Ethernet Is Becoming a Foundational Component of Digitization for Defense Applications

The defense market is now experiencing a supercycle, with multiple national and allied projects developing and deploying next-generation warfare platforms. ABI Research estimates that global spending for defense will reach US$2.6 trillion in 2026, which will include the following initiatives:

1. The Joint All-Domain Command and Control (JADC2) is a U.S. Department of Defense (DoD) project to link sensors from all branches of the U.S. Armed Forces (USAF) in a unified network powered by Artificial Intelligence (AI).
2. Federated Mission Networking (FMN) is a North Atlantic Treaty Organization (NATO) initiative to ensure that Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) are interoperable between NATO members and that mission networks can rapidly be created in a theater of war.
3. Multiple next-generation air fighter platforms are being created, including the Next Generation Air Dominance (NGAD) project in the United States, Future Combat Air System (FCAS) in Europe, BAE Systems Tempest in the United Kingdom, and China’s sixth-generation fighter project named Chengdu J-36.

These are a few examples of high-profile projects being developed across the world, with many more being developed for autonomous warfare, loitering munitions, and attributable munitions. At the same time, AI is being diffused through the defense market, albeit at a slower rate compared to commercial markets due to regulations, certification, the need for ruggedized and secure systems, and incumbent technologies. Nevertheless, all of these systems need to have high-speed, reliable connections with a technology that can be expanded and follow market developments.

Legacy connectivity technologies, including Controller Area Network (CAN) bus, RS-485, Military Standard (MIL-STD)-1553, and many more, were designed for high resiliency, deterministic communications, and harsh environments, but not for sensor fusion, autonomous decision-making, distributed computing, and edge AI, all of which are now high priorities in the military segment. Many military projects are now making Internet Protocol (IP)-networking a core component of their platforms, including the above projects, as well as the U.S. Army’s VICTORY architecture and the British Army’s Morpheus. In the United States, the XM30 mechanized infantry combat vehicle is optionally manned and can function autonomously, using Ethernet as the backbone. In fact, the dominant physical layer that many platforms are converging on is Ethernet, including single-pair implementations such as 10BASE-T1S and 100BASE-T1, originally developed for automotive applications, for which it is mainstream today.

Ethernet is now becoming the dominant technology across multiple defense segments, because it is mainstream, mature, commoditized, and ubiquitous in most consumer and enterprise markets.

The defense market has specific requirements for the transition to Ethernet: fewer and lighter cables, native IP compatibility that allows freedom in selecting future networking architecture, and, most importantly, support for Time-Sensitive Networking (TSN). All of these have been requirements of commercial sectors, notably automotive, manufacturing, and many more. Although the military sector is dominated by defense contractors and vendors, including Curtiss-Wright, L3Harris, Lockheed Martin, RTX, and Northop Grumman, the reliance on Ethernet expands the addressable market to new entrants that can certify their Ethernet products and attack this market directly, or through these contractors.

According to ABI Research estimates, the addressable market for Operational Technology (OT) Ethernet in the military sector will be US$7.5 billion in 2026, the majority of which will be enabled by discrete modules, rather than embedded. Discrete modules refer to interface cards that are plugged in to another unit via a standard interface, including PCI-Express, whereas embedded modules integrate with other systems through non-standard interfaces. Many Ethernet vendors are already experienced with TSN capabilities in adjacent verticals, but they may not be certified for military use. These vendors must act proactively to achieve Military Standard (MIL-SPEC) status and then address the military segment, rather than wait to develop the market before engaging in certification activities. 

The military digitization market is rapidly developing, and its growth trajectory is proven by macro trends (e.g., multiple theaters of war, ongoing geopolitical tensions), as well as micro trends (digitization initiatives, use of AI). Moreover, defense supply chains are becoming constrained and sovereign, meaning that the Ethernet market may become balkanized or even region-locked, opening opportunities for vendors in Europe and the United States. Moreover, retrofitting existing equipment in the field will also become a priority for many fleets, potentially growing the addressable market of Ethernet considerably.

The military and defense segment is a prime market for Ethernet, as well as other mission-critical connectivity technologies, and the mainstream nature of these technologies can open the miliary supply chain to new entrants, particularly silicon vendors like Intel, Marvell, and Texas Instruments (TI). These companies need to proactively certify their products for military use and employ their expertise from adjacent verticals to address the military and defense segments directly, rather than go solely through the large defense contractors. This will remain a channel to market for these companies, but proactive certification and product alignment will ensure that they will attract a larger market share than before and can approach the defense supply chain more directly.