COTS military electronics is bright spot in otherwise dismal VME embedded computer market

By John Keller

FOUNTAIN HILLS, Ariz., 3 Feb. 2008. Growing demand for commercial off-the-shelf (COTS) military embedded computing is one of the few bright spots in an otherwise dismal market forecast for VME, VPX, and VXS computer boards, according to a market forecast released today from the VITA open standards and open markets trade organization in Fountain Hills, Ariz.

Although the overall U.S. Department of Defense (DOD) budget should decline over the next several years, an increasing emphasis on systems upgrades and technology insertion on existing military platforms -- particularly for signals intelligence (SIGINT), intelligence, and data monitoring -- should keep demand for rugged high-reliability board products stable or in growth mode, according to the VITA 2009 State of the VME Technology Industry report.


"The established SIGINT board vendors should be prepared for an onslaught of ragtag industrial and telecom board makers, covered in flaming financial napalm, rushing into the MIL/COTS board market."

In fact, the VITA report predicts an overall DOD electronics spending shift away from military weapons platforms and towards SIGINT and intelligence gathering, primarily in response to the continuing global war on terror.

Meanwhile, demand for VME embedded computers for the industrial and telecommunications sectors is dropping sharply, and demand for VME board products for medical applications is slowing, according to the VITA report.

As a result, VME board companies that may be in financial trouble due to their pursuit of the industrial and telecommunications markets can be expected to start pursuing the military market aggressively -- sometimes to the detriment of VME's strong reputation in military and aerospace applications.

"If there is a military spending shift under the Obama regime, away from weapons platforms and to SIGINT and intelligence-gathering platforms, the established SIGINT board vendors should be prepared for an onslaught of ragtag industrial and telecom board makers, covered in flaming financial napalm, rushing into the MIL/COTS board market," says VITA Director Ray Alderman in the report.

"They will slap a DSP [digital signal processing] chip or an FPGA [field-programmable gate array] on some board form factor, certify that it has passed some convoluted testing level, and represent it to the primes as 'good to go' in critical MIL applications," Alderman writes.

Aside from the promising military market for VME, VPX, and VXS embedded computer boards, demand for VME in the industrial sector continues to be hurt by falling sales of automobiles and semiconductor equipment. "With car loans difficult to get and demand for new cars falling, this market sub-segment for boards has nearly disappeared," Alderman writes.

"The semiconductor equipment industry also declined significantly in 2008," Alderman continues. "As a result, the demand for semiconductor manufacturing and handling equipment has declined for several years. This trend has also created a glut of cheap semiconductor handing equipment on the used market."

The telecommunications market for embedded computer boards remains a long-term disaster. "The market for telecom-targeted board products is the same in 2008 as it was in the previous few years: a disaster of Biblical proportions," Alderman writes.

Continuing tough times for the embedded computing industry is because of instability in the banking system, a decline in general economic activity, and an new presidential administration in Congress, Alderman writes.

For more information on VME technology or on the State of the VME Technology Industry report, contact VITA online at www.vita.com.


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