Report Overview

Japan Defense Market - Industry Trends & Forecast Report, 2031

Japan Defense Market size was estimated to be worth USD 54.95 billion in 2024. During the forecast period between 2025 and 2031, Japan Defense Market size is projected to grow at a CAGR of 3.23% reaching a value of USD 68.63 billion by 2031. Major growth factors for Japan Defense Market include increasing geopolitical tensions, heightened security concerns, and rising military expenditures. Escalating geopolitical tensions with hostile neighboring countries (including North Korea) have heightened security imperatives and triggered a surge in military expenditures with pronounced expansion. For instance, during FY2024, Japan defense budget was estimated at JPY 7.95 trillion (approximately USD 56 billion). However, it reached more than 1.5% (approximately USD 71 billion) of the country’s GDP, including supplementary packages, related R&D, and security expenditures.

Source: BlueWeave Consulting

Defense Market – Overview

Defense refers to a state's military actions aimed at safeguarding sovereignty, territorial integrity, and national security by countering aggression, subversive activities, and terrorism. The defense market is witnessing growth due to the rising adoption of integrated defense technologies, which combine multiple systems to enhance security capabilities. Advancements in automation and data analytics are driving modernization efforts, improving operational efficiency. The growing need for a highly adaptable and technologically advanced military is fueling demand for modern defense systems to support evolving security requirements.

Japan Defense Market

Growth Drivers

Increasing Budget Allocation to Defense Modernization

Escalating geopolitical tensions worldwide are driving substantial growth in the Japan Defense Market, with nations increasing their military expenditures to enhance security and strategic capabilities. A key example is China, which recently announced a 7.2% rise in its defense budget for 2025, continuing its efforts to modernize its armed forces amid intensifying competition with the United States. As the world’s second-largest military spender, China aims to strengthen its defense capabilities despite trailing behind the United States, which maintains the highest military budget Japan. China’s growing assertiveness in territorial disputes—particularly in the South China Sea and with Japan—has heightened concerns among neighboring countries and Japan. Tensions over Taiwan remain central to Beijing’s defense strategy, with the Chinese government reinforcing its stance against separatist movements while increasing military preparedness. This expansion of defense capabilities reflects broader security concerns and is contributing to a rise in defense investments across the Asia-Pacific region. The United States, meanwhile, continues to lead Japan defense investments. The shift toward higher military budgets is shaping a new defense market cycle, benefiting defense contractors and encouraging advancements in military technology, including weapon systems, naval fleets, and aerospace defense. As Japan power dynamics shift and geopolitical conflicts persist, defense spending is set to remain a key priority for many nations, driving long-term growth in Japan Defense Market.

Challenges

Rising Costs for Development and Maintenance

High development and maintenance costs are significant restraints on the growth of Japan Defense Market. The advanced technology required for modern defense systems, such as aircraft, naval vessels, and cyber defense solutions, demands substantial investments. Additionally, ongoing maintenance and upgrades of existing military assets further strain budgets. These financial burdens could limit the ability of nations, especially those with smaller defense budgets, to expand or modernize their forces. As a result, high costs can hinder military readiness and slow the adoption of innovative defense technologies, potentially impacting overall market growth.

Impact of Escalating Geopolitical Tensions on Japan Defense Market

Escalating geopolitical tensions could significantly impact Japan Defense Market by driving increased defense spending as nations prioritize military preparedness. Heightened conflicts and regional instability push countries to enhance their defense capabilities, leading to larger defense budgets and investments in advanced defense technologies. This surge in demand for military equipment, such as aircraft, weapons systems, and cybersecurity solutions, fuels the growth of Japan Defense Market. Additionally, geopolitical uncertainty accelerates arms race dynamics and fosters strategic partnerships, further expanding the defense market. However, it also creates challenges, including rising competition and the need for rapid innovations to address emerging security threats.

Japan Defense Market

Segmental Coverage

Japan Defense Market – By Platform

Based on platform, Japan Defense Market is divided into Airforce, Land, and Naval segments. The airforce segment holds the highest share in Japan Defense Market by platform. The modernization of aircraft capabilities in Japan is expected to drive significant growth in the Airforce segment. The naval segment, followed by Air force platform segment, holds a significant market share in Japan Defense Market.

Source: BlueWeave Consulting

Japan Defense Market – By Type

Japan Defense Market by type is divided into Air-based Defense Equipment, Sea-based Defense Equipment, Land-based Defense Equipment, Defense Equipment Maintenance, Repair & Overhauling Services, and Defense Support & Auxiliary Equipment segments. The communication systems segment is expected to maintain dominance by type during the forecast period. It is driven by Japan’s strategic focus on enhancing secure and efficient military communication networks to ensure seamless coordination among defense units. The government is actively investing in advanced technologies, such as encrypted communication systems, satellite-based connectivity, and network-centric warfare solutions. Moreover, the country's broader emphasis on cybersecurity and digital modernization in defense operations reinforces this trend.

Japan Defense Market – By Operation

On the basis of operation, Japan Defense Market is bifurcated into Autonomous Defense Equipment and Manual segments. Japan, like other major countries across the world, is rapidly adopting unmanned systems, such as unmanned aerial vehicles (UAVs), unmanned combat vehicles, and autonomous drones, for various military applications, such as surveillance, reconnaissance, search and rescue operations, and tactical missions. Unmanned systems are equipped with advanced sensors, 360-degree situational awareness capabilities, and autonomous technologies, enabling them to operate remotely or make autonomous decisions without human intervention. It enhances operational efficiency, reduces risk to personnel, and improves mission outcomes. For instance, Japan recently acquired MQ-9B SeaGuardian for the Japan Coast Guard (JCG) to enhance maritime surveillance, and 6 V-BAT vertical take-off and landing (VTOL) drones from Shield AI for the Japan Maritime Self-Defense Force (JMSDF) to support its new patrol vessels. The country’s surge in unmanned systems development is also reflected by advancements in commercial and civilian sectors, where drones are used for purposes ranging from agriculture and delivery to infrastructure inspection. As research and innovation in unmanned systems continue to evolve, these technologies offer an expanding array of applications and further fuel the growth of unmanned systems in Japan Defense Market.

Competitive Landscape

Japan Defense Market is highly competitive, as a number of companies are competing to gain a significant market share. Key players in the market include Lockheed Martin Corporation, The Boeing Company, BAE Systems plc, Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries, Mitsubishi Electric, ShinMaywa Industries, IHI Aerospace Co., Ltd, NEC Corporation, Toshiba Corporation, Subaru Corporation, and Komatsu Ltd. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In 2025 – Japan granted the JPY188-billion contract to US-based Lockheed and Raytheon for obtaining Tomahawk integration and JSM/JASSM for F-35/F-15.

• In October 2024 - Mitsubishi Heavy Industries won the JPY279 billion contract to supply Type-12 SSM upgrades (ship/sub/ground-launched) and sub-launched missile to Japan Defense Force.

Scope of the Report

By Platform

• Airforce

• Land

• Naval

By Type

• Air-based Defense Equipment

• Sea-based Defense Equipment

• Land-based Defense Equipment

• Defense Equipment maintenance, Repair, & Overhauling Services

• Defense Support & Auxiliary Equipment

By Operation

• Autonomous Defense Equipment

• Manual

1. Research Framework
   1. Research Objective
   2. Product Overview
   3. Market Segmentation
2. Executive Summary
3. Japan Defense Market Insights
   1. End User Value Chain Analysis
   2. DROC Analysis
      1. Growth Drivers
         1. Rising Geopolitical Tensions
         2. Increasing Defense Budgets
         3. Growing Threat of Cyber Warfare
      2. Restraints
         1. High Development & Maintenance Costs
         2. Regulatory Challenges & Export Retractions
      3. Opportunities
         1. Growing Demand for Unmanned Systems
         2. Rising in Space-Based Defense Initiative
      4. Challenges
         1. Supply Chain Disruptions
         2. Geopolitical Sanctions & Trade Barriers
   3. Technological Advancements/Recent Developments
   4. Regulatory Framework
   5. Porter’s Five Forces Analysis
      1. Bargaining Power of Suppliers
      2. Bargaining Power of Buyers
      3. Threat of New Entrants
      4. Threat of Substitutes
      5. Intensity of Rivalry
4. Japan Defense Market: Marketing Strategies
5. Japan Defense Market: Pricing Analysis
6. Japan Defense Market Overview
   1. Market Size & Forecast, 2019–2031
      1. By Value (USD Billion)
   2. Market Share & Forecast
      1. By Platform
         1. Airforce
         2. Land
         3. Naval
      2. By Type
         1. Air-Based Defense Equipment
         2. Sea-Based Defense Equipment
         3. Land-Based Defense Equipment
         4. Defense Equipment maintenance, Repair, & Overhauling Services
         5. Defense Support & Auxiliary Equipment
      3. By Operation
         1. Autonomous Defense Equipment
         2. Manual
7. Competitive Landscape
   1. List of Key Players and Their Offerings
   2. Japan Defense Company Market Share Analysis, 2024
   3. Competitive Benchmarking, By Operating Parameters
   4. Key Strategic Developments (Mergers, Acquisitions, Partnerships)
8. Impact of Escalating Geopolitical Tensions on Japan Defense Market
9. Company Profiles (Company Overview, Financial Matrix, Competitive Landscape, Key Personnel, Key Competitors, Contact Address, Strategic Outlook, SWOT Analysis)

9. 13. Other Prominent Players
10. Key Strategic Recommendations
11. Research Methodology
    1.  Qualitative Research
       1.  Primary & Secondary Research
    2.  Quantitative Research
    3.  Market Breakdown & Data Triangulation
       1.  Secondary Research
       2.  Primary Research
    4.  Breakdown of Primary Research Respondents, By Region
    5.  Assumptions & Limitations

*Financial information of non-listed companies can be provided as per availability.

**The segmentation and the companies are subject to modifications based on in-depth secondary research for the final deliverable

List of Figures

Figure 1        Japan Defense Segmentation

Figure 2        Japan Defense Market Value Chain Analysis

Figure 3        Company Market Share Analysis, 2024

Figure 4        Japan Defense Market Size, By Value (USD Billion), 2019–2031

Figure 5        Japan Defense Market Share, By Platform, By Value (USD Billion), 2019–2031

Figure 6        Japan Defense Market Share, By Type, By Value (USD Billion), 2019–2031

Figure 7        Japan Defense Market Share, By Operation, By Value (USD Billion), 2019–2031

List of Tables

Table 1         Japan Defense Market Size, By Value (USD Billion), 2019–2031         

Table 2         Japan Defense Market Size, By Platform, By Value (USD Billion), 2019–2031          

Table 3         Japan Defense Market Size, By Type, By Value (USD Billion), 2019–2031  

Table 4         Japan Defense Market Size, By Operation, By Value (USD Billion), 2019–2031          

Table 5         Lockheed Martin Corporation Company Overview

Table 6         Lockheed Martin Corporation Financial Overview

Table 7         The Boeing Company: Company Overview

Table 8         The Boeing Company Financial Overview

Table 9         BAE Systems plc Company Overview

Table 10       BAE Systems plc Financial Overview

Table 11       Mitsubishi Heavy Industries (MHI) Company Overview

Table 12       Mitsubishi Heavy Industries (MHI) Financial Overview

Table 13       Kawasaki Heavy Industries Company Overview

Table 14       Kawasaki Heavy Industries Financial Overview

Table 15       Mitsubishi Electric Company Overview

Table 16       Mitsubishi Electric Financial Overview

Table 17       ShinMaywa Industries Company Overview

Table 18       ShinMaywa Industries Financial Overview

Table 19       IHI Aerospace Co., Ltd Company Overview

Table 20       IHI Aerospace Co., Ltd Financial Overview

Table 21       NEC Corporation Company Overview

Table 22       NEC Corporation Financial Overview

Table 23       Toshiba Corporation Company Overview

Table 24       Toshiba Corporation Financial Overview

Table 25       Subaru Corporation Company Overview

Table 26       Subaru Corporation Financial Overview

Table 27       Komatsu Ltd Company Overview

Table 28       Komatsu Ltd Financial Overview