Anduril Lands $2.9bn Navy Submarine Contract as Co-Founder Takes Role in Pentagon's Project Meridian

Defence technology company Anduril Industries has secured a $2.9bn contract from the United States Navy to manufacture components for Virginia-class fast attack submarines, a deal announced alongside a $3.7bn private investment by the California-based firm to build a new shipyard in Maryland.

The facility, named Arsenal-2, represents one of the largest single private investments in American submarine production capacity in decades and comes as Washington scrambles to address persistent shortfalls in its maritime industrial base.

President Donald Trump was scheduled to formally unveil the project and announce a broader naval shipyard expansion initiative in Baltimore on Tuesday afternoon, according to the company and officials familiar with the plans.

The announcement carries additional political significance because Anduril co-founder Palmer Luckey is currently heading a newly disclosed Pentagon initiative alongside Elon Musk, the technology billionaire and former top adviser to Trump. The two were tapped by the Defence Department to lead Project Meridian, an effort focused on the future of warfare, including autonomous systems, artificial intelligence-powered capabilities, and maritime military operations.

That initiative was first announced last week during Defence Secretary Pete Hegseth's State of the Force address in Virginia. It forms part of a 120-day study aimed at identifying the technologies the US military will need to maintain battlefield superiority in coming decades.

Anduril, founded by Luckey in 2017, has grown rapidly from a drone-focused startup into one of the most valuable private defence contractors in the world, with a valuation approaching $117bn. The company is best known for its autonomous military systems, uncrewed underwater vehicles, ocean vessels often described as naval drones, and command-and-control software designed to link military sensors, weapons, and other platforms into unified networks.

The Maryland shipyard will specialise in producing torpedo tubes and larger hull sections for the Navy's upgraded Virginia-class submarines, which are being modified to carry as many as 40 Tomahawk missiles each. Although the vessels are nuclear-powered, they do not form part of the US strategic nuclear deterrent, which is maintained separately through ballistic missile submarines.

The project is expected to create approximately 3,100 direct jobs, with officials projecting support for more than 11,000 additional indirect roles in the surrounding region. That employment impact could prove politically significant in Maryland, a state whose economy has long depended on federal defence spending and naval installations.

The contract award underscores a deepening crisis in American submarine production. The Navy currently operates 26 Virginia-class fast attack boats, with two more scheduled for delivery in 2027. However, according to reports released by the Department of Defence and Navy officials, American shipyards have been unable to meet the Pentagon's target production rate of two new submarines per year. Supply chain disruptions and chronic labour shortages have kept actual delivery rates stalled at roughly 1.1 to 1.2 vessels annually, well below what military planners consider necessary to counter growing naval capabilities in China and elsewhere.

Analysts have warned that the gap between expected and actual production leaves the US fleet stretched thin at a moment of heightened global tension. Virginia-class submarines are considered among the most capable undersea platforms in the world, used for intelligence gathering, anti-submarine warfare, strike missions, and covert operations. Their versatility has made them central to US military planning in the Indo-Pacific and the Atlantic.

Speaking to reporters on Tuesday, Anduril President Chris Brose said the new facility's primary objective was producing components for the Virginia-class programme rather than developing new drone platforms. He described the arrangement as the government purchasing the output of a facility built with private capital.

"It's really the government buying the results of what we're able to produce from the facility that we've invested in," Brose said.

That model reflects a broader shift in US defence procurement, where private firms are increasingly funding infrastructure upfront and then selling production capacity back to the military. Proponents argue this approach accelerates timelines and reduces bureaucratic friction. Critics contend it concentrates public functions in private hands and may limit oversight of strategically sensitive programmes.

The involvement of both Luckey and Musk in Project Meridian has also drawn attention from ethics watchdogs, who have questioned whether private-sector figures advising the Pentagon on future warfare might benefit from contracts awarded during or after their government-linked work. Neither Anduril nor the Defence Department has publicly addressed those concerns.

For Anduril, the submarine deal marks a significant expansion beyond its original focus on aerial drones and software. The company has spent recent years moving into maritime and undersea systems, aiming to position itself as a full-spectrum supplier of autonomous military technology.

The Arsenal-2 shipyard is expected to take several years to become fully operational, meaning its contribution to submarine production will not be immediate. Nonetheless, officials view it as a critical step toward rebuilding an industrial base that has contracted sharply since the end of the Cold War.

The Navy's struggles have been documented in repeated assessments, including warnings that without major investment, the submarine fleet could shrink relative to the demands placed upon it. The new Maryland facility is intended to address one specific bottleneck: the manufacture of complex hull sections and torpedo tubes, components that require specialised welding and precision engineering.

Whether the investment ultimately raises production to the Pentagon's target rate will depend on hiring enough skilled workers, securing materials, and integrating the new facility into existing supply chains. For now, the announcement signals both confidence in Anduril's capabilities and recognition in Washington that the nation's shipyards require urgent reinforcement.