Defence demand drove the infrared image sensor market to more than $1 billion in 2024, says Yole Group. 2024-30 CAGR will be more than 5%.

By 2030 the SWIR (Short-Wave Infra Red) market should reach almost $102 million, while cooled MWIR (Medium-Wave IR) and LWIR (Long-Wave IR) are targeting $1,179 million and $249 million, respectively.

The defence demand follows the emergence of drones, counter-UAS technologies, and AI-software-defined companies

The market is receptive to  lower-cost technologies such as Quantum Dots sensors and T2SL or similar architectures.

“Cooled MWIR and LWIR sensors are increasingly deployed in long-range surveillance and counter-drone systems, while the SWIR segment, facing delays in consumer adoption, is shifting its focus toward machine vision and surveillance applications,” says Yole’s Axel Clouet.

SWIR is used specifically for laser target designation in airborne optronics. It is also gaining traction in long-range surveillance and counter-Unmanned Aerial System (UAS) applications. SWIR’s ability to provide a reflectance-based imaging channel, combined with its high atmospheric penetration, makes it particularly valuable in challenging operational conditions.

Cooled MWIR remains a cornerstone of the defense infrared industry. It supports thermal imaging across a broad spectrum of military systems, from gimbals and targeting pods to missile seekers and air defense platforms. 

Similarly, Cooled LWIR is used in many of the same systems, particularly in ground vehicle optronics, where its superior performance through smoke and dust is critical. However, LWIR may face increasing competition from uncooled microbolometers, which offer lower costs and are improving their performance levels. LWIR sensors still carry higher price points than MWIR ones.

“Infrared imaging plays a critical role in defence applications due to its ability to deliver long-range vision under demanding conditions. Whether at night, during adverse weather, or in environments obscured by smoke or dust, infrared technology ensures visibility and target detection,” says Yole’s Florian Domengie, “these systems are widely integrated across air, sea, and land platforms, including drones and vehicles, and are commonly used by infantry in most modern military forces.

IMG - SWIR MWIR AND UNCOOLE IR_Market forecast_YG_Mar2025
IMG - SWIR MWIR AND UNCOOLE IR_Ecosystem description_YG_Mar2025

Since the onset of the war in Ukraine, capital expenditures by defence OEMs have risen significantly, fuelled by increased government budgets and procurement contracts. 

There was a surge in M&A between 2022 and 2024, reshaping the competitive landscape. These consolidations are driving vertical integration across the industry. For example, Lynred’s acquisition of NIT and Exosens’ acquisition of Xenics have positioned the two companies as direct competitors in the SWIR segment.

Simultaneously, a new generation of “software-defined” defence companies is emerging. 

Focused on the intersection of AI, drone technology, and counter-UAS systems, firms such as Anduril, Shield AI, and Palantir are attracting significant private investment. 

This new ecosystem is accelerating innovation in defence, challenging traditional players, and reshaping the industry’s future.