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Business Segment Overview

Integrated Defense
& Space Systems

While continuing to strengthen our existing businesses,
we are preparing to expand our business scale by
commercializing new projects for overseas markets.

Hisakazu Mizutani

Domain CEO, Integrated Defense & Space Systems

S Strengths
  • Leading-edge technologies fostered through the development of defense and space products

  • Defense

    Ability to make proposals for integrated defense systems
    Expertise and channels cultivated through Japan-U.S. joint development of the SM-3 missile

  • Space

    Developing capabilities in rockets and rocket engines
    Maintaining world-leading product reliability and quality control

W Weaknesses
  • Defense

    Limited experience in pursuing and leading in projects overseas

  • Space

    Inadequate cost and competitive pricing

O Opportunities
  • Defense

    Growing overseas demand for defense equipment
    Accelerating development and procurement of new products in line with the formulation of Japan's Medium-Term Defense Program

  • Space

    Increasing need for satellite launches by emerging countries
    Under Japan's New Basic Plan on Space Policy, domestic market scale expected to grow to ¥5 trillion over the next 10 years

T Threats
  • Defense

    Severe competition with domestic and overseas manufacturers

  • Space

    Concern regarding price competition as new U.S. companies enter the market for overseas satellite launch services

  • Targets of the 2015 Medium-Term Business Plan Billions of yen
  • photo

Operating Environment

The Integrated Defense & Space Systems business is performing steadily, but its operating environment is changing.

In defense, the Ministry of Defense's Medium-Term Defense Program formulated in 2013 indicated the Japanese government's intent to build a "Dynamic Joint Defense Force," and new defense equipment development and procurement is expanding. Furthermore, the 2014 Cabinet decision adopting the Three Principles on Transfer of Defense Equipment and Technology established clear principles for transferring defense equipment overseas. As a result, we anticipate an increase in overseas projects, centering on joint international development.

In space systems, the formulation of the new Basic Plan on Space Policy in January 2015 and the work schedule for this plan, revised in December 2015, clarified the vision for the future, thereby facilitating investment forecasts. The scale of the domestic market is expected to grow to ¥5 trillion over the next decade. Demand is also increasing in relation to gathering and analyzing information, determining conditions overseas, and providing resulting products and services related to the space systems market.

Policies of the 2015 Medium-Term Business Plan

  • Develop business overseas, taking the Three Principles on Transfer of Defense Equipment and Technology to locations where opportunities for new markets exist
  • Promote private-sector projects, leveraging the cutting-edge technologies cultivated through the defense and space business
  • Take advantage of land, sea, air, and space synergies to expand domestic business

We are implementing three growth strategies as we continue to prepare for expansion during the period of the next business plan.

First, we will develop business overseas that takes advantage of opportunities provided by the Three Principles on Transfer of Defense Equipment and Technology. Through the Japan-U.S. joint development and production of the SM-3 missile, we will gain expertise in joint international development. We expect to apply this expertise toward commercial development in fields that match MHI's technological expertise. We also aim to utilize our advanced technologies and channels with U.S. and European business partners to participate in new international joint development projects. Furthermore, we will build upon a track record of conducting final assembly and functional tests of F-35 fighters on schedule, and we will consider participating in areas providing back-up support.

Second, we will leverage the leading-edge technologies we have cultivated through the defense and space business to promote projects in the private sector. Through joint development with Nippon Telegraph and Telephone Corporation (NTT), which possesses cutting-edge security technologies, we will develop cybersecurity technologies for key infrastructure control systems. We will develop cybersecurity-related products and services, giving shape to technologies that detect and respond in real time to unknown threats. In space systems, we will promote H-IIA rocket launch services to countries new to space exploration and accelerate activities to attract orders for H-IIA and H3 launch services from leading global satellite operators. We are also considering commercialization in areas related to the development, launch, and operation of small satellites, based on the expertise and knowledge gained through the operational testing of our own small satellites commencing in fiscal 2015.

Third, we will take advantage of land, sea, air, and space synergies to expand orders in domestic areas of business. In defense, we will incorporate the elemental technologies relating to jet fighters that we have accumulated and advanced to date into future jet fighters. We will also apply cutting-edge technologies cultivated through defense equipment to the development of new naval ships and mass-production projects. Meanwhile, in space systems we will carry out our duty to secure Japan's autonomous national launch capacity through the development of the H3 rocket. At the same time, we will strengthen global competitiveness through cost reductions to expand launch vehicle services in the global market.

R&D Case Study: X-2 Advanced Technology Demonstrator

In April 2016, MHI successfully completed the maiden flight of the X-2, an advanced technology demonstrator jet, from Nagoya Airport in Aichi Prefecture to the Japan Self-Defense Force's Gifu Air Base.

The X-2 is a prototype stealth aircraft for Japan's Ministry of Defense. It is the first in Japan to feature technology impeding its detection by radar and engineered for extremely high maneuverability. The prototype integrates an airframe, engines, and other advanced systems and equipment all adaptable to future fighters. As the coordinating company of the X-2 development project, MHI began developing the aircraft's airframe in 2009 with cooperation provided by 220 domestic companies and guidance from Japan's Acquisition, Technology & Logistics Agency (ATLA). We completed the airframe assembly in fiscal 2014. After engine testing, we completed taxiing tests at Nagoya Airport before moving on to the maiden voyage. Going forward, the aircraft will be subjected to repeated flight tests at the Gifu Air Base with a view to enhancing performance and technological effectiveness.

HIGHLIGHT

MHI Successfully Launches Telesat's Telstar 12 VANTAGE Satellite

On November 24, 2015, MHI successfully delivered Telesat's Telstar 12 VANTAGE satellite into planned orbit on the H-IIA launch vehicle F29.

The H-IIA launch vehicle F29 lifted off from the Yoshinobu launch pad at the Tanegashima Space Center at 15:50 local time (6:50 GMT and 01:50 EST). The launch vehicle flew as planned and, at about four hours and 27 minutes after liftoff, the separation of the Telstar 12 VANTAGE satellite was confirmed. H-IIA F29 incorporates the enhancements of the H-IIA upgrade. The upgrade relates to improvements in the launch vehicle's upper stage, and MHI has been implementing these improvements with strong support and oversight from the Japan Aerospace Exploration Agency (JAXA). These efforts led to the launch vehicle's success in bringing the satellite near geostationary orbit. Including the H-II rocket's F30 vehicle, launched on February 17, 2016, H-IIA/H-IIB launch vehicles have been successful 29 consecutive times, resulting in a success rate of 97.1%.

MHI intends to market more proactively its H-IIA satellite launch services both in Japan and abroad, continuing to play a key role in the Japanese space industry.

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