What major industry trends are you seeing in the A&D markets and how is Mercury Systems responding to them?
We’re at a very interesting juncture in the defense industry where DoD spending is expected to increase and our customers need high performance technology brought to market in shorter periods of time. More than ever before, we’re seeing increasing demand for RF components, modules, and subsystems that aggressively push the boundaries of SWaP-C. At the same time, our customers are looking to simplify their supply chains by working with fewer, but more capable suppliers. Only the strongest, most agile suppliers can rise to meet all of these challenges.
Mercury has acquired many companies over the last few years, how are all of these businesses coming together today?
Mercury’s acquisitions in the RF and microwave space have been careful and deliberate steps. Each acquisition brings a complementary set of technologies that we integrate to build a more comprehensive product portfolio. To achieve maximum efficiencies, we’ve consolidated our RF and microwave design and production capabilities into three regional facilities called Advanced Microelectronics Centers or AMCs. Our AMCs are strategically located in close proximity to many of our key customers. With engineering and production resources co-located in the same facility, Mercury Systems is positioned to be the one-stop resource for any high performance RF application.
With these acquisitions, Mercury Systems has become a complete end-to-end systems supplier – what opportunities and leverage has this given the company?
Mercury Systems takes great pride in being the only commercial supplier offering solutions along the entire sensor chain. Customers are increasingly recognizing Mercury Systems as the lowest risk choice for the most sophisticated RF microelectronics. We take the risk out of adopting cutting-edge technology that gives our military forces the biggest advantage in the battlefield. One example of how we do this: We’ve standardized our engineering design principles, the equipment on our manufacturing floors, and the processes we use to build our products across all three of our AMCs. This allows us start a new design at one AMC and support production at one or more of our three regional facilities. The ability to quickly ramp production at any of our sites without sacrificing quality is incredibly valuable to the defense community.
Mercury Systems has won several recent contracts on EW platforms, what advantages are you bringing to the market in this area?
Mercury Systems has a leadership role in SWaP-optimized RF microelectronics for electronic warfare (EW) platforms. That certainly contributes to our success. But I think it’s important to acknowledge the true value that Mercury Systems brings to our EW customers. When you combine our broadband components and modules with other Mercury Systems technologies – secure processing, digital RF memory techniques, for example – customers have access to pre-integrated, customizable building blocks. By providing a pre-integrated subsystem, we lower the technical risk for our customers, reduce their overall costs, and minimize the possibility of program delays. That’s a winning combination.
There has also been a lot of activity in guided munitions for Mercury Systems. What unique technologies do you have in this area?
Our expertise in advanced packaging is a perfect fit for the weapons market, where size and weight need to be minimized without sacrificing performance. By tightly integrating our engineering design resources with our production capabilities, we design for manufacturability from day 1. We can pack more performance in smaller spaces than any other supplier – and we can ruggedize it to survive the harsh environments that a weapon encounters. Some suppliers can do this once or twice, but we do this in high-volume production every day.
Mercury Systems has established several centers of excellence at various facilities; can you tell us about these centers and how they service your customers?
We now have three Advanced Microelectronics Centers (AMC) for RF and microwave technologies – two in the Northeast and one in Southern California – in addition to a digital microelectronics AMC in the Southwest. These facilities have been purpose-built with interoperability in mind, and capitalized with the same manual and automated equipment. All of our facilities are interlinked with common ERP systems and common design and quality standards. As the only supplier to the defense community that can offer this level of scalable production capability, Mercury Systems can support military programs of any size from prototype through full-rate production.
What are the major areas of growth you see in the near future for Mercury Systems?
As you mentioned earlier, we’ve won a number of contracts in EW, and we have a pipeline full of new EW opportunities where we are well-positioned. As our military forces encounter more threats in the electromagnetic environment, there’s a tremendous opportunity for our high-power GaN technology in electronic attack applications. Looking at other areas: The capabilities acquired from the Microsemi carve-out acquisition last year have given us a strong foothold in the weapons market. Customers are bringing us more opportunities to support major weapons programs, including guided munitions and ballistic missile defense.
The capabilities from the Delta acquisition this year further expands the scale and breadth of technology portfolio. Mercury Systems’ customers now have access to high-power, high-frequency active and passive components and subassemblies that are ideal for space applications, satellite communications, and datalinks. Response from our customers in these areas has been tremendously positive.
What are some of the new areas of technology Mercury Systems is investing in and how do you expect these to pay off?
Commercializing innovations that matter to the defense community requires a substantial investment, and we scrutinize those investment dollars closely. With our next-generation business model we are uniquely positioned to support both incremental improvements in technology and more disruptive technologies that offer new capabilities to our customers. On the more disruptive end of the spectrum, we’re using our packaging expertise to miniaturize EW capability small enough that it can now be integrated on-board a weapon. This opens up a whole new market for Mercury Systems, integrating two of our core strengths – EW and weapons.
Along the lines of more traditional investment, we’re also supporting Mercury Systems’ team in Huntsville, Ala to advance OpenRFM with custom-engineered RF MMIC’s, components, and modules. Just as Mercury Systems was a champion for OpenVPX in the digital world, we can give customers in the analog domain the same benefits with OpenRFM. By adopting open architecture platforms, it’s a win for Mercury Systems and our customers. Mercury Systems accelerates its time to market for the latest technologies, and our customers can future-proof their investment.