One of the unpleasant truths stands out as the US military plans to deploy large-scale drones to offset China’s presence in the Pacific Ocean. Many Silicon Valley startups source important parts from China, which builds America’s next-generation military drones.
A recent Forbes report highlights the scale of the issue. China manages almost 90% of the global commercial drone market and produces much of its core hardware, including agriculture, batteries, radios, cameras, screens, and more.
“Today, China manages nearly 90% of the global commercial drone market and manufactures most of the major hardware used to build them.
Pentagon’s Drone Rush encounters “made in China” issues
The Pentagon is hoping to have thousands of small, affordable drones in the air by 2025. This is part of a larger plan called the replicator initiative, created in response to rising tensions with China and lessons drawn from the drone warfare in Ukraine. “We need to compete with China’s arsenal,” a Pentagon official told Forbes, referring to the Chinese drone giant DJI, which manages around 70% of the global consumer drone market.
Startups like Skydio, Mach Industries and Neros have secured contracts to help build this fleet. Supported by VCs like Andreessen Horowitz, they are tasked with providing fast, agile drone technology, depending on the needs of the US military. But there’s a catch. Many of their products still rely on Chinese elements.
For example, the day after Mach Industries dropped a sleek promotional video for the new Viper Strike drone, CEO Ethan Thornton found himself in the hot seat.
The video, which he proudly shared on social media, was scrutinized more than applause with the caption, “Show, don’t tell.” Several keen viewers pointed out that the drone appears to be using an engine that is suspected of being made by a Chinese manufacturer. Thornton previously claimed that Mach’s drones did not include the Chinese part.
show.
Don’t tell me.
Mach Industry. pic.twitter.com/dei4fq24e9– Ethan Thornton (@ethanrthornton) March 4, 2025
But then there were more harsh questions. This time, we asked Palmer Lucky, CEO of Andrill, publicly, “How’s the video aircraft?”
Cornanged Thornton replied with an X. “We feel comfortable blowing out Chinese components for testing purposes and are Palmer,” effectively confirming the origins of the engine. He later told Forbes that “all final production units will be shipped without Chinese components.” Andrill and Lucky did not comment on the exchange.
We feel comfortable blowing up Chinese components for testing purposes, Palmer.
We are on the same team
– Ethan Thornton (@ethanrthornton) March 5, 2025
He wrote about Anduril in February following reports that the eight-year-old startup raised $2.5 billion at a $28 billion valuation, expanded defense technology, expanded border surveillance capabilities, and deployed advanced AI systems for national security operations.
Many US military drone parts still come from China
Meanwhile, a Forbes survey found that 50% to 80% of the major components used in US military drones (from batteries and motors to radios and cameras) still come from China. The industry data back is as follows: Drone Industry Insights Both UG and Bloomberg report that China controls the production of most of the hardware of drones sold worldwide.
Skydio, for example, was hit hard in October 2024 when China approved the company and cut off shipping the battery. The startup was forced to distribute the remaining batteries. “The Chinese government will use the supply chain as a weapon,” Skydio said at the time.
Mach Industries, which recently launched a promotion for Viper Strike drones, has admitted to using Chinese parts during testing, but claims they will not be produced. Even US Senator JD Vance was spotted wearing Chinese-made drone goggles at a Marine Corps demonstration, highlighting how deep this trust is.
Some drone manufacturers told Forbes that the Pentagon deficit is hampering growth in the domestic industry. However, the pentagon is the use of Chinese components that have hesitated to adopt drones on a large scale. One example: Orqa, a company that once branded as “Western DJI,” saw a military order that allegedly had been found in its products suspended.
“Most Western drone companies still rely on Chinese elements,” ORQA CEO Srdjan Kovacevic told Forbes. He added that Orqa has since brought its production in-house.
Security Red Flag
The pentagon is not excited about this. Trent Emmenker, who works with the Defense Innovation Unit (DIU), frankly said, “China could be shut down.” [the drone industry] It’s been down globally for a year. “Some of the most concerning components, like cameras and flight controllers, could be misused to collect data or to ban the Chinese portion of the military drone already.
To address this issue, DIU has launched the Blue UAS program. This proofs drones avoid banned components. But what is listed doesn’t take a walk in the park. Of the 300 submissions in 2025, only 23 people made the cut. Startups like Brinc and Darkhive say the process is slow and ambiguous. “It’s easier to get approved by China than to get on the blue list,” Brinth’s Andrew Court joked after learning of his company’s rejection.
I’m cutting the cord
Some startups have been able to reduce dependencies. California-based Neros says he has built most of the drones in-house, and is completely close to something that is not China. “This is a good enforcement feature,” Neros CTO Olaf Hichwa told Forbes. Valued at $5.3 billion, Shield AI says none of its V-Bat drones depend on the Chinese part. Firestorm and Anduril make similar claims.
But building everything domestically is expensive and slow. A Bloomberg report says China’s retaliatory moves, including blocking Trump-era tariffs and magnet exports, are increasing costs. Andreessen Horowitz warned the US drone sector that pulling all the Chinese-made parts apart overnight would have “devastating effects.”
“Drones have become smarter, more deadly, more essential, and almost all of them come from China,” Bloomberg reported.
Policy Gridlock and Lobby Pressure
The DJI impact adds another layer. The company receives both Chinese government subsidies and investments from US ventures, making it difficult to drive away. “Until DJI is completely banned, there is not enough market to stand up to US industrial bases,” Nathan Aeselberger of the National Drone Association told Forbes.
The proposed US rules blocking Chinese drones and parts has sparked backlash from industry and consumers. The DJI lobbyed hard in late 2024 to kill the legislative ban and claimed it was unfairly targeted.
Meanwhile, venture-backed defense startups continue to reach obstacles. Darkhive learned that it was removed from the blue list by a press release. Some companies are beginning to look for alternative suppliers for Thaiwan and other locations that are part of Europe, but they are moving slowly.
What’s next?
The Pentagon’s drone strategy relies heavily on startups moving rapidly. But the parts they need still come from the entire Pacific. Social media accounts like @truthtoolbox have already warned of the risk of a sudden “collapse” if China cuts off supplies.
Still, there are signs of progress. Neros and Shield AI show that they can build high-quality drones with minimal Chinese input. The question is whether enough businesses can follow their leads and whether the government will do enough to help them expand.
“At some point we’ll have to pull the band-aid apart,” said Josh Steinman, a former NSC official.
For now, the future of Pentagon drones is stuck at supply chain standoffs. Startups to build America’s next-generation drones are still connected to factories in rival countries. That tension may define the next chapter in Silicon Valley’s defense technology.
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