Palantir to Secure US Defense Contracts... Competing with Traditional Defense Contractors

Consortium Formed with Anduril, SpaceX, OpenAI, etc.
Competition Expected with Traditional Defense Companies like Lockheed Martin

American AI defense contractor Palantir and autonomous drone manufacturer Anduril have reportedly entered negotiations with other IT companies to secure U.S. defense budget contracts. A fierce budget battle is expected with traditional defense contractors such as Lockheed Martin.

On the 22nd (local time), major foreign media including Bloomberg reported that Palantir and Anduril are preparing to bid for the U.S. Department of Defense's defense projects by forming a consortium with about 10 other IT companies.

Reuters Yonhap News

According to sources, companies currently discussing joining the consortium include SpaceX, the space company led by Tesla CEO Elon Musk; OpenAI, the developer of ChatGPT; autonomous ship manufacturer SeaRonic; and AI data company Scale AI. The finalized agreement is expected to be announced in early January next year. While SpaceX and Palantir have secured government defense contracts for over 20 years, this is the first time for the other companies to participate in defense project bids.

Officials involved in the consortium negotiations stated, "We are collaborating to become a new generation of defense contractors," gathering Silicon Valley's most valuable companies and utilizing their products to supply the U.S. government with cutting-edge defense and weapon capabilities more efficiently.

The U.S. Department of Defense's defense contracts are structured so that traditional defense contractors such as Lockheed Martin, Raytheon, and Boeing monopolize and divide the approximately $850 billion (about 1,231 trillion KRW) defense budget. Consequently, there have been ongoing criticisms that procurement in the U.S. defense sector has become slow and anti-competitive due to domination by a few large corporations.

However, due to wars in Ukraine and the Middle East, as well as U.S.-China tensions, government reliance on advanced AI products for military purposes has increased. Additionally, with expectations of increased spending on national security and space exploration under the Donald Trump administration, startups in this field have emerged as beneficiaries.

In particular, AI defense companies have recently attracted market attention. Palantir, whose stock price surged 300% over the past year, surpassed Lockheed Martin?the manufacturer of the stealth fighter F-35?with a market capitalization exceeding $180 billion. Anduril, founded in 2017, was valued at $14 billion (about 20 trillion KRW) this year. Furthermore, SpaceX was recognized this month with a $350 billion valuation, becoming the world's largest private startup, and OpenAI's valuation soared to $157 billion since its establishment in 2015.

Reuters Yonhap News