U.S. pushes homegrown drone industry amid China battle

Alarmed at the prospect of relying on Chinese-made drones for public safety and monitoring critical industries, U.S. investors and the federal government are newly backing a domestic drone industry of hardware and software companies.

The big picture: The moves come as the industry continues to be led by DJI, a Chinese hardware maker — and as concerns grow both in China and the U.S. about reliance on the other country's technology.

Driving the news:

• Skydio, a U.S. firm best known for its self-navigating selfie drones, announced $100 million in fresh funding, several executive hires and new products aimed at expanding its presence in the commercial market.
• The U.S. government is giving $13 million to five U.S. companies that are part of the drone industry as part of the COVID-related CARES Act. Skydio received $4 million, with AirMap, ModalAI, Graffiti Enterprises and Obsidian Sensors also receiving funding.

The big picture: Today's global tech industry builds many of its biggest products through a complex interdependence between the U.S. and China, with the U.S. leading the market for core technologies like chips and operating systems and China leading in hardware manufacturing.

• Amid increasing tensions, both countries have taken long- and short-term measures designed to reduce such dependencies.

Skydio's first two drones were aimed primarily at consumers and designed to follow people around as they ran or tackled the ski slopes.

• The company's pivot to the enterprise market could mean major cost savings for businesses looking for an alternative to the primarily non-autonomous drones offered by DJI, Skydio CEO Adam Bry suggested. Up to 80% of the costs in commercial drone programs are spent on training human pilots.

Yes, but: Other U.S. firms, such as GoPro, have tried unsuccessfully to compete with DJI head-on.

• "It's not enough to be made in the U.S.," Bry told Axios.
• But Skydio's focus on creating the software that allows drones to fly autonomously is a bet on where the industry is headed. "Over time more and more of our devices become completely defined by software," Bry said.

In other words, the future of the drone industry will resemble the arc of the computer and phone businesses, in his view.

Between the lines: Drones are seen as essential to national security given their role in tasks like inspecting bridges, cell towers and power infrastructure as well as their use in emergencies.

• Critics of DJI, citing fears that Beijing could use drones to spy on or even attack U.S. infrastructure, say that's why the U.S. shouldn't be relying on Chinese drones. (DJI has long maintained its drones pose no risk, noting that government agencies and cybersecurity experts have vetted its gear and found no evidence of security flaws or backdoors.)
• Skydio wants to play a role in those areas, but also announced Monday a series of principles around use cases it wants to avoid, including banning sales to regimes it deems repressive and barring the use of weapons in conjunction with its drones.