Japan Destroyer Market - 2024 - 2031

Japan's Destroyer Market reached US$ 1.7 billion in 2023 and is expected to reach US$ 2.4 billion by 2031, growing with a CAGR of 4.40% during the forecast period 2024-2031.

The Japan destroyer market is evolving rapidly, driven by emerging technologies, changing geopolitical dynamics and the need for enhanced operational capabilities. Several key trends are shaping this market, highlighting Japan's focus on maintaining a robust and technologically advanced maritime defense.

Missile defense remains a critical focus for Japan's destroyers, given regional threats from North Korea and China. The integration of the Aegis Combat System and SM-3 Block IIA missiles into the fleet showcases Japan's commitment to building a robust missile shield. For instance, Japan is constructing new Aegis-equipped destroyers to replace the canceled Aegis Ashore program, reflecting its emphasis on mobile, sea-based defense solutions.

In addition, modern destroyers in Japan are increasingly designed to perform multiple roles, including anti-air warfare (AAW), anti-submarine warfare (ASW) and anti-surface warfare (ASuW). The Maya-class destroyers, commissioned by the JMSDF, exemplify this trend, featuring the Aegis Ballistic Missile Defense system alongside advanced radar and sonar technologies. This versatility ensures that destroyers can address diverse security challenges, from missile threats to naval engagements.

Moreover, environmental concerns and operational efficiency are driving the adoption of hybrid propulsion systems in new destroyers. These systems combine gas turbines and electric propulsion to enhance fuel efficiency and reduce emissions. The development of such green technologies aligns with Japan's broader environmental commitments while improving the operational range and sustainability of its naval assets.

Finally, Japan's increasing defense budget is enabling the procurement of more advanced destroyers and upgrades to existing ones. Japan's defense expenditures were once targeted at 1% of GDP or less. The first budget proposed by the administration of Prime Minister Kishida Fumio in fiscal 2022 totaled ¥5.1 trillion, in line with that policy, but for fiscal 2023 the budget rose to ¥6.6 trillion and it climbed by another trillion to ¥7.7 trillion in the fiscal 2024 budget.

Drivers

Geopolitical Tensions and National Security Concerns

Japan's geopolitical environment, particularly in the Indo-Pacific region, drives the need for advanced destroyers. For instance, the Stockholm International Peace Research Institute (SIPRI) estimates that North Korea possessed approximately 20 nuclear weapons and sufficient fissile material for 45 to 55 nuclear devices as of January 2022. In the 12 years following its first detonation test in 2006, North Korea has conducted six nuclear tests, with explosion yield increasing steadily from less than 1 kiloton in the first test to 160 kilotons in the sixth test.

In addition, in East Asia, the balance of power has been shifting rapidly in favor of China. According to SIPRI, while US defense expenditures increased by 2.7% between 2013 and 2022, China's defense spending soared by 63 percent in the same period. In absolute terms, US remained in first place globally, spending US$ 877 billion in 2022, while China was in second place at US$ 292 billion. However, it must be noted that while US military is globally committed, the Chinese military is only regionally engaged.

Moreover, Japan has decided to spend more on defense. However, given the two-theater commitment that it now makes, the security commitments that Japan-and US-can make to the defense of South Korea will likely decline in the future. Japan is already shifting its attention away from the Korean Peninsula toward the Taiwan Strait. Thus, above factors helps to boost the market growth.

Government Defense Policies and Budgets

Japan's government defense policies and budgets are critical drivers of the destroyer market, reflecting the nation's commitment to enhancing maritime security amidst regional tensions. The Japanese government, under its National Defense Program Guidelines (NDPG) and the Medium-Term Defense Program (MTDP), prioritizes naval modernization to counter emerging threats in the Indo-Pacific. The policies emphasize strengthening Japan's Self-Defense Forces (SDF), particularly its Maritime Self-Defense Force (JMSDF), by allocating significant funds to procure and upgrade destroyers with advanced capabilities.

For instance, in 2023, Japan plans to begin the construction of the two destroyers, known as the Aegis System Equipped Vessels (ASEV), in Fiscal Year 2024 and FY 2025, respectively, with commissionings in 2027 and 2028. Japan will spend 373.1 billion yen or US$ 2.6 billion, in FY 2024 funding for the destroyers. That amount is a slight reduction from the 379.7 billion yen or US$ 2.64 billion, that the Ministry sought in its August FY 2024 budget request.

In addition, in 2024, Japan's Ministry of Defense (MoD) formally inked contracts for the production of two new-build naval destroyers being equipped with the AEGIS air warfare battle management system. The new vessels - referred to as Aegis System Equipped Vessels (ASEVs) - are planned for commissioning in 2027 and 2028.

The Japanese MoD is spending JPY272.1 billion (US$ 1.89 billion) for the two vessels, with the first contract awarded to Mitsubishi Heavy Industries (MHI) at the cost of JPY139.7 billion and the second going to Japan Marine United Corp. for JPY132.4 billion. MHI will deliver its vessel in 2027, with Japan Marine's following a year later. Therefore, Japan's government defense policies and increasing budgets directly drive the destroyer market by enabling procurement, modernization and the integration of cutting-edge technologies.

Restraints

High Costs of Development and Maintenance

The high costs associated with the development, procurement and maintenance of advanced destroyers significantly restrain the growth of the Japan destroyer market. The vessels are among the most expensive assets in a naval fleet due to their cutting-edge technology, complex systems and specialized requirements. For instance, the Maya-class destroyers, equipped with the Aegis Ballistic Missile Defense system, cost approximately ¥173 billion (US$ 1.6 billion) each. Such substantial upfront investment limits the number of ships that can be produced within a given budget cycle.

Additionally, the ongoing operational and maintenance expenses further strain financial resources. Advanced systems like phased-array radars, missile interceptors and stealth technologies require regular upgrades and specialized personnel for upkeep. The increasing use of artificial intelligence and cybersecurity measures adds another layer of cost, as these systems must be continually updated to remain effective against evolving threats. Therefore, the high costs of development and maintenance constrain the scale and pace of the Japan destroyer market.

Segment Analysis

The Japan destroyer market is segmented based on type, propulsion system, technology and end-user.

Demand for Propulsion System Drives the Segment Growth

The Nuclear-Powered Destroyers segment is expected to dominate with over 35% of the market during the forecast period 2024-2031. The potential adoption of nuclear-powered destroyers represents a transformative development in Japan's naval capabilities, driving market growth by addressing critical operational and strategic needs.

Nuclear-powered destroyers offer unparalleled advantages in endurance, speed and operational range, making them ideal for long-term deployments and missions in contested waters. This capability aligns with Japan's focus on countering regional threats, such as China's expanding naval presence in the Indo-Pacific and securing critical maritime trade routes.

Although Japan currently operates conventionally powered destroyers, discussions about nuclear propulsion technology have gained attention as part of the broader defense modernization agenda. The operational benefits of nuclear-powered vessels, such as reduced refueling needs and enhanced power capacity for advanced weapons and sensors, are driving interest. For instance, integrating nuclear propulsion could support high-energy systems like directed-energy weapons or advanced radar, crucial for countering hypersonic missiles-a growing concern in the region.

Competitive Landscape

The major global players in the Japan Destroyer market include General Dynamics, BAE Systems, Mitsubishi Heavy Industries, Lockheed Martin, Navantia, Kawasaki Heavy Industries, Rolls-Royce, Thales Group, Northrop Grumman and Fincantieri.

Key Developments

• In 2024, Japan's Maritime Self-Defense Force has chosen Rolls-Royce's MT30 engines for its Aegis System-equipped vessels, marking the first use of twin MT30-powered hybrid electro-mechanical propulsion worldwide. The MT30 will ensure that these new destroyers' performance meets the speed requirements of the Japan Maritime Self-Defense Force (JMSDF). This advanced propulsion system not only enhances speed but also offers operational benefits.
• In 2024, Japan has earmarked 314.8 billion yen (US$ 2 billion) in 2025 to develop three 4,800-ton FFM multi-purpose compact destroyers. Featuring advanced automation and labor-efficient designs, these ships require only 90 crew members-less than half the personnel needed for current models. This cutting-edge platform is also being proposed as a potential option for Australia's next-generation frigates.

Why Purchase the Report?

• To visualize the Japan destroyer market segmentation based on a type, propulsion system, technology and end-user, as well as understandkey commercial assets and players.
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• Excel data sheet with numerous data points of the Japan destroyer market-level with all segments.
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The Japan destroyer market report would provide approximately 45 tables, 33 figures and 201 pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies