• In 2024 Hensoldt and Raytheon signed a strategic MoU at AUSA to co‑develop advanced EO/IR systems for NATO forces, enhancing interoperability and bolstering Allied ISR capabilities.

• In 2025 India’s DRDO initiated production of the IDD&IS Mk2A, a 360° EO/IR sensor suite deployable across air, sea, and ground platforms, extending its reach into electronic warfare roles.

In this report, the Military Electro-optical and Infrared Systems Market has been segmented by Platform, Cooling Technology, System, Imaging Technology, and Geography.

Military Electro-optical and Infrared Systems Market, Segmentation by Platform

The Military Electro-optical and Infrared Systems Market has been segmented by Platform into Air-based, Land-based, and Sea-based.

Air-based
The air-based segment holds a significant share in the Military Electro-optical and Infrared Systems Market due to the growing demand for surveillance and reconnaissance missions by airborne platforms. These systems are widely deployed in fighter jets, drones, and helicopters, accounting for around 45-50% of the total market share. Their ability to provide real-time, high-resolution imagery and thermal detection is critical for modern aerial combat and intelligence gathering.

Land-based
The land-based electro-optical and infrared systems are extensively used for ground surveillance, target acquisition, and navigation in various military vehicles and command centers. This segment represents approximately 30-35% of the market and benefits from advances in sensor technology, which enhance battlefield awareness and force protection during both day and night operations.

Sea-based
The sea-based segment, covering naval vessels and submarines, contributes around 15-20% to the overall market. These systems are crucial for maritime reconnaissance, navigation, and threat detection in harsh oceanic environments. The increasing need for naval security and anti-submarine warfare is driving growth in this segment, with a focus on integrating EO/IR technology into shipborne platforms.

Military Electro-optical and Infrared Systems Market, Segmentation by Cooling Technology

The Military Electro-optical and Infrared Systems Market has been segmented by Cooling Technology into Cooled, and Uncooled.

Cooled
The cooled segment leads the Military Electro-optical and Infrared Systems Market, capturing about 55-60% of the share due to its exceptional sensitivity and accuracy. By using cryogenic cooling to minimize sensor noise, these systems excel in long-range detection and perform reliably in challenging environments. They are essential for high-precision applications such as missile tracking, targeting, and advanced surveillance missions.

Uncooled
Uncooled EO/IR systems are increasingly popular for their affordability, compact design, and minimal maintenance. Making up roughly 40-45% of the market, these systems are ideal for portable and short-range use cases, including soldier weapon sights and unmanned aerial vehicles (UAVs). Continuous improvements in microbolometer technology are enhancing their performance, boosting their adoption across various military platforms.

Military Electro-optical and Infrared Systems Market, Segmentation by System

The Military Electro-optical and Infrared Systems Market has been segmented by System into Laser, Targeting, and Imaging.

Laser
The laser segment is a critical part of the Military Electro-optical and Infrared Systems Market, accounting for approximately 35-40% of the market share. These systems offer precise targeting, range finding, and designation capabilities essential for missile guidance and target tracking. Their speed and accuracy make them indispensable in modern combat scenarios, ensuring effective engagement and reduced collateral damage.

Targeting
Targeting systems represent about 30-35% of the market, providing enhanced weapon accuracy by integrating electro-optical and infrared sensors. Widely deployed across both ground and aerial platforms, these systems enable real-time target lock-on and tracking, boosting mission success rates under diverse operational conditions.

Imaging
Imaging systems make up roughly 25-30% of the Military EO/IR market and are key for reconnaissance, surveillance, and situational awareness. They deliver high-resolution visual and thermal imagery, aiding battlefield monitoring and intelligence gathering. Advances in sensor resolution and image processing technologies are driving the growth of this segment, making it essential for modern military operations.

Military Electro-optical and Infrared Systems Market, Segmentation by Imaging Technology

The Military Electro-optical and Infrared Systems Market has been segmented by Imaging Technology into Scanning, Starring, Hyperspectral, and Multispectral.

Scanning
The scanning segment in the Military Electro-optical and Infrared Systems Market is known for its ability to cover large areas quickly by systematically scanning the environment. This technology is widely used for surveillance and target detection, offering comprehensive monitoring capabilities. Scanning systems contribute significantly to real-time data collection and are crucial in dynamic combat zones.

Starring
Starring technology utilizes a fixed array of detectors to capture images without mechanical movement, providing faster and more reliable image acquisition. This segment supports high-speed target tracking and surveillance, making it ideal for applications where quick response is critical. Starring systems enhance image clarity and reduce mechanical failure risks.

Hyperspectral
Hyperspectral imaging systems capture data across hundreds of narrow spectral bands, enabling detailed analysis beyond visible light. This technology allows for precise material identification and environmental monitoring, representing a growing segment in military EO/IR applications. Hyperspectral systems improve target discrimination and intelligence gathering by revealing subtle spectral differences.

Multispectral
Multispectral imaging captures data in several broad spectral bands, providing valuable information for surveillance, reconnaissance, and targeting. This technology balances high performance with lower complexity compared to hyperspectral systems and is widely adopted for battlefield awareness. Multispectral systems contribute to enhanced situational awareness and decision-making in military operations.

Military Electro-optical and Infrared Systems Market, Segmentation by Geography

In this report, the Military Electro-optical and Infrared Systems Market has been segmented by Geography into five regions; North America, Europe, Asia Pacific, Middle East and Africa, and Latin America.

Military Electro-optical and Infrared Systems Market Share (%), by Geographical Region

North America
North America dominates the Military Electro-optical and Infrared Systems Market, holding a significant share due to strong defense budgets and advanced technological infrastructure. The region accounts for approximately 35-40% of the market, driven by extensive military modernization programs and high adoption of EO/IR systems across air, land, and sea platforms.

Europe
Europe represents about 25-30% of the market, fueled by increasing defense expenditure and strategic initiatives to upgrade military surveillance and targeting systems. Key countries like the UK, Germany, and France invest heavily in EO/IR technologies to enhance their defense capabilities.

Asia Pacific
The Asia Pacific region is witnessing rapid growth with a market share of roughly 20-25%, propelled by rising geopolitical tensions and expanding military budgets in countries such as China, India, and Japan. Increasing demand for advanced EO/IR systems in border security and maritime surveillance drives this expansion.

Middle East and Africa
Middle East and Africa hold around 10-12% of the market, supported by growing defense spending focused on enhancing situational awareness and counterterrorism operations. Investments in EO/IR systems for border control and naval security contribute to market growth.

Latin America
Latin America accounts for approximately 5-7% of the market, with steady growth due to modernization efforts and increasing adoption of EO/IR technologies in surveillance and reconnaissance. Countries like Brazil and Mexico are key contributors to this segment.

This report provides an in depth analysis of various factors that impact the dynamics of Military Electro-optical and Infrared Systems Market. These factors include; Market Drivers, Restraints and Opportunities Analysis.

Drivers, Restraints and Opportunity Analysis

Drivers:

• Increasing Geopolitical Tensions
• Rising Demand for ISR Capabilities
• Military Modernization Initiatives
• Counterterrorism and Counterinsurgency Operations

• Rapid Growth in Unmanned Systems - The reshaping the defense and aerospace landscape, particularly in intelligence, surveillance, and reconnaissance (ISR) operations. Unmanned aerial vehicles (UAVs), ground vehicles (UGVs), and maritime systems are increasingly being deployed to perform high-risk, long-duration, and data-intensive missions without endangering human personnel. Their flexibility and scalability make them ideal for border surveillance, tactical reconnaissance, and strike missions.

  As their adoption expands, there is a growing emphasis on equipping unmanned systems with advanced sensors, AI-based processing, and autonomous decision-making capabilities. These enhancements enable systems to operate in contested environments, respond to dynamic threats, and relay mission-critical data in real time. The integration of unmanned assets into network-centric warfare strategies has become essential to modern combat doctrine.

  Military modernization programs globally are prioritizing unmanned platforms as key force multipliers. They reduce operational costs, increase mission frequency, and allow access to dangerous or denied environments. Emerging applications include swarming drones, robotic logistics support, and unmanned combat vehicles capable of precision targeting and deep strike capabilities.

  Vendors that develop modular, interoperable, and mission-adaptable unmanned systems will have a significant advantage in future defense procurement. The demand for unmanned assets is set to grow rapidly as militaries seek greater agility, reduced risk, and cost efficiency on the battlefield.

Restraints:

• Complex Integration Challenges
• Export Controls and Regulations
• Limited Operational Range and Endurance

• Vulnerability to Electronic Warfare - A critical concern for advanced defense systems, particularly those that rely heavily on communication, navigation, and data transmission technologies. Adversaries are increasingly deploying jamming, spoofing, and cyber disruption techniques to target the digital infrastructure of both manned and unmanned platforms. This exposes military systems to signal interference, data corruption, and operational paralysis.

  Electronic warfare threats are especially damaging to unmanned systems, which often depend on GPS signals, remote control links, and real-time telemetry. Disruption of these channels can lead to mission failure, loss of control, or hostile takeover. These vulnerabilities compromise not only individual systems but also entire command and control networks that rely on synchronized data flow across platforms.

  To address this risk, defense agencies are investing in anti-jamming antennas, encrypted communication protocols, and hardened electronics. Systems are being designed with fail-safes, redundancy, and the ability to operate autonomously if communication is lost. However, incorporating these features adds cost, complexity, and weight to system architecture.

  As electronic warfare becomes a key domain of future conflict, defense OEMs must prioritize EW-resilient designs, adaptive software, and robust signal management. Failure to do so will leave critical systems exposed in increasingly contested electromagnetic environments.

Opportunities:

• Investment in Artificial Intelligence (AI) and Machine Learning
• Expansion of EO/IR System Applications
• Focus on Export Market Expansion
• Investment in Next-Generation EO/IR Technologies

• Focus on Miniaturization and Lightweight Solutions - The transforming the design philosophy of modern military platforms and sensors. As battlefield mobility becomes a top priority, there is a need for compact, portable, and low-footprint technologies that can be easily integrated into soldier-wearable kits, UAVs, and small vehicles. Reducing system size without compromising performance allows for enhanced operational agility and deployment speed.

  Technological advancements in microelectronics, nanomaterials, and integrated circuits have enabled the development of smaller yet more capable systems. This includes lightweight EO/IR sensors, micro radars, compact power supplies, and modular communication tools. Such systems are ideal for rapid insertion operations, special forces missions, and urban combat environments where space and weight constraints are critical.

  Miniaturized technologies also support energy efficiency and stealth, especially in unmanned and low-observable platforms. Smaller systems generate less heat and are easier to camouflage or embed, enhancing survivability in hostile environments. Additionally, lightweight payloads increase fuel economy, endurance, and maneuverability of airborne and ground platforms.

  Manufacturers focusing on scalable, lightweight, and power-efficient solutions will meet the evolving demands of modern defense forces. Miniaturization not only reduces logistical burden but also enables multi-role adaptability in a range of combat and reconnaissance scenarios.

Key players in Military Electro-optical and Infrared Systems Market include,

• BAE Systems plc
• Elbit Systems Ltd.
• Teledyne FLIR LLC
• Israel Aerospace Industries Ltd.
• L3Harris Technologies Inc.
• Leonardo S.p.A
• Lockheed Martin Corporation
• Raytheon Technologies Corporation
• Rheinmetall AG
• Saab AB
• THALES
• Ultra Electronics Holdings

In this report, the profile of each market player provides following information:

• Company Overview and Product Portfolio
• Market Share Analysis
• Key Developments
• Financial Overview
• Strategies
• Company SWOT Analysis