“We actually have a very wide, and I would say sophisticated drone industry here. I say wide because it's not deep. I'm sort of impressed by the quality of the entrepreneurs and the quality of the ideas that they have, but none of them scale. … Everyone gets mad at me when I say that. And when I say scaled, I mean, tell me where you are on the log chart versus 8 million a year. Because that's what scaled looks like. It's not having made 1,000 last week.”
ChinaTalk · Geopolitics & World Affairs · October 2026
Asked where the bottleneck is in US drone production, the acting head of the Defense Innovation Unit says it is in the component supply chains. He goes on to describe the department's first orders for drones that use no Chinese motors or battery packs.
Transcript
about it. Be transparent.
…way up? Or do you want to see a more expanded like tier two, tier three supplier base in the United States? And I guess the question would be, if that doesn't get solved, is that indicative that there is a bubble because we're not able to grow the base enough to actually feed the need that we have?
Yeah. One of my theories is to try to not be too prescriptive about the market structure on the basis that if you just consistently apply demand, the market structure will end up in a sort of optimized sort of place. My own view is that this is something where vertical integration is not the goal from our point of view. From the United States Department of War's point of view, you'd like to have a diverse set of vendor bases across all the way, not single-threaded through anyone. It would be nice if some of these factories and component suppliers were dual use so that we're getting the benefit of coming down the cost curve from commercial demand. But my key issue is to broadly not be prescriptive. I do think, and you're quite right, that the components, the component supply chains are the ones that are immature. We actually have a very wide, and I would say sophisticated drone industry here. I say wide because it's not deep. I'm sort of impressed by the quality of the entrepreneurs and the quality of the ideas that they have, but it's not, none of them scale. Like literally, and they get everyone gets mad at me when I say that. And when I say scaled, I mean like, tell me where you are on the log chart versus 8 million a year. Because…
So to build those, you need mineral supplies that are outside China and processing outside China because you need permanent magnets. You need lithium and other components that go into batteries. So how big do you think the market needs to be to incentivize the companies to then pay for suppliers to…
Yeah, that's a good question. You asked the exact question I never like answering. Because of course, I was very careful with what I said. I said Chinese battery packs, not sells, right? Because the chemistry we can't do outside. We broadly can't do the rare earth magnets in those brushless motors…
That's what I was going to ask. Do you see efforts across the government to try to maybe coordinate the demand signals sufficiently to drive that? Because obviously there's all these areas that have Chinese dependencies like packaging and printed circuit board manufacturing or production. All those…
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