Bullets:
The Pentagon is desperate to catch up to China and Russia, and has announced ambitious plans to “unleash US drone dominance.”
But the Trump Administration’s Executive Orders to advance drone manufacturing in the United States ironically repealed previous restrictions on Chinese components in US military drones.
The removal of those restrictions were a boon to drone companies that source parts from China. That includes Unusual Machines, a company with Donald Trump, Jr. as a key investor and board member.
The President’s son has other investments in drone companies, who have also been awarded large Pentagon contracts. Anduril now carries a private valuation of over $30 billion.
But the performance of the drones themselves is poor, in testing with the US military, and under battlefield conditions in Ukraine. The US Navy and Air Force accuse the companies of “misguiding” them, and operators in Ukraine refuse to deploy US drones at all, even though they’re free.
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This is a transcript, for the YouTube video found here:
Report:
Good morning.
For an idea of how terrible things are, this chart is very helpful. It’s the stock price for Unusual Machines. Unusual Machines manufactures drones. Just after the election last November, President Trump’s son joined the company as an advisor and bought a lot of stock in the company. Donald Trump Jr. now owns over 300,000 shares, worth about $4 million.
This year, Unusual Machines won big contracts with the Pentagon to build drones for the Defense Department. So this is a stock that should have gone straight up, but instead is lower today than when Trump took over from Biden.
We shared before that the Defense Department has big plans for drones, and announced a big effort to “unleash US military drone dominance”. Soon after, Unusual Machines was awarded the contract to build drone motors for the Army, in drones used in recon and surveillance.
The Executive Order which Trump signed to build up the drone industry in the US repealed previous restrictions on where the technology needs to come from. And at the beginning, it was the removal of that restriction that goosed the shares of the companies that build the drones. Previously, strict regulations prevented the Pentagon from buying drones and parts made by Chinese companies. That restriction went away with Trump’s Executive Order, and that paved the way for Unusual Machines to bid on the new contracts to provide drones, because Unusual Machines sourced their motors from China.
The Blue UAS program maintains a list of companies that are allowed to be used by the Pentagon. Suddenly the list now includes drone parts built by companies in adversarial companies, and most of the drone systems that have been cleared for Pentagon use are sourced in China.
Naturally defense officials have mixed opinions about all that. One anonymous former official says that Chinese components are everywhere now in Pentagon drones, the motors, the batteries, and the speed controllers. He remembers fondly the days of a few years ago when nobody thought about raw materials, rare earth metals, or where parts come from. Now everyone knows all those things come from China. He goes on to worry that the Chinese may be building backdoors or geofences into their batteries, or something.
Most experts understand though that there is no real vulnerability to any of that—it’s just another example that China owns the supply chain for yet another thing the Pentagon wants to build. Simple components don’t create a high risk of exploitation; the real problem is that the economics don’t work for American companies to bother building them. A drone requires four motors. Chinese motors cost $12 to $25. American drone motors cost $100 to $200. So the cost of the motors for a simple, cheap drone will cost $48 bucks if using made-in-China motors, verses $400 if you want them built in the US.
Here’s another official’s take on the supply chain problem: if a hot war kicks off, sea lanes cut off, supply lines shut down, we’re not going to have access to those motors. ‘Sourcing drone parts from China is a bad strategy.” He’s worried here, that a shooting war with China will lead right away to an economic embargo, and naval blockades. If that happens, nobody is going to care—including him—about when the next shipment of cheap drone motors might get here from Shenzhen. It will be the last thing anyone cares about. During COVID Americans were fighting over toilet paper. Balloon goes up against the Chinese, and nothing is coming in, from anywhere.
So for now, there’s no getting around the China problem. And because the motors are so cheap, and simple, there’s not much the US government can do to change the situation. And the motors are just the first problem—the glass for the cameras that go into drones are made in China. Go through a bill of materials for any drone, and you’ll find a dozen parts that need a Chinese company to build them affordably, and on time. The Pentagon needs lots of new drones from wherever they can, and Unusual Machines and the other drone companies are happy to get the parts from wherever they can. President Trump signed the Executive Order that allowed Chinese drone parts makers to go on the UAS list, and that led right away to big contracts for the drone makers who get their parts from China.
For their part, Unusual Machines insists that the contract award had nothing whatsoever to do with the fact that the President’s son is now on their board, and it’s also just an amazing coincidence that he screened candidates for top jobs at the Defense Department, and pushed forward those who promised to invest in drones.
Besides Unusual Machines, Trump Jr. is an executive with a VC firm with investments in other companies—Firehawk Aerospace, Space X, and Anduril, and all of those have won big Pentagon contracts.
So on paper, everything should be great for these companies. They are very well politically connected; they were awarded big money-no-object contracts from the Pentagon, who spends more on weapons than the next ten countries combined. The Trump administration even changed the rules and now they are allowed to buy cheap parts from China, put them together, and slap their own company’s name on the side and pretend they’re “unleashing US drone dominance”. The companies are even going global: Unusual Machines is in partnership with a company in Puerto Rico to build a fleet of unmanned aircraft carriers, autonomous drones, anti-aircraft missiles and torpedoes.
And Anduril, another company in that portfolio, just contracted with Rheinmetall to build defense systems for Europe. Anduril’s Barracuda missiles and Fury drones will be developed, and new assembly lines in Europe for solid rocket motors, with a lot more projects on the way.
But instead of a vertical line that makes it look like the next Google, the stock is crashing and burning. And that’s because the drones themselves are. Shifting now to Anduril, recently conducting a big test with the US Navy: It was a launch and recovery test of 30 drone boats off California, and about half of them shut off automatically, and were dead in the water. That posed a navigation hazard to everything else floating nearby, so the Navy raced out to gather them up. In the report, the Navy ops guys said that the “company representatives misguided the military.”
That’s a bureaucratic way of saying they were lied to, we should think. Four sailors warned about chronic security and safety problems, and “performer misguidances”. Without urgent changes the Anduril drones pose an “extreme risk to force and potential for” guys getting killed.
The company’s software program, called Lattice, is sold to the Pentagon as a force integrator, allowing for multiple weapons to be deployed and handled by a single operator. But the system doesn’t work. In the case of the California drone test, the boats rejected commands and failed to navigate away from non-targets, so they had to shut the system down. Anduril says the fault was with the boats, which are builtby a different company, but that company said they integrate other software with no problem, and the Navy crews at the exercise says it’s on Anduril to make sure the software works before they give it to the Navy in the first place.
Another test in California, this time for the Fury jet. It had to be delayed by debris that caused engine damage. Up in Oregon, the company’s counterdrone system literally crashed and burned, causing a large fire there:
In another previous test, the drones performed so badly the testers themselves feared for their lives.
The company is privately held, and is worth $30 billion after racking up a bunch of contracts awards for the Fury jets and other systems. But their battlefield experience for their drones has been poor. They were used in Ukraine, briefly, but Anduril’s drones there were vulnerable to jamming. The Ukrainian operators gave up using them at all, because they kept missing their targets and blowing up stuff they weren’t supposed to.
Apparently, this industry is a lot more difficult, than simply buying some cheap parts from the Chinese and putting them into the air. We asked the question over a year ago. How bad must the American drones be, that the Ukrainians refuse to use them even though they’re free? What that can only mean, is that they have a negative utility on the battlefield. For soldiers in the field, it’s more risky for them to use the drones built by these companies, than just going without.
And another question that we like to ask, is just what exactly Anduril does, that’s worth a valuation of $30 billion, if they can’t even give their equipment away to guys in the fight right now, and if our own US Navy operators accuse the company of lying to them?
Be Good.
The Pentagon is desperate to catch up to China and Russia, and has announced ambitious plans to “unleash US drone dominance.”
But the Trump Administration’s Executive Orders to advance drone manufacturing in the United States ironically repealed previous restrictions on Chinese components in US military drones.
The removal of those restrictions were a boon to drone companies that source parts from China. That includes Unusual Machines, a company with Donald Trump, Jr. as a key investor and board member.
The President’s son has other investments in drone companies, who have also been awarded large Pentagon contracts. Anduril now carries a private valuation of over $30 billion.
But the performance of the drones themselves is poor, in testing with the US military, and under battlefield conditions in Ukraine. The US Navy and Air Force accuse the companies of “misguiding” them, and operators in Ukraine refuse to deploy US drones at all, even though they’re free.
Be good.
Resources and links:
Pentagon’s growing list of ‘made in America’ drones has a loophole for certain parts made in China
https://defensescoop.com/2025/11/20/dod-drones-blue-uas-list-chinese-parts-motors
The Pentagon wants to build millions of drones without Chinese parts. It’s off to a bad start.
Hegseth To ‘Unleash’ U.S. Drone Dominance. These Stocks Surge.
https://www.investors.com/news/drones-hegseth-pentagon-department-of-defense-ktos-avav-defense-stocks/
‘We Do Fail … a Lot’: Defense Startup Anduril Hits Setbacks With Weapons Tech
https://www.wsj.com/wsjplus/dashboard/articles/anduril-industries-defense-tech-problems-52b90cae
Forbes, Donald Trump Jr.’s Expanding Business: After Joining 2nd New Board, U.S. Contracts Followed
https://www.forbes.com/sites/zacheverson/2025/10/29/donald-trump-jr-ultimate-machines-defense-contracts-drones/
IBD, Trump Jr.-Linked Firm Rallies On Pentagon Wins, Unmanned Carrier Efforts
https://www.investors.com/news/unusual-machines-drones-donald-trump-jr-red-cat-unmanned-carriers-umac-stock-kratos/
Rheinmetall, Anduril Team Up to Jointly Produce Defense Systems for Europe
https://www.wsj.com/world/europe/rheinmetall-anduril-team-up-to-jointly-produce-defense-systems-for-europe-07e08b90
Ukraine, Israel buying Chinese civilian drones for combat use; shun US military-grade drones
The Pentagon wants to build millions of drones without Chinese parts. It’s off to a bad start.
Reuters Exclusive: US defense firm Anduril faces setbacks from drone crashes
https://www.reuters.com/business/aerospace-defense/us-defense-firm-anduril-faces-setbacks-drone-crashes-2025-11-27/
Ukraine, Israel buying Chinese civilian drones for combat use; shun US military-grade drones.
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