The Department of War’s Office of Strategic Capital signed a conditional loan commitment of up to $820 million with Performance Drone Works to scale domestic production of drone components on July 31.
The commitment is one of the largest single federal investments in domestic drone manufacturing capacity in U.S. history, according to the department. The loan aims to reduce U.S. reliance on Chinese-manufactured unmanned aerial system parts.
The loan addresses a recognized national security vulnerability: the U.S. military and its allies have become increasingly dependent on drones for reconnaissance, strike, and logistics operations, yet a significant share of critical drone components are manufactured in China. That supply chain dependency creates strategic risk during a period of heightened U.S.-China competition.
Performance Drone Works must meet domestic manufacturing benchmarks to access the full loan commitment, ensuring that the investment results in actual U.S.-based production capacity rather than simply subsidizing existing foreign supply chains, the department said.
The Office of Strategic Capital was established to use financial tools like loans and loan guarantees to address gaps in the defense industrial base that traditional procurement contracts have failed to close. The $820 million drone commitment represents one of the office’s largest single actions to date.
Demand for military drones has surged globally, driven in part by lessons from the Ukraine conflict, where low-cost unmanned systems have proven decisive on the battlefield. The U.S. military is rapidly expanding its own drone programs across all service branches.