Anduril’s Luckey Wants China Cut Out of US Defense Supply Chain

The supply chain for US defense manufacturing is too reliant on China, Anduril Industries Inc. founder Palmer Luckey said on Friday, shortly after new tariff threats by US President Donald Trump sent the markets skittering.

“We have to get off the Chinese supply chain,” Luckey said in an interview with Bloomberg Television. “We need to reindustrialize. We need to have our own rare earth supply and make our own chips and computers. China has a lot of leverage.” Anduril has made strides decoupling from the country, Luckey added. “Anduril is not what I’m concerned about.”

The tariff warnings are just the latest volley in US-China relations that will impact businesses, Anduril Chief Executive Officer Brian Schimpf told Bloomberg TV. “I think it’s going to be a long-run conflict with China, and that’s just something that we’ve got to be prepared for,” he said.

Anduril is the largest in a growing crop of defense technology startups aiming to modernize the US military using artificial intelligence and autonomy software to command drones, fighter jets, submarines and other vehicles. The boom in the industry is driven in part by rising competition with China.

Schimpf said that he expects the company will double its revenue this year to more than $2 billion, and boost production by 400%. Luckey said that production would likely again rise by that amount next year.

Companies like Anduril and publicly traded Palantir Technologies Inc. have long been focused on China as a potential adversary, as they work to build out US defense technology. Speaking on Bloomberg TV, Palantir Chief Technology Officer Shyam Sankar said that a conflict between the countries has been “brewing for the better part of 50 years.”

“No country has done more to alleviate poverty in China than America,” he said. “No country has done more to undermine American prosperity than China.”

Palantir’s stock has been on a tear in recent years, climbing more than 2,000% since 2022. The company has been buoyed by surging demand for its AI software. China has “pound for pound more capacity,” Sankar said. “We have the best software as a nation in the world.”

Venture investors have increased their focus on the defense sector in recent years — driven by fears around geopolitical tensions, and optimism about reforms to US procurement policies that could benefit startups. Some in the industry are particularly worried that the US would fare poorly in a drone arms race with China, and are eager to build out manufacturing capacity, part of a costly endeavor to create new US defense factories. Investors poured almost $20 billion into the defense tech sector in the second quarter of this year, according to PitchBook, up 200% from the previous year.

Anduril, backed by venture firms including Peter Thiel’s Founders Fund and Andreessen Horowitz, was last valued at $30.5 billion. The company counts the US and allied countries including UK, Australia and South Korea as customers, helping the 8-year-old startup surpass what it has said will be $6 billion in global contracts by the end of this year.

The company is currently in the early phases of building out a nine-building megafactory in Ohio on a site the size of 87 football fields that will ultimately employ around 4,500 people. Called Arsenal I, the facility will use advanced manufacturing robotics and other methods to make drones, missiles, mini-fighter jets and other products.

“We’re moving out of an era where we need to make relatively few very, very expensive high-end things,” Schimpf said. “We’re moving into an era where it’s much more about how do we have things that are at scale and smarter and more autonomous.”