US Defense Giant Lockheed Martin Strives to Capture New Business Opportunities in Japan

It has been almost two years since the Cabinet of Japanese Prime Minister Kishida Fumio made a landmark decision to increase defense spending to a total of 43 trillion yen ($300 billion) over five years. The December 2022 budget announcement aimed at drastically strengthening Japan’s defense capabilities. In response, defense companies from around the world are eager to explore new business opportunities in Tokyo.

One of these companies is Lockheed Martin, the world’s largest defense firm with annual sales of $67.6 billion. On September 10, the company invited four Japanese journalists, including myself, to its Rotary and Mission Systems division in Morristown, New Jersey, for a press tour called “Japan Media Day.”

The Rotary and Mission Systems division has a long-standing history with Japan. It has been supporting the development, integration, manufacturing, and testing of the Aegis system installed on the Aegis ships of the Japan Maritime Self-Defense Force (JMSDF) for over 30 years.

So what was the company's aim in inviting four Japanese journalists this time? There appear to have been three main aims.

First, to highlight the smooth progress of Japan’s Aegis System Equipped Vessels (ASEV) program, using the company’s SPY-7 radar.

Second, to promote the adoption of the SPY-7 radar on the successor vessels to the aging Kongo-class Aegis vessels.

And third, to promote new equipment such as the Mark 70 Payload Delivery System (PDS) (a new Vertical Launching System or VLS) and the integration of the land-based interceptor PAC-3 Missile Segment Enhancement (MSE) into the Aegis Weapon System.

As for the first point, the Japanese Ministry of Defense plans to build two ASEVs for the JMSDF. The naval vessels will serve as alternatives to the nation’s now-defunct land-based Aegis Ashore ballistic missile defense system.

Most recently, on September 18, the Defense Ministry announced that it had signed contracts to build two ASEVs with Mitsubishi Heavy Industries and Japan Marine United, separately.

MHI was contracted to build the first vessel for about 139.7 billion yen ($970 million) in August, while JMU was contracted to build the second vessel for about 132.4 billion yen ($920 million) in September, according to the ministry’s Acquisition, Technology, and Logistics Agency (ATLA).

These ships are scheduled to be commissioned in fiscal year 2027 and 2028, respectively.

The ASEVs will be 190 meters long, 25 meters wide, and have a standard displacement of 12,000 tons. The new ships are equipped with the SM-3 Block IIA, which boasts high interception capabilities against ballistic missiles, and the SM-6, which can intercept cruise missiles and hypersonic glide vehicles (HGVs).

The ships also have a whopping 128 missile launch cells, the most in the world. The ASEVs have the “scalability” to be able to add U.S.-made Tomahawk cruise missiles, the upgraded version of Japanese Type 12 surface-to-ship missile (SSM) (ship-launched type), and high-power laser weapons for drone interception after fiscal year 2032. With such aerial defense capabilities, some have called the ASEV a “super Aegis ship.”

And the “eye” of the Aegis system, or the core of the system, is the SPY-7, which Lockheed Martin calls “the world's most advanced multi-function radar.”

The Defense Ministry said the radar has five times the tracking capability of the conventional SPY-1 radar, and will be able to deal with lofted trajectories and multiple ballistic missiles at the same time.

During the journalist tour, Lockheed Martin emphasized that production of the SPY-7 is progressing smoothly in line with the ASEV schedule to be commissioned in 2027 and 2028.

There is another strong reason why Lockheed Martin earnestly promoted the SPY-7 radar. As mentioned above, it hopes to supply the radar for another class of JMSDF vessels.

Japan must decide whether the successor to the Kongo-class Aegis ships, which are nearing retirement, will adopt the SPY-6 radar made by the U.S. firm RTX (formerly Raytheon Technologies) or Lockheed Martin’s SPY-7 radar. The next year or two will be the peak of sales efforts for both companies.

Currently, the JMSDF has a total of eight Aegis ships: four Kongo-class, two Atago-class, and two Maya-class. The first Kongo-class ship, JS Kongo, was 31 years old as of March 2024, the second (JS Kirishima) is 29 years old, the third (JS Myoko) is 28 years old, and the fourth (JS Chokai) is 26 years old.

Among the JMSDF destroyers, the former helicopter destroyer JS Hiei recorded the longest period of service, reaching 36 years and four months in March 2021. And so the Kongo class is certainly nearing the end of its lifespan.

The Defense Buildup Program approved by the Cabinet in December 2022 calls for the acquirement of 10 Aegis ships, two more than the current eight. In its budget request for fiscal year 2025, the Defense Ministry has requested 3.3 billion yen in technical research costs to study a successor to the aging Kongo-class Aegis ships.

Will the successor, called DDG(X), use the SPY-6 or the SPY-7?

The U.S. Navy is expected to install the SPY-6 on 65 ships of seven types (DDG Flight III, DDG Flight IIA, CVN-74, CVN-79, LHA-8, LPD-29, and FFG-62) by 2033.

Considering future interoperability with the U.S. Navy, there is a strong opinion that the SPY-6 should be a better choice for Japan, even if the SPY-7 was adopted on the ASEVs. In response, Lockheed Martin argued that “the SPY-7 radar is fully interoperable with other SPY radar systems and will deliver IAMD [Integrated Air and Missile Defense] capability.”

The selection of the radar for the Kongo-class successor is likely to have a major impact on Japanese companies as well. Mitsubishi Electric announced in July 2024 that it had signed a supply contract with RTX to deliver the power supply unit, a core product of the SPY-6. If the JMSDF adopts the SPY-6, Mitsubishi’s orders are expected to increase.

Meanwhile, Lockheed Martin says it “is in active discussions with Japanese industry for sustainment and manufacturing of the SPY-7 radars for future ships.” This suggests there is a possibility that the firm will find an opportunity to win the competition, for example, by allowing Mitsubishi Heavy Industries and others to license production.

The third point of emphasis on the “Japan Media Day” was the promotion of new defense equipment such as the container-type Mark 70 PDS VLS.

Lockheed Martin announced in May that it had launched a PAC-3 MSE missile from the Mark 70 container launch platform at the U.S. Army’s White Sands Missile Range in New Mexico, and successfully intercepted a target, a cruise missile, in flight. This test was the first time that a PAC-3 MSE was launched using a virtualized Aegis weapon system and intercepted an actual target.

Japan has been deploying the PAC-3 MSE, an improved version of the conventional PAC-3 with a protection range more than doubled. According to Lockheed Martin the vertical launch system PAC-3 MSE canister holds one missile and can be attached to all existing Mark 41 systems.

Lockheed Martin said that “the integration of the PAC-3 MSE into the Aegis Weapon System will deliver an enhanced IAMD capability to U.S. sailors.” This suggests the company is now considering selling it for the JMSDF’s Aegis ships as well.