in visible and infrared spectra, significantly enhancing reconnaissance and targeting. With increasing joint operations and emphasis on interoperability, the EO/IR integration rate in tactical platforms grew by 25% across Europe and North America within one year.

RESTRAINT

Limited export licensing and ITAR regulations.

Strict export regulations and international arms controls have hindered market access for emerging EO/IR system providers. In 2023, over 300 proposed international deals for EO/IR technologies were either delayed or cancelled due to compliance issues, especially concerning the US ITAR framework. This has led to procurement delays in Latin America and parts of Africa, limiting the market's expansion. The restraint is particularly prominent for dual-use technologies that could be repurposed for non-military or unauthorized surveillance applications.

OPPORTUNITY

Increasing UAV deployment in ISR missions.

The proliferation of UAVs across combat and surveillance missions has created vast opportunities for EO/IR system integration. Over 40,000 new UAVs entered military service in 2023, with 60% requiring advanced EO/IR payloads. Countries like Australia, Poland, and Turkey are investing heavily in indigenous drone platforms with EO/IR targeting systems, creating strong market potential. The increasing role of drones in humanitarian aid, border patrol, and counter-insurgency further boosts demand for lightweight, high-resolution EO/IR modules.

CHALLENGE

Rising development costs and power limitations.

Designing EO/IR systems with multi-band functionality, AI processing, and ruggedized deployment capabilities has escalated R&D and production costs. In 2024, average development costs for new-generation airborne EO/IR pods rose by 15% year-over-year. Additionally, these systems often face power consumption and heat dissipation challenges, especially on compact platforms like UAVs and small naval vessels. This restricts continuous operation and demands sophisticated cooling solutions, complicating system integration for defence forces with limited resources.

Military Electro-Optical and Infrared Systems Segmentation

The military EO/IR systems market is segmented by type and application. Type segmentation includes staring sensor technology, scanning sensor technology, and airborne platforms. Applications are categorized into naval and ground-based operations. Each segment contributes significantly to technological evolution and adoption across strategic domains.

By Type

Staring Sensor Technology: Staring sensors provide continuous imagery of a fixed field of view, widely used in missile warning and perimeter defense. In 2023, over 6,500 staring EO/IR systems were installed in land-based command posts and stationary surveillance systems. These systems deliver high-speed video and thermal data for real-time battlefield visualization and are preferred in fixed installations due to lower mechanical complexity.
Scanning Sensor Technology: Scanning EO/IR systems are dominant in missile guidance and ISR missions. These systems recorded over 8,000 active deployments in 2024, particularly in guided munitions and targeting pods. With the ability to scan wide areas through mechanical movement, they are critical in dynamic battlefield monitoring. Scanning systems are increasingly integrated into rotary-wing platforms and armored vehicles.
Airborne: EO/IR systems accounted for over 50% of global deployments in 2024. Fighter jets, bombers, and UAVs use these systems extensively for targeting, navigation, and surveillance. More than 9,000 aircraft worldwide were reported to operate with EO/IR targeting pods or gimbals, with significant usage by the US Air Force and Indian Air Force. Integration with GPS, laser rangefinders, and AI-enabled processors enhances operational lethality.

By Application

Naval: EO/IR systems are essential on naval vessels for night vision, missile detection, and anti-submarine warfare. Over 2,300 ships globally are equipped with infrared search and track (IRST) systems as of 2024. EO/IR turrets are also used in mine detection and port security applications. Nations like Japan and Italy have invested in multi-band naval EO/IR technologies for situational awareness in contested waters.
Ground: Ground forces use EO/IR for vehicle-mounted and soldier-carried surveillance systems. In 2023, over 7,800 armored vehicles were delivered with pre-installed EO/IR turrets. Man-portable EO/IR units exceeded 15,000 global shipments, particularly to special forces and border patrol units. These systems assist in real-time mapping, thermal tracking, and forward observation in combat environments.

Military Electro-Optical and Infrared Systems Regional Outlook

The military EO/IR systems market shows region-specific dynamics based on procurement patterns, defense budgets, and local conflicts.

North America
dominates the global EO/IR market, with the US Department of Defense operating over 30,000 EO/IR-enabled platforms across its services. Canada has also accelerated EO/IR integration into UAVs and border surveillance units, with over 2,500 systems deployed. R&D initiatives in autonomous targeting and high-altitude infrared surveillance are strongly funded by federal programs.

Europe

nations are increasing EO/IR adoption amid growing geopolitical tensions. In 2024, the UK, France, and Germany collectively procured over 7,200 EO/IR systems. NATO's enhanced forward presence along eastern borders has triggered new EO/IR investments, particularly for drones and armored vehicle retrofits. Programs in Sweden and Poland focus on AI-enhanced IR threat recognition.

Asia-Pacific

is the fastest-growing region for EO/IR system deployments. China and India each operate more than 10,000 EO/IR-equipped platforms. South Korea’s border surveillance program expanded to include 1,200 AI-integrated EO/IR towers. Japan’s naval modernization added over 500 EO/IR systems on new destroyers and submarines in 2023 alone, driven by maritime security concerns.

Middle East & Africa

It is rapidly acquiring EO/IR technologies for counter-insurgency and border control. Saudi Arabia and the UAE jointly deployed more than 4,000 EO/IR units across UAVs and ground vehicles. African countries, particularly Egypt and Nigeria, are using EO/IR for anti-terrorism surveillance, with over 1,800 systems in operation across military and internal security agencies.

List of Top Military Electro-Optical and Infrared Systems Companies

Lockheed Martin
Raytheon
Thales Group
ELBIT Systems
BAE Systems
L-3 Communications
Northrop Grumman
Rockwell Collins
UTC Aerospace
General Dynamics
ASELSAN A.
FLIR Systems, Inc.
Safran Electronics & Defense

Top Two Companies with the Highest Share

Lockheed Martin: Lockheed Martin leads the global EO/IR market with over 12,000 active systems deployed on F-35s, Apache helicopters, and naval platforms. The company has integrated advanced IRST pods and Sniper Advanced Targeting Pods into over 3,500 aircraft globally.

Raytheon: Raytheon has deployed over 8,500 EO/IR sensors worldwide, with primary installations on naval and missile defence platforms. Its multi-spectral targeting systems are operational in over 50 countries, making it a top EO/IR supplier for allied defence forces.

Investment Analysis and Opportunities

Global defence spending surpassed USD 2.2 trillion in 2023, with a significant portion directed toward modernization and intelligence systems, including EO/IR technologies. In the past year alone, over 600 investment contracts were awarded for EO/IR R&D projects, with over 150 focused on multispectral imaging and AI integration. India’s “Make in India” defense program allocated budget for 1,500 locally-produced EO/IR systems, with joint ventures formed with Israeli and French firms.

Venture capital in EO/IR sensor miniaturization increased by 22%, as startups introduced SWaP-optimized payloads for drone platforms. The US Army announced a $350 million contract in 2024 for thermal sensor upgrades across armored vehicle fleets. Similarly, the UK’s MoD has earmarked funding for hyperspectral satellite-based EO/IR platforms under its Space Command initiative.

The growing need for cyber-secure, ruggedized EO/IR modules for electronic warfare creates an attractive space for investment. With over 90 countries implementing ISR reforms and EO/IR upgrades by 2025, investment momentum is expected to be sustained across OEMs, defense ministries, and private equity stakeholders.

New Product Development

Innovation in military EO/IR systems is driven by real-time data fusion, miniaturization, and dual-band imaging. In 2023, over 75 new EO/IR products were introduced globally. Lockheed Martin launched its advanced IRST21 sensor suite, integrating passive IR tracking into 5th-generation airframes. Thales introduced the Damocles XF pod for next-generation targeting with enhanced LIDAR capabilities.

Raytheon’s Multi-Spectral Targeting System-C (MTS-C) added longwave infrared and shortwave infrared integration, enhancing thermal detection range beyond 20 km. Elbit Systems developed lightweight, helmet-mounted EO/IR displays for dismounted soldiers, rolled out in 4,000 units in Israel and Australia.

AI-assisted anomaly detection, used in perimeter EO/IR surveillance, was integrated by over 15 companies in 2024. L-3Harris introduced EO/IR cube-sat payloads for tactical satellite ISR, with 12 already in orbit by Q1 2024. These innovations reflect the rapid technological evolution of EO/IR systems into multi-domain operations.

Five Recent Developments

Raytheon Technologies delivered 1,200 advanced MTS-B pods to the U.S. Navy with extended IR imaging for maritime ISR.
Elbit Systems secured a contract to supply 2,500 miniaturized EO/IR payloads for tactical drones across European defense agencies.
BAE Systems unveiled its long-range IR targeting solution for 6th-gen fighter integration, operational in UK flight tests.
Thales Group integrated multispectral EO/IR modules into 400 naval platforms under the FREMM program.
Northrop Grumman partnered with DARPA to prototype high-orbit EO/IR satellites with 0.3-meter resolution imaging.

Report Coverage of Military Electro-Optical and Infrared Systems Market

The military electro-optical and infrared systems market report offers an in-depth analysis of type, application, and regional deployments across all major defense markets. It covers over 50 product types and more than 25 applications across ground, air, and naval platforms. The report analyzes 75+ procurement programs globally and offers a breakdown of over 100 EO/IR system contracts finalized between 2023 and 2024.

It explores strategic investment data, highlighting more than 200 contracts signed by major OEMs, including subsystem procurement trends and production capacity expansions. The scope includes thermal imaging systems, long-wave IR, mid-wave IR, visible spectrum optics, and laser rangefinding integration. Regional analytics include over 30 defense modernization programs from Asia-Pacific, 25 from Europe, and 20+ from North America and the Middle East.

The report provides a vendor landscape analysis across 15 top players and maps procurement roadmaps, expected production volumes, and military R&D initiatives in EO/IR over the next five years. With battlefield requirements evolving and militaries emphasizing multispectral dominance, the report presents critical insights into how global defense forces reshape EO/IR capabilities.