The Trump administration is turning to defense technology company Anduril in a $6.6 billion effort to accelerate the production of nuclear-powered submarines, as the United States struggles to keep pace with China's expanding shipbuilding capacity. President Donald Trump is scheduled to visit the Sparrows Point shipyard outside Baltimore on Tuesday afternoon to formally announce the initiative alongside Anduril leadership.
Under the arrangement, Anduril will build a shipyard exceeding 2 million square feet at Sparrows Point to manufacture critical submarine components, with plans to eventually scale up to producing large sections of the vessels. A senior administration official said the facility could add roughly 9 million labor hours per year, equivalent to about a 15% increase in submarine production capacity.
The investment targets a problem the Navy has struggled with for years. Shipyards are currently delivering approximately 1.3 Virginia-class submarines annually, well short of the Navy's goal of two per year. The service projects reaching that two-per-year rate around 2032. The Navy currently operates 26 Virginia-class submarines and expects to add two more in the spring.
Anduril plans to invest $3.7 billion of its own capital to build the facility, workforce, and manufacturing capacity, while the Navy could spend up to another $2.9 billion purchasing the resulting production. The deal represents an unusual bet on a commercial model for addressing one of the Pentagon's most persistent industrial challenges: Anduril will risk billions of dollars of its own capital building new submarine production capacity, while the Navy pays for what the company can successfully produce.
«I wouldn't say that the government's paying us back. We feel the government is buying the results of what we're able to produce,» an industry official told reporters of the deal.
The agreement deepens Anduril's growing relationship with the Pentagon, coming just days after War Secretary Pete Hegseth tapped company founder Palmer Luckey, along with Elon Musk and former House Speaker Newt Gingrich, to launch Project Meridian, a 120-day study of how future wars will be fought and what weapons and technologies the U.S. military will need. The arrangement puts Luckey in a position to help shape recommendations about the Pentagon's future technology needs as the company he founded expands its own business selling weapons and other systems to the department. Project Meridian does not have procurement authority, and the Pentagon has said appropriate safeguards will be used to address potential conflicts of interest.
Anduril will work under General Dynamics Electric Boat and alongside HII's Newport News Shipbuilding, initially producing components that have become bottlenecks in the construction of new Virginia-class boats. Among the first will be torpedo tubes, which a senior administration official described as a current gating component holding up production. The official said getting those tubes earlier could allow the Navy to move forward more quickly. Anduril has already begun work on torpedo tubes at a facility in California and plans to shift that production to Baltimore as the new shipyard, dubbed Arsenal-2, comes online.
The company eventually hopes to move from individual components to complex modules and large sections of submarines. «We just need new production capacity,» an industry official said. «We need to grow the maritime industrial base, the submarine industrial base, so that we can produce more submarines.»
Anduril plans to build Arsenal-2 around software, automation, and digital manufacturing to break historically complex shipbuilding work into simpler tasks that can be performed without years of shipyard experience. The push comes as the Navy faces growing pressure to expand its attack-submarine fleet while also preparing to transfer Virginia-class submarines to Australia under the AUKUS security pact. Meeting those commitments will require the industrial base not only to reach the Navy's longstanding two-per-year goal but eventually to move beyond it.
Arsenal-2 is expected to create 3,100 direct jobs and another 11,000 indirect jobs nationwide. Anduril expects the Baltimore facility to begin operations around 2030, though the company said production of some submarine components is beginning now in California. The approach will still have to clear the certification and safety requirements that govern nuclear submarine construction. Anduril acknowledged that it will have to prove it can meet those standards before graduating from individual components to increasingly complex sections of the boats.