You're speaking primarily of guns and items, but is this system also applicable to ships as well?

Yep, absolutely. Not only ships, also ship components. Something that we really want to make sure of is that we don't want you to go through the process of, because you crafted your tier 1 item, you then have to disassemble it to just craft a tier 2 item. That is nonsense. We really want to enable players to have their item and then use the upgrade to actually still have the item, but then the better version of that.