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Palantir and Anduril, the largest U.S. defense technology companies, are in talks with about a dozen competitors to form a consortium to jointly bid for U.S. government jobs to break the oligopoly of domestic “prime” contractors. I am doing it.
The consortium is expected to announce agreements with multiple technology groups as early as January. Companies in talks to join include Elon Musk’s SpaceX, ChatGPT maker OpenAI, autonomous shipbuilder Saronic and artificial intelligence data group Scale AI, according to people familiar with the matter.
“We are working together to deliver a new generation of defense contractors,” said one of the people involved in the group’s development.
The move comes as technology companies seek to wrest a bigger slice of the U.S. government’s massive $850 billion defense budget from traditional prime contractors like Lockheed Martin, Raytheon and Boeing.
Another official said the consortium would bring together the gravity of some of Silicon Valley’s most valuable companies and leverage their products to more efficiently supply the U.S. government with cutting-edge defense and weapons capabilities. The plan is to provide a method for doing so.
Defense technology startups are on the rise as investors bet these companies will be among the winners of expanded federal spending on national security, immigration, space exploration and more under President Donald Trump’s incoming administration. It comes as record amounts of funds are being raised this year.
Wars in Ukraine and the Middle East and geopolitical tensions between the US and China have increased government reliance on high-tech companies developing advanced AI products that can be used for military purposes, and investors in the sector is increasing.
Palantir’s stock has soared 300% over the past year, giving the company a market capitalization of $169 billion, larger than Lockheed Martin. The data intelligence group was co-founded by tech investor Peter Thiel. He also provided early backing for Anduril, which was founded in 2017 and valued at $14 billion this year.
Meanwhile, SpaceX was valued at $350 billion this month, making it the world’s largest private startup, while OpenAI’s valuation has soared to $157 billion since its 2015 founding.
Each company is trying to grab a slice of the government’s defense budget. While SpaceX and Palantir have won large public contracts going back two decades, this is also the first time the companies have participated in government procurement. OpenAI updated its terms of service this year to no longer explicitly prohibit the use of its AI tools for military purposes.
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U.S. defense procurement has long been criticized as slow and anticompetitive, favoring decades-old blue-chip companies such as Lockheed Martin, Raytheon and Boeing. These large conglomerates typically produce ships, tanks, and aircraft that are expensive and take years to design and manufacture.
Silicon Valley’s burgeoning defense industry has prioritized producing small, cheap, autonomous weapons that it says can better protect the United States and its allies in modern conflicts.
One official involved in the development of the consortium described it as an “industry collaboration” to “execute Department of Defense technology priorities” and “solve critical software capability issues.” did.
Partnerships between the technology groups expected to join the consortium have already been agreed, and integration work is expected to begin immediately.
Palantir’s AI Platform, which provides cloud-based data processing, was integrated this month with Anduril’s autonomous software Lattice to provide AI for national security purposes.
Similarly, Anduril is combining its anti-drone defense system with OpenAI’s advanced AI models to jointly work on US government contracts related to “aeronautical threats.”
A joint statement from Anduril and OpenAI regarding the partnership reads: “Our goal is to ensure that the U.S. Department of Defense and intelligence community has access to the most advanced, effective and secure AI-driven technology available in the world. ” is written.
Anduril, OpenAI, and Scale AI declined to comment on the consortium’s development. Palantir, SpaceX and Saronic did not respond to requests for comment.
