Anduril Commits $3.7 Billion to Shipyard, Wins $2.9 Billion Navy Award in Defense Tech Coup

For old school defense contractors, it was Torpedo Tuesday.

Anduril Industries, the privately held defense tech firm founded by Palmer Luckey, revealed plans to build a $3.7 billion shipyard in Maryland yesterday. At the same time, the US Navy awarded the upstart defense company a $2.9 billion contract to make components for its prestigious, but delay-plagued, Virginia-class submarine program. For Anduril, best known for its autonomous drones and crafts, the deal signals it’s serious about taking on traditional defense giants.

New Business in the Old Line State

As the Trump administration has looked to shore up military capabilities amid wars in Ukraine and Iran, it’s turned to the tech sector to complement and compete with traditional defense contractors and invited Silicon Valley into the national security brain trust. In June, Andreessen Horowitz’s Marc Andreessen and former Thiel Capital COO Blake Masters, two leading defense tech investors, were appointed to a major Pentagon advisory board. Last week, Luckey and SpaceX’s Elon Musk were tapped to lead a Department of Defense review of the future of armed conflict alongside former House Speaker Newt Gingrich.

The Navy’s insatiable appetite for complex and mammoth ships and submarines has long tested the capacity of even the biggest military contractors. A Government Accountability Office report published last year concluded that the seven private shipyards constructing Navy vessels were not positioned to meet current goals. Take, for example, Virginia-class submarines: the US currently builds about 1.3 per year, well short of the goal of two.

Enter Anduril, which is being dropped into a massive potential business line to hasten production of the latest-generation nuclear-powered attack submarines. Virginia-class subs are currently jointly built by General Dynamics subsidiary Electric Boat and Huntington Ingalls Industries, with the former winning a portion of a $76.6 billion submarine award from the Navy this summer. Their new defense tech partner will start small, but executives made clear their ambitions are sky high — or, er, ocean deep:

• Anduril’s new Maryland shipyard, situated outside Baltimore and named Arsenal-2, is expected to open by the end of the decade. While it will initially manufacture smaller components for Virginia-class production, company President Christian Brose told a media briefing that Anduril expects to eventually build significant bow and stern sections of the submarine, known as super modules.
• In the short term, Anduril will make Virginia-class components including torpedo tubes at a new Orange County, California, facility slated to open in 2027. This, the company said, will give it a “two-year operational head start to develop and validate manufacturing methods” that it can apply to the Arsenal-2 shipyard when it opens.

Tolkien’s Tech Bros: Last year, Luckey founded Erebor, a startup-focused bank to fill the gap left by the 2023 collapse of Silicon Valley Bank. On Tuesday, the Financial Times reported that it has more than $7 billion in deposits after adding in excess of 500 customers and $3 billion in deposits in the third quarter. And yes, like Anduril and Peter Thiel-founded Palantir, Erebor is named after “Lord of the Rings” lore.