Palmer Luckey’s insistence on deferring to U.S. could scare off the allies he wants to arm?

Anduril, the defense-technology startup Luckey founded in 2017 after his politically charged departure from Facebook, could be set for a $60 billion valuation. The company is riding a record surge in global defense spending and a shift in Silicon Valley sentiment toward working with the military, selling autonomous systems such as its Fury drone and Ghost Shark submarine to U.S. partners including Australia, Japan, South Korea, and Taiwan. 

War in the Middle East—between high-tech planes on the side of the U.S. and Israel, and relatively low-tech drones and missiles on the side of Iran—is also revealing how current-day warfare is changing, and how manufacturing capacity can quickly become stretched. 

But as Anduril grows into one of America’s most closely watched weapons makers, Luckey’s position—that arms makers should function as extensions of U.S. government policy—puts him at the center of overlapping debates about alliance politics in Asia, the rise of Chinese military hardware, and how much power tech billionaires should wield over questions of war and peace.

“I’m never going to promise to do something the U.S. wouldn’t do,” he told Fortune in early February, on the sidelines of the Singapore Airshow. The question is: Will other governments be relieved–or unnerved–by that pledge? 

From consumer tech to defense tech

Drones were all over the Singapore Airshow, held at Singapore’s Changi Exhibition Centre on a sweltering February day. Exhibitors hawked unmanned aerial vehicles and systems to manage them; a few booths further down, other companies sold systems to shoot those same drones down.

One such drone was the YFQ-44 Fury: a grey metal fuselage that resembles a fighter jet stripped of its cockpit. Made by Anduril Industries, the Fury is a jet-powered, unmanned combat aircraft designed to team with fighters like the F-35 and carry out high-risk air-to-air missions autonomously at a fraction of the cost of a traditional jet.

Anduril is the work of Palmer Luckey, who founded the defense tech startup in 2017 after leaving Facebook amid political fallout over his support for a pro-Trump, anti-Hillary Clinton group during the 2016 election.

“It’s funny seeing people say, ‘Look at him—he’s wasting his time,’ or, ‘He’s evil and trying to make war happen,’” Luckey said. “Post-Ukraine, I feel like people have been more like, ‘Okay, maybe he wasn’t totally nuts.’ Even the people who hate me agree I’m not nuts.”

Luckey, 33, was in consumer tech long before he went into defense. He started Oculus VR, a company that designed virtual reality headsets, in 2012, which was later bought by Facebook for $2 billion.

Months after leaving Facebook in 2017, Luckey founded Anduril Industries—named for Aragorn’s reforged sword in J.R.R. Tolkien’s The Lord of the Rings—alongside several other executives from Palantir Technologies. Last year, Anduril raised $2.5 billion in a funding round led by Founders Fund, the Peter Thiel-led VC fund, which valued the defense tech company at $30.5 billion. The company is currently in talks with Thrive Capital and other investors for a new funding round that could double its valuation to $60 billion, Bloomberg reported on March 3. 

Luckey admits that moving from VR headsets to defense was a shift. “With VR, the only thing stopping us from launching a new headset was whether it was finished and ready to launch. You can’t do that with the military. You’re moving at someone else’s pace.”

That sluggishness is partly why Anduril doesn’t rely on defense grants to develop products, instead relying on its own funds. “Cost-plus contracting has perverse incentives: people make more money when programs are slow, more money when things are more expensive, more money when things break all the time. If I relied on the government to give me money to start development, I’d have to wait years just to even start.”

Not all of Anduril’s customers praise the company’s work. The Wall Street Journal reported last year that some Ukrainian operators stopped using Anduril’s drones in 2024, following frustrations with their performance. U.S. testers, too, have reportedly criticized the responsiveness of Anduril’s Lattice operating system. 

Anduril has pushed back against these reports, arguing in an extended response that failures are part of a broader strategy of “highly iterative model of technology development—moving fast, testing constantly, failing often, refining our work, and doing it all over again.”

“It is not surprising that Anduril, as a leading new defense technology company, is subject to increasing scrutiny,” the company wrote.

‘I’m not willing to go to prison to sell you spare parts’

Anduril is riding a record defense spending boom and a wave of government-aligned tech sentiment in Silicon Valley, as investors pour billions into autonomous weapons, AI-enabled sensor networks, and cheap, expendable drones. The company projects about $4.3 billion in revenue this year, even as it expects to lose more than $1 billion and does not forecast adjusted profitability until later in the decade, The Information reported in early March.

Global arms spending rose to a record $2.7 trillion in 2024, according to the Stockholm International Peace Research Institute, an international institute that tracks military expenditure and security trends. Shares of defense contractors have shot upwards over the past year: The Global X Defense Tech ETF, which includes companies like Lockheed Martin, RTX, Hanwha Aerospace, and Leonardo, is up by more than 45% over the past 12 months, compared to 14% for the S&P 500. 

Some of that boom in defense spending, in Luckey’s view, is due to longstanding U.S. demands that allies pay more for their own defense. “There’s an appetite in Washington for Anduril to work with Asian countries on domestic production. The view is that if Japan isn’t building any of its own weapons, they’re basically a freeloader,” he said.

Australia is spending $1.1 billion on Anduril’s autonomous submarine, the Ghost Shark. Anduril has also signed deals with companies in Japan and South Korea, as well as the government of Taiwan; that last partnership caught the ire of Beijing, which slapped sanctions on both Anduril and Luckey last year.

Asanka Ratnayake—Getty Images

Australia, Japan and South Korea are all close U.S. security allies and longstanding democracies, and so obvious markets for a U.S. defense company. But what about countries that are less democratic, or those who don’t have decades-long security arrangements with Washington?

“I have opinions on which countries are going to stay close U.S. allies and which ones aren’t. But my opinion can’t be the one that counts,” he explained.

He takes it to an extreme: he would sell arms to North Korea, if the U.S. asks him to. “If I take any other position, then what I’m effectively saying is that U.S. foreign policy should be decided by a handful of corporate executives based on who they’re willing to sell to or not,” he said.

What Anduril’s customers may be more concerned about, however, is what happens if the U.S. orders the company to stop working with a particular country. Many countries have looser ties to the U.S. alliance system, bound together by more transient economic and geopolitical alignments. 

And even close alliances don’t seem as solid as they used to be: President Trump has repeatedly picked fights with South Korea, Japan, Canada, and the European Union in disagreements over tariffs, defense spending, and support for U.S. military endeavors.

“I can’t reassure them. I’m never going to be able to promise to do anything that the U.S. would not. If a country asks me ‘commit to supporting this even if the U.S. doesn’t want to,’ all I can say is no,” he explained. “I’m not willing to go to prison to sell you spare parts.”

The rise of China

It’s impossible to talk about defense spending in Asia without talking about China, a strategic rival to the U.S. and a growing military power in its own right. The country makes up the second-largest share of global defense spending, at 12%, though it is still far behind the U.S.

“China has actually gotten its shit together,” Luckey said.

U.S. officials have long been concerned about China’s ability to develop hypersonic missiles and other forms of asymmetric warfare that might undermine the U.S.’s traditional strength. Last year’s brief India-Pakistan conflict was also a wake-up call for military observers, when Pakistani-operated J-10Cs—a Chinese-manufactured plane—shot down Indian jets, including a French-made Dassault Rafale, along with other aircraft, according to Western officials.

Then Chih Wey—Xinhua via Getty Images

“Is China building the world’s best fighter jets? No. But you don’t need to build the world’s best fighter jets to be a massive threat,” Luckey said. “A lot of times, two pretty good fighter jets will kick the butt of one really good fighter jet.”

Luckey uses a Second World War comparison to illustrate his point. Nazi Germany manufactured tanks using complex systems that could withstand repeated use—but were difficult to fix when they did break, he notes. The U.S., by comparison, used techniques that required pieces to be replaced constantly—but made tanks “cheap to make, easy to maintain, and fast to repair.”

He now sees China as the U.S. in this analogy, producing things that are “engineered to be manufacturable.” The U.S., he worries, is now like Germany: “We’ve built exquisite systems without regard for manufacturability and maintenance.”

Anduril is trying to position itself on the Chinese side of that comparison. The company is building a 5‑million-square-foot “Arsenal-1” factory in Ohio that aims to mass-produce drones and other weapons systems by mid‑2026, part of Luckey’s bet that industrial scale, rather than a handful of exquisite platforms, will decide future conflicts. 

Luckey’s more reasoned views on China are balanced by his public persona, which is far more provocative than what he says in private. Just hours after his conversation with Fortune, where he praised China’s ability to innovate, the Anduril founder posted a photo mocking the Shenyang J-35, a Chinese stealth fighter jet developed by the state-owned Aviation Industry Corporation of China. “Not convinced China’s J-35 measures up to the real deal,” he posted on X.

Luckey’s post prompted a backlash from both Chinese netizens and state-owned media. “This is more like a piece of performance art, and I think he lacks professional dedication,” one Chinese military expert grumbled to the Global Times, a Chinese state-owned English-language outlet.

‘An appendage of our democracy’

At the Singapore Air Show, Luckey mused that “you’re going to see a return of American corporations, particularly the ones large and powerful enough to be of national importance, working closely with the United States as a country.”

Luckey’s views on how tech should work with the government are increasingly common across Silicon Valley, as U.S. tech companies embrace a more overtly patriotic mindset in the Trump era—whether to get on the president’s good side, avoid his bad side, or both.

But there are still tensions between the U.S. tech sector and the Trump administration. In late February, Anthropic—the developer behind the Claude large language model—refused to accept a Department of Defense request to roll back its red lines on how its AI was used, particularly around surveillance and autonomous weaponry. In retaliation, the DoD deemed Anthropic a “supply chain risk,” putting it on the same level as firms like Huawei; Trump later barred all federal agencies from using Claude. (A U.S. court paused that order before on March 26.)

Anthropic’s decision set off a fierce debate in Silicon Valley about how much deference business owes to the U.S. government. Anthropic supporters are angry that the U.S. government is punishing a company for trying to decide how its product gets used; Trump supporters, on the other hand, see Anthropic as unfairly harming U.S. national security and undermining Washington’s democratic legitimacy.

Luckey, perhaps unsurprisingly, has come out on the side of those criticizing Anthropic.

“At the end of the day, you have to believe…that our imperfect constitutional republic is still good enough to run a country without outsourcing the real levers of power to billionaires and corpos and their shadow advisors,” he wrote on X on Feb. 28.

As he told Fortune in Singapore: “I’m an appendage of the will of the people—for better or for worse.”