How Silicon Valley Can Reindustrialize America
Inside Anduril’s bold bet on American defense manufacturing
David A. Cowan writes on Substack at The American System and is a non-resident fellow at the Foundation for American Innovation. He has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, and FUSION.
Peace through strength has been an enduring doctrine in American foreign policy. From Teddy Roosevelt’s big stick to Ronald Reagan’s Star Wars program, successful presidents have understood this instinctively. But the nature of war, as in all things, is ever-changing. Measuring defense capabilities by the size of the Pentagon budget or the number of military personnel does not tell you everything you need to know about how well prepared the country will be for future conflict. The quality and lethality of the technology and equipment available, as well as the ability to manufacture them securely and at speed, are also essential. One company drawing attention to the role of defense and technology in reindustrializing and protecting the country is Anduril Industries.
Founded in 2017 by Silicon Valley entrepreneur and VR pioneer Palmer Luckey, Anduril (meaning ‘Flame of the West’ in J.R.R. Tolkien’s Elvish language and the name given to the hero Aragorn’s sword) announced their new factory in Columbus, Ohio. Arsenal-1, an over 5-million-square-foot complex near Rickenbacker Airport, will employ 4,000 people and manufacture drones, missiles, and high-tech weaponry. This is supported by $452 million of tax credits from the state and $70 million from the All Ohio Future Fund to build a new taxiway and other improvements at the airport to ensure the quick delivery of Anduril’s products. JobsOhio will also provide grants to support workforce training. Arsenal-1’s first products will start being made next July and join Anduril’s factories in Georgia, Mississippi, and Rhode Island, as well as contracts in Australia and the UK. Working with Microsoft, Anduril is also testing a visual augmentation program for the US Army to help improve “beyond line-of-sight perception capabilities,” such as detecting drones and navigating battlefields. Over the past six months, the company’s valuation doubled to $28 billion.
This is the launch of Anduril’s project to reindustrialize the heartland through defense manufacturing. It is not just clever branding to based cutting-edge technology in an area rich with industrial heritage. Anduril is evoking a time when defense elites dreamed big and defense technology was viewed as a public good. FDR spoke of the United States being an “arsenal of democracy” during the West’s darkest hour. The marketing for Arsenal-1 has deliberately tapped into a broader patriotic sentiment about how manufacturing and defense go together. The posters and slogans have relied on an aesthetic that appeals to the MAGA-Tech Right alliance and could inspire other entrepreneurs and engineers to follow.
This has been a long time coming. Luckey originally made his name in VR when he founded Oculus, which he later sold to Facebook in 2014. After being fired for donating to a pro-Trump PAC in 2016, he started Anduril and piloted autonomous surveillance technology to help guard the southern border. This brought the condemnation of progressives, who wanted to undermine the first Trump administration’s efforts to get illegal immigration down. But when Russia shamefully invaded Ukraine in February 2022, Anduril was able to send essential AI-enabled drones to the Ukrainians. The truth is that no country can survive without borders.
Support for national security efforts have not always been a given in Silicon Valley. Employees at Google famously protested when the company agreed a defense contract with the Pentagon. Hostility towards defense in Silicon Valley inspired Palantir CEO Alex Karp to relocate the company to Colorado. Notably, Karp supported Joe Biden’s re-election and Kamala Harris’s presidential bid. Palantir (named after the ‘seeing stones’ of Tolkien’s The Lord of the Rings) is an AI and software company that helps to identify terror cells, cyber networks, and roadside bombs, as well as providing support to ICE and other law enforcement agencies in the United States and globally. Palantir shares had increased 13-fold in two years and stand at $260 billion, though its stock took a hit after Defense Secretary Pete Hesgeth ordered an 8% cut to the Pentagon budget. The company has come a long way from being a $30 million startup in 2003 with help from Peter Thiel.
New defense tech startups are happening like Texas-based Saronic, which has raised $600 million to build ‘Port Alpha,’ a shipyard for autonomous vessels. Hadrian and Shield AI are other promising ventures. We have already seen the growing military role of AI, drone warfare, and Starlink in the Ukraine War. These areas are big business, and Big Tech is starting to realize that. Alphabet and Meta dumping DEI and misinformation policies is surely a taster for what is to come. These changes beg the question of what technological innovation is for. Instead of creating new distractions for people, tech companies have to potential to transform lives and the nation’s security. Importantly, the Pentagon needs a fresh injection of expertise and ideas in the face of a rapidly changing battlefield.
This can also deliver major benefits for the country’s industrial base. Silicon Valley can build factories, create jobs, and upskill people across the country. Arsenal-1 could be replicated in other places with major benefits for communities at a time when wide swaths of what was once the most productive industrial land in America sit underutilized. That would address a connected problem: our lack of top-flight military technology.
It would also bridge the gap between two parts of the nation: namely, a mobile and highly educated tech elite and a more rooted, non-college-educated working class. Beyond these domestic benefits, cultivating a vibrant defense tech sector is essential to military preparedness. In the event of large scale war, the United States cannot depend on imports from any other country. Europe has already hallowed out its defense industrial base with disastrous consequences. To be secure and strong, the United States needs cutting-edge, lethal weaponry made at home.
The Silicon Valley mindset of “move fast and break things” does not always work well in government, but the status quo must not continue. DOGE’s rampage through the federal bureaucracy, however worthy its goals might be, could destroy much more than it creates. But that is not to reject the idea that Silicon Valley talent can improve efficiency and innovation in the federal government. In fact, nowhere is this more desperately needed than in defense. China has a well-funded and large military that is being built up to establish regional hegemony in the Pacific, with Taiwan firmly in its sights. It is no longer true—if it ever was—that the United States innovates while China imitates. There is an international tech race gathering speed over AI and robotics.
In some ways, the United States needs to get the basics right, such as reshoring domestic steel and aluminum supply. The Trump administration’s 25% tariffs can help in this effort. Securing the semiconductors needed to power new technology is also essential. But the federal government can only do so much on its own. As in every era, the country needs the best business brains to guarantee the resilience and innovativeness of its defense industrial base. Arsenal-1 is performing that role in a powerful way. But the country needs more companies like Anduril.
Palantir’s Karp has been giving a similar pitch to his counterparts in the tech industry. Palantir’s Chief Technology Officer Shyam Sankar has authored a substantial essay on the need for reforming defense procurement, calling out post-Cold War monopsony in the defense industry. This shift away from progressive causes, such as climate action and identity politics, and toward defense should be encouraged through a mixture of federal policy and branding. There are ways in which government can be reshaped to facilitate this process, but it should be driven in part by a broader cultural shift toward national service over the next few years. Some modest moves in this direction came under the Obama and Biden administrations with the founding and expansion of the Defense Innovation Unit. But the new Trump administration could push things further.
To enable the emergence of more companies like Anduril and Palantir, the federal government needs to make sure tariffs are introduced alongside a broader defense industrial policy. Higher tariffs make steel and aluminum more expensive for domestic manufacturers by shutting out cheaper options from abroad. But they can be compensated for this through the extension of full expensing for investments in new plant and machinery, which would expand to cover longer-lived assets. This should be a priority for Republicans as they look at what provisions to extend under the Tax Cuts and Jobs Act. You cannot have high tariffs and a burdensome regulatory and tax regime at the same time. Abundant, affordable, and reliable energy is another crucial component.
The Pentagon should overhaul its procurement process for defense tech startups to ensure the right incentives are in place. It ought to be easier for companies to get a start in supplying innovative technology to the military. DARPA does an excellent job at supporting the upper echelon of advanced new tech in the very early stages, but there is more the federal government can do to help companies scale up and build out industrial capacity more broadly. There are powers currently available to Pentagon leadership; they just require the political will to use them properly. More drastic action might be needed, such as scrapping join requirements to allow greater experimentation. In exchange for ease of access to government contracts for the most promising ideas, there should be conditions requiring companies to establish factories domestically and use a certain percentage of American-sourced raw materials. Beyond improving our industrial base, this would send a message that the defense tech industry has an obligation toward national strength as well as their own bottom line.
There should also be greater effort from the Pentagon to help sell the benefits of new defense tech to the American public. Spotlighting American champions, startups, and founders in improving national defense can be actively pursued. Turning the development of new technologies into public events would also help. People around the world watched Boom’s first supersonic flight test a few weeks ago. Their plane has now paved the way for commercial supersonic travel. Expos and other events could turn new defense tech into a public spectacle and object of national pride. This would help inform the public about how innovations in defense have long supported advances in other areas, from microwaves to satellites.
Reached for comment about their work, Anduril’s President and Chief Strategy Officer Chris Brose said:
Anduril has long recognized that technological innovation isn’t worth much unless it’s paired with production at scale. We’ve been building towards this from the beginning. We’re using common software across all our hardware that accelerates design, development, and fielding. We’re building hardware that’s open, modular, and as simple as possible. And we’re committed to investing private capital ahead of need to build the industrial capacity America and its allies so desperately need.
Relying on old technologies, institutions, and mentalities will not provide the United States the dynamism needed to compete with its geopolitical rivals. Technological progress has been at the heart of the republic’s ability to thrive. The internet age brought about massive changes in American life, and so will AI and robotics. But the United States must ensure its military does not just keep pace with changing technology. It must be world leading and not surrender its technological advantages to China. Anduril and other firms are at the vanguard of a defense tech wave that has the potential to reinvigorate the industrial base and prepare the republic for the future.