The Pentagon is prepping for drone warfare – But Silicon Valley drone startups still rely on parts made in China

As the U.S. military ramps up plans for large-scale drone deployment to offset China’s growing presence in the Pacific, one uncomfortable truth stands out: many of the Silicon Valley startups building America’s next-gen military drones are still sourcing critical parts from China—the same nation those drones are meant to deter.

A recent Forbes report highlights the scale of the problem: China controls nearly 90% of the global commercial drone market and produces much of the core hardware—airframes, batteries, radios, cameras, and screens—that powers the industry.

“China currently controls close to 90 percent of the global commercial drone market, and manufactures most of the key hardware used to build them – airframes, batteries, radios, cameras and screens, Forbes reported. 

The Pentagon’s Drone Rush Meets a “Made in China” Problem

The Pentagon wants thousands of small, affordable drones in the air by 2025. It’s part of a larger plan called the Replicator initiative, created in response to rising tensions with China and lessons drawn from Ukraine’s drone warfare. “We need to counter China’s arsenal,” a Pentagon official told Forbes, referring to China’s drone giant DJI, which controls about 70% of the global consumer drone market.

Startups like Skydio, Mach Industries, and Neros have secured contracts to help build out this fleet. Backed by VCs like Andreessen Horowitz, they’re tasked with delivering the kind of fast, agile drone tech the U.S. military needs. But there’s a catch: many of their products still depend on Chinese components.

For example, the day after Mach Industries dropped a sleek promo video for its new Viper strike drone, CEO Ethan Thornton found himself in the hot seat.

The video, which he proudly shared on social media with the caption “Show, don’t tell,” got more scrutiny than applause. A few sharp-eyed viewers pointed out that the drone appeared to be using an engine suspiciously similar to one made by a Chinese manufacturer. Thornton had previously insisted that none of Mach’s drones included Chinese parts.

But then came a tougher question—this time from Anduril CEO Palmer Luckey, who publicly asked: “What about the airframe in the video?”

Cornered, Thornton responded on X: “We feel comfortable blowing up Chinese components for testing purposes, Palmer,” effectively confirming the engine’s origin. He later told Forbes that “all final production units ship without Chinese components.” Anduril and Luckey didn’t comment on the exchange.

In February, we wrote about Anduril following reports that the 8-year-old startup was preparing to raise $2.5 billion at a $28 billion valuation to scale its defense tech, expand border surveillance capabilities, and roll out advanced AI systems for national security operations.

Many U.S. Military Drone Parts Still Come from China

Meanwhile, a Forbes investigation found that 50% to 80% of the key parts used in US military drones—from batteries and motors to radios and cameras—are still coming from China. Industry data backs that up: Drone Industry Insights UG and Bloomberg both report that China dominates production of most of the hardware in drones sold worldwide.

Skydio, for example, got hit hard in October 2024 when China sanctioned the company and cut off battery shipments. The startup was forced to ration what batteries it had left. “The Chinese government will use supply chains as a weapon,” Skydio said at the time.

Mach Industries, which recently rolled out a promo for its Viper strike drone, admitted to using Chinese parts during testing but claims those won’t make it into production. Even U.S. Senator J.D. Vance was spotted wearing Chinese-made drone goggles at a Marine Corps demo, highlighting how deep this reliance runs.

Some drone makers told Forbes that Pentagon red tape has held back the growth of the domestic industry. But it’s the use of Chinese components that’s made the Pentagon hesitant to adopt their drones at scale. One example: Orqa, a company once branding itself as the “DJI of the West,” saw military orders paused after allegedly banned Chinese parts were discovered in its products.

“Most Western drone companies still rely on Chinese components,” Orqa CEO Srdjan Kovacevic told Forbes. He added that Orqa has since brought its manufacturing in-house.

Security Red Flags

The Pentagon isn’t thrilled about this. Trent Emeneker, who works with the Defense Innovation Unit (DIU), put it bluntly: “China could shut [the drone industry] down globally for a year.” Some of the most concerning components—like cameras and flight controllers—could be exploited to gather data or disrupt systems. That’s why the NDAA already bans some Chinese parts in military drones.

To address the issue, the DIU launched the Blue UAS program, which certifies drones that avoid banned components. But getting listed is no walk in the park. Out of 300 submissions in 2025, only 23 made the cut. Startups like BRINC and Darkhive say the process is slow and murky. “It’s easier to get sanctioned by China than to get on the Blue List,” BRINC’s Andrew Cote joked after learning of his company’s rejection.

Trying to Cut the Cord

A few startups are managing to reduce their dependency. Neros, based in California, builds most of its drones in-house and says it’s close to going fully China-free. “This is a good forcing function,” Neros CTO Olaf Hichwa told Forbes. Shield AI, valued at $5.3 billion, says none of its V-BAT drones rely on Chinese parts. Firestorm and Anduril make similar claims.

But building everything domestically is expensive and slow. A Bloomberg report noted that Trump-era tariffs and China’s retaliatory moves, like cutting off magnet exports, are raising costs. Andreessen Horowitz warned that pulling all Chinese-made parts overnight could “have a catastrophic effect” on the U.S. drone sector.

“Drones are getting smarter, deadlier, and more indispensable, and almost all of them come from China,” Bloomberg reported.

Policy Gridlock and Lobby Pressure

DJI’s influence adds another layer. The company has received both Chinese government subsidies and investment from U.S. venture firms, making it hard to dislodge. “Until DJI is entirely banned, there’s not enough market to stand up a U.S. industrial base,” Nathan Ecelbarger of the National Drone Association told Forbes.

A proposed U.S. rule to block Chinese drones and parts sparked backlash from industry and consumers. DJI lobbied hard to kill a legislative ban in late 2024, claiming it was being unfairly targeted.

Meanwhile, venture-backed defense startups continue to hit roadblocks. Darkhive learned it was dropped from the Blue List via press release. Some companies are starting to look elsewhere—Taiwan and parts of Europe—for alternative suppliers, but it’s slow going.

What’s Next

The Pentagon’s drone strategy depends heavily on startups moving fast. But the parts they need are still coming from across the Pacific. Social media accounts like @TruthToolbox are already warning about the risk of a sudden “collapse” if China cuts off supplies.

Still, there are signs of progress. Neros and Shield AI are showing it’s possible to build high-quality drones with minimal Chinese input. The question is whether enough companies can follow their lead—and whether the government will do enough to help them scale.

Former NSC official Josh Steinman said it best: “You are going to have to pull the band-aid off at some point.”

For now, the Pentagon’s drone future is stuck in a supply chain standoff. The startups racing to build America’s next generation of drones are still tethered to a rival nation’s factories. That tension may define the next chapter of defense tech in Silicon Valley.