Anduril, the defense startup with a valuation of $30 billion, has been constantly evolving. In May, it entered into a partnership with Meta to create virtual reality tools for the U.S. Army. By July, it had secured a $100 million contract for the development of the Army’s command-and-control software. In August 2025, it marked its position as the third leading supplier of rocket engines to the U.S. government and is now in the race to build the ‘Golden Dome’ missile-defense system. It’s also expanding its footprint globally with new offices in Seoul and Taipei. Many have been captivated by Anduril’s rise, suggesting that future warfare innovations are sprouting from regions like Ukraine and endorsing the notion of producing affordable, high-volume weapons as a strategy against China.
Undoubtedly, Anduril and similar neo-defense tech companies have shown promise. However, consistency and uniformity in viewpoints concerning future warfare call for some critical examination. Firstly, any assertion that a less expensive option is superior should be met with skepticism. It’s not impossible, but it is uncommon. Secondly, it’s essential to evaluate companies on their business models and incentive structures, rather than their proclaimed patriotic motives. The proclamation that cheaper weapons will triumph seems to be an overreaction to Ukraine’s situation and could potentially steer the U.S. into risky business models that endanger its success in future wars.
Looking back, the five key defense contractors – Lockheed Martin, Raytheon, Northrop Grumman, Boeing, and General Dynamics – have not always received positive press, sometimes for valid reasons. China has demonstrated supreme efficiency in manufacturing military equipment such as warships, aircraft, missiles, and other weapons. Concurrently, China has been catching up with U.S. technological sophistication and quality. Although these key contractors have created exceptional capabilities for the U.S. military, they appear to have lagged in terms of modern production rates and software development, causing a stagnation in America’s industrial base.
Emerging from this challenging scenario, a new group of companies promises to relieve America from its defense manufacturing struggles. This includes Anduril, Helsing, Saronic, Epirus, and Shield AI, which belong to the genre of neo-defense tech enterprises. For a considerable time, Silicon Valley held back from engaging with the U.S. government due to ideological differences and the complex government procurement process. However, in the past five years, resistance to the Valley’s traditional apathy for national defense has increased. The idea of ‘patriotic investing’ – the belief that private funding can spark innovation beneficial for national interests – is gaining traction.
A prominent narrative being pushed by many neo-defense tech companies and their venture capital backers is the importance of mass production of inexpensive weaponry in contemporary warfare. Using the Russo-Ukrainian War as a key reference point, they argue how Ukraine has managed to resist Russian aggression by utilizing drones and other asymmetrical capabilities to invert the ‘cost exchange ratio’ in warfare. The idea is to use low-cost weapons to challenge armies that depend on high-priced resources such as aircraft, ships, and tanks, forcing them to exhaust their expensive arsenal. The U.S. Navy’s encounters with the Houthis in the Red Sea echo this theory.
Furthermore, the fast consumption of NATO’s weapons reserve in aid of Ukraine has revealed the limitations of American and allied productive capabilities. From this standpoint, the solution advocated is an industrial revival focused on mass producing inexpensive weapons. Based on the principle of ‘cheap mass,’ several neo-defense tech companies propose a range of solutions, from ShieldAI’s air drones to a number of firms marketing explosive surface torpedoes. On the surface, the add-on benefit to this approach is said to be the creation of numerous stable, well-paid jobs in the American manufacturing industry.
However, there are a couple of key issues with this narrative. Firstly, cheaper does not always translate to better or even cost-efficient. Ukraine’s approach to adopting asymmetric tools has been backed by advanced air defense systems, intelligence support, and cutting-edge missiles provided by the United States and Europe. In spite of neo-defense tech insiders denouncing pricy assets like aircraft carriers and F-35s, small, slow, non-stealthy drones are not the ultimate solution. The U.S. had to rely on stealthy B-2 bombers, submarine-launched cruise missiles, and fourth and fifth-generation aircraft to neutralize Iranian air defenses.
Moreover, using the protracted artillery conflict on the European mainland between two underfunded, personnel-strapped, and ill-trained militaries, as a comparison for a superpower conflict in the Indo-Pacific, is not apt. Unmanned surface vessels offered a strategic advantage to Ukraine primarily due to their ability to launch them from the coast for short trips and Russian inefficiencies in surface warfare, which offered easy targets. However, in the Indo-Pacific, larger manned warships will be required to deploy these unmanned surface vessels.
Moreover, unmanned underwater vehicles wouldn’t stand a chance against the range and firepower of America’s cost-intensive nuclear-powered submarines. There is a legitimate concern that by overemphasizing the teachings from the Ukrainian battlefield, we could potentially jeopardize strategies for deterring (or, if need be, defeating) China.
Secondly, it’s nearly impossible to generate substantial wealth from selling low-cost hardware, even in large quantities. While the patriotic inspirations sung in neo-defense tech press releases sound alluring, they do not alter the underlying economics. A company typically turns a profit selling inexpensive items when they need to be frequently replaced, which would necessitate a significant war. Betting a company’s future on the likelihood of a devastating global conflict is not a sound business strategy.
Conventional defense contractors manage to sustain their production lines in times of peace through foreign sales. However, if the product being manufactured is cheap and easily replicable, allies and partners could potentially develop their own alternatives – and they already have begun to do so. In the absence of conflict, the question arises: how will neo-defense tech companies profit from selling cheap hardware? When all the needed frontline equipment has been sold and warehouses are stocked with spare parts, what’s the next move?
This dilemma reveals a fundamental shift in business models. The buzzwords for the day are ‘software-defined’ weapons and ‘collaborative autonomy’ (think drone swarms). The ‘cheap mass’ concept necessitates that weapons communicate with each other: a multitude of small units, working together, can dismantle a large, expensive enemy target. This capability, however, demands a comprehensive command-and-control system, especially as the number of weapons begins to surpass the number of human operators.
This future system-of-systems will need a unified battle-management software or perhaps a few software suites that can effectively communicate with each other. For companies like Anduril, this software is ‘Lattice’; for ShieldAI, it’s ‘Hivemind’; for Helsing, it’s ‘Altra’; for Saronic, it’s ‘Echelon’. Despite the theoretical capacity for all these software systems to weave together under the defense standardization program’s ‘modular open systems approach’, a ‘zoo of systems’ is neither scalable nor especially profitable for individual companies.
‘Cheap’ may not equate to cost-effectiveness in the long run. This isn’t to suggest that neo-defense tech products are lackluster or pointless, or that making a profit is wrong. Instead, the focus should be on their real business model. This isn’t centered around creating jobs for American citizens or winning wars per se, but rather on licensing and continuously updating software.
This orientation to profit from selling software-as-a-service raises a conundrum: not everyone can win this competition. The military doesn’t need an array of command-and-control systems, nor can they be efficiently coalesced, even through modular open systems. This means that the future will likely not consist of the existing five primes being replaced by hundreds of contractors or thousands of medium-sized enterprises. We might end up seeing just six or seven prime companies instead.
In conclusion, while neo-defense technology companies might offer significant products, they are also promoting a specific narrative. It’s only fair to critically evaluate such narratives, particularly when the authors stand to gain from them. The debate isn’t just about the usefulness of the weapons currently used in Ukraine for the United States, according to these new companies. More crucially, it’s about whether the United States should commit to a specific combat strategy based on these weapons. Prudence is a key factor in determining an effective war strategy and it shouldn’t be overshadowed by technological innovation. Being skeptical in this case is a reflection of prudence, not resistance to progress or aversion to technology.
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