Anduril wants to rewrite the export rules. The drone war's real front is the control list.

Anduril's chief executive wants allied countries to build US-designed weapons under license, and says the export-control rulebook is what stands in the way. Days earlier, Washington added 65 more Chinese firms to a list that bars them from its supply chain.

What happened

Anduril chief executive Brian Schimpf has called for what he describes as a reset of US arms-export controls, telling the Financial Times that allied governments should be able to manufacture American-designed weapons rather than only buy them through a long approval process. The target is ITAR, the International Traffic in Arms Regulations, the regime that controls the transfer of sensitive military technology. Schimpf framed the change narrowly. High-end platforms such as the F-35 would stay inside the existing export model, he said, while drones, autonomous aircraft and systems assembled from commercial parts would move to a faster track, because their limiting factor is production capacity rather than design.

Schimpf is making the case from a position of scale. Anduril raised $5 billion in May at a $61 billion valuation, roughly double its previous worth, in a round led by Thrive Capital and Andreessen Horowitz, according to the Financial Times. The company reported 2025 revenue of $2.2 billion and projects more than $4.3 billion this year, while remaining unprofitable. It is building Arsenal-1, a five-million-square-foot plant near Rickenbacker airport in Ohio due to open around July 2026 and projected to employ about 4,000 people, and it is studying a second site, Arsenal-2, in Europe, where it already works with Germany's Rheinmetall on versions of its Barracuda cruise missile and Fury autonomous aircraft.

Drones cause up to 85% of front-line casualties

The urgency behind the export-control argument comes from the casualty data in Ukraine. The Council on Foreign Relations reported this month that drones now account for 75 to 85 percent of casualties along the front, and that Ukraine's advantage this spring came from striking precisely and in large numbers. Ukraine produced an estimated four million robotic and autonomous systems in 2025 and is on course for five to six million in 2026, according to the same analysis, while a US-supplied Hornet strike drone costs under $10,000, a price that makes heavy attrition affordable.

The systems are also technically capable. CFR noted that Ukrainian drones increasingly use fiber-optic guidance and onboard autonomy to keep operating when Russian jamming cuts the link to an operator, and that a Ukrainian Magura naval drone shot down a Russian Su-30 fighter with an adapted air-to-air missile last year.

By that measure the United States is lagging in a field it once led. Of the 22,320 systems ordered under the Pentagon's drone-dominance initiative, fewer than 3,000 had shipped as of this month, CFR found. The gap extends to munitions. The Institute for the Study of War, citing Ukrainian armament researcher Colonel Oleksandr Zaruba, reported on June 13 that Russia is producing 40 to 50 Kh-101 cruise missiles and 60 to 70 Iskander-M ballistic missiles a month, against roughly 600 PAC-3 interceptors a year, or about 50 a month, in the United States. By that count, Russia's monthly missile output now exceeds US monthly interceptor production.

Schimpf's argument rests on that imbalance. Capital and software talent have moved into defense technology, but manufacturing capacity has not scaled to match, and a single Ohio plant does not close the difference. Even Ukraine, the war's most prolific drone producer, holds between $25 billion and $40 billion of defense-production capacity that sits idle for lack of capital, by CFR's estimate. Anduril's case is that a network of allied factories could add the missing capacity, provided the law lets designs, components and technical data move across borders quickly enough.

Kuwait's $1.98 billion counter-drone order

The demand is already in the order book. The State Department approved a possible $1.98 billion foreign military sale of Anduril counter-drone systems to Kuwait on June 5, days after an Iranian strike on June 3 sent roughly 30 Shahed-136 loitering munitions and missiles at Kuwait International Airport, killing one person and injuring 63. The drones flew under Patriot batteries configured to intercept ballistic missiles. Zafer Al Ajami, a retired Kuwaiti air force colonel, told Breaking Defense the attack exploited a vulnerability and that the deal marks a shift toward a layered, integrated counter-drone network.

The package combines several systems. It pairs Roadrunner-M, a reusable vertical-takeoff interceptor that can be recovered and reflown when it does not engage, with Anvil-Kinetic interceptors that destroy small drones by collision, Pulsar jammers, Sentry sensor towers and Anduril's Lattice command software. The economics match the rest of the category: firing a surface-to-air missile worth around $1 million at a $20,000 drone favors the attacker, so a reusable interceptor and a jammer that can be tried first improve the exchange rate. The Kuwait package is worth roughly eight times the $250 million US contract Anduril won in October 2024 to deliver more than 500 Roadrunner-M interceptors.

The deal also shows what the current rules do and do not allow. It is a direct US export of US-built hardware, approved quickly under wartime pressure. The change Schimpf wants goes further, to allied co-production, under which a partner country would build and adapt the systems itself. Anduril says it keeps key component designs in-house specifically so it can plug into local supply chains, which it argues makes such co-production feasible. ITAR governs that kind of technology transfer, and Anduril says that is where the rules slow it down.

The Pentagon adds BYD and Alibaba to its 1260H list

Three days later the controls moved in the opposite direction. On June 8 the Pentagon added 65 entities to its 1260H list of Chinese military companies, among them BYD, Alibaba, Baidu, the drone maker Autel and the robotics firm Unitree, according to a client alert from the law firm WilmerHale. The list once served mainly to name and shame, but it now carries direct consequences. From June 30, 2026, the Pentagon may not enter, renew or extend contracts with listed firms, with a wider ban on products that contain their work taking effect in 2027. China's foreign ministry called the designation a discriminatory overstretch of national security and said it would defend its companies, though it had announced no specific retaliation when the list was published.

The two measures work the same instrument from opposite ends. Washington is trying to relax its export controls toward allies it wants as co-producers, while tightening procurement controls against China to keep Chinese firms out of its defense-industrial base. Both decisions turn on which companies are allowed to build or supply American weapons, a question that now sits alongside the older fights over advanced chips and shipbuilding in the US-China competition over cheap autonomous systems.

The two policies can also undercut each other. Removing Chinese batteries, motors and components from US systems, the part of the 1260H list that covers BYD and Autel, raises the cost and slows the production of the same cheap mass the West says it needs. Allied co-production brings its own complications. A German or Polish plant building US-origin autonomous systems is more than a procurement contract; it raises questions of jobs, sovereignty, technology transfer and control of software upgrades during a crisis, which is why European governments rebuilding their own industrial bases are unlikely to accept an American template without conditions.

What to watch

The near-term markers are concrete. The Trump administration's America First Arms Transfer Strategy, opened in February, has not yet produced published ITAR carve-outs for drones or autonomous systems. Anduril has said it could site Arsenal-2 in Europe but has named no location, and a committed site with a partner beyond its existing Rheinmetall work would mark co-production moving from plan to construction. Beijing, which retaliated last month over US sanctions on Chinese oil refiners, had answered the June 8 1260H expansion only with a foreign-ministry protest as of the listing, not a countermeasure against US firms in China.