Axios Event: Tech production is "name of the game" for U.S. defense, industry leader says

PARIS – The defense tech sector is booming with companies looking to help the U.S. modernize outdated infrastructure and build defense systems faster, speakers said at an Axios event alongside the Paris Air Show.

Why it matters: While plenty of companies are creating innovative products, the U.S. needs to significantly increase production volume to keep up with global adversaries.

Axios' Colin Demarest spoke with Anduril Industries co-founder and executive chairman Trae Stephens and Firestorm CEO and co-founder Dan Magy at the June 16 event, sponsored by Amazon Web Services and Exiger.

What they're saying: "The culture has really been shifting in a pretty meaningful way in recent years," Stephens said of the defense tech landscape.

State of play: Defense tech is "now weirdly a trendy tech sector" since they created Anduril eight years ago, Stephens said.

• "Some of this I think is really good, obviously it's great to see new entrants coming in," he said.
• "But at the same time, becoming a category is never a good sign. Once you become a category, it's too late. There are no returns to be had. Companies are raising too much money at too high prices."

Zoom in: From the business perspective, the Pentagon is running a lot of great autonomy programs but speed, cost and budget still need finessing, Magy and Stephens pointed out.

• "We have to really rethink how we're going to use autonomous systems in combat. Ukraine and Russia are showing us the way," Magy said.
• Magy added that systems like Firestorm's portable 3D printer technology could be used to speed up drone production processes. "You can basically set them up anywhere in the world, and in two hours you're building drones."

The bottom line: Production volume is the "name of the game" right now, Magy added.

• "We say you're not going to be able to buy your way out of this problem, you've got to build your way out of this problem. … I think we are going to have smarter drones, but we have to build tremendous numbers of them."

Content from the sponsored segment:

In a View From the Top conversation, AWS director of global defense partners Shannon Judd and Exiger SVP of supply chain transformation Derek Lemke discussed reshaping the defense supply chain through predictive models and AI.

• "We are hearing a lot from the defense companies as well as aerospace companies that fundamentally the way they think about supply chain from a modernization standpoint, and honestly the way they think about it from a profitability standpoint, is dramatically changing," Judd said.
• "Really to sum it up, the way to think about it is, don't look at how to solve supply chain again as the normal 'how do I detect outages or how do I find other parts.' Yes, that's important – but it's really building fundamental models to predict and look at supply chain as a strategic asset," she added.