Anduril’s $6.6 billion bet on US submarine manufacturing
Subscribe to our free newsletter today to keep up to date with the latest manufacturing news.
US defense technology company Anduril Industries plans to invest $3.7 billion in a new Maryland shipyard as part of a $6.6 billion effort to increase the production of components for the US Navy’s nuclear-powered submarines.
The investment, announced Oct. 6, comes alongside a Navy contract worth up to $2.9 billion. Payments under the contract will depend on Anduril meeting production targets, placing much of the financial risk on the company.
The new facility, known as Arsenal-2, will be built at Sparrows Point in Baltimore County. Initial operations are expected to begin in 2030, with the project set to create more than 3,100 direct jobs and support over 11,000 indirect jobs.
Anduril plans to manufacture components such as torpedo tubes for Virginia-class attack submarines, before expanding into larger assemblies and potentially complete hull sections.
The project marks a major move into naval manufacturing for Anduril, which is better known for military drones, autonomous systems and defense software.
It also comes as the US Navy struggles to build submarines fast enough to meet demand. Anduril believes its software-based production methods can help increase output, although their effectiveness in submarine construction has yet to be proven.
Why the US Navy needs more submarine manufacturing capacity
The US submarine industry has struggled for years to meet the Navy’s production targets, with workforce shortages and supplier delays contributing to a growing backlog.
According to a January 2026 Congressional Research Service report, production of Virginia-class submarines has remained at approximately 1.1 to 1.2 vessels annually since 2022. That is well below the Navy’s longstanding target of two per year.
General Dynamics Electric Boat and HII’s Newport News Shipbuilding are responsible for constructing the vessels. Both rely on a network of specialist suppliers to provide the components needed for each submarine.
Submarine construction requires highly skilled workers, specialized equipment and strict quality controls. Many parts must meet demanding engineering standards because failures could put vessels and their crews at risk.
Production delays also affect operations beyond the shipyards. Late component deliveries can disrupt assembly schedules, while limited supplier capacity makes it difficult to increase output across the industry.
These pressures are growing as the US prepares to supply Virginia-class submarines to Australia under the AUKUS security partnership. The agreement adds to the demands on an industrial base already struggling to meet domestic requirements.
The Navy ultimately aims to increase production beyond two Virginia-class submarines annually to support its own fleet and planned Australian deliveries.
Anduril’s new facility is intended to ease some of these pressures by increasing the supply of components and assemblies. This would allow established shipbuilders to focus more resources on final submarine construction.
Whether that translates into faster vessel deliveries will depend on improvements across the wider supply chain.
How Anduril plans to bring software into submarine production
Anduril is approaching submarine manufacturing with a production model that places greater emphasis on software, automation and digital systems.
The company describes Arsenal-2 as a software-defined shipyard, where digital tools will help coordinate manufacturing operations and manage complex production processes.
The approach follows Anduril’s broader manufacturing strategy, which includes investments in facilities designed to produce military systems at greater scale, such as its Arsenal-1 factory in Ohio.
Applying similar methods to submarine components could improve production planning, help monitor quality and reduce delays between manufacturing stages.
Digital production records, for example, can help manufacturers track materials and components throughout assembly. Automated equipment can also improve consistency in repetitive processes, reducing the amount of manual work required.
However, these potential benefits will need to be demonstrated under the demanding requirements of naval construction.
Building submarine components presents different challenges from manufacturing drones or smaller defense systems. Large metal structures require precise fabrication, extensive inspection and detailed documentation before they can be accepted for use.
Anduril is developing production capacity in California for components such as torpedo tubes. Arsenal-2 would allow the company to expand those activities and gradually take on larger assemblies.
The company does not intend to replace Electric Boat or Newport News Shipbuilding as the Navy’s primary submarine builders.
Instead, it plans to become a larger supplier to both contractors, increasing the amount of manufacturing work completed outside their existing facilities.
The model could offer an example of how companies from outside traditional shipbuilding can support naval production. Its value will depend on whether Anduril can deliver components at the quality, cost and pace required by the Navy.
Why greater factory capacity may not guarantee faster deliveries
Additional manufacturing capacity could help address some of the Navy’s supply problems, but another factory will not eliminate every source of delay.
One major challenge is the shortage of skilled labor. Submarine manufacturing depends on experienced welders, machinists, engineers and quality inspectors, many of whom are already in high demand across the defense industry.
Anduril’s plan to create more than 3,100 direct jobs will therefore require a substantial recruitment and training effort.
The company must also establish reliable relationships with suppliers capable of meeting strict naval standards. Even when factory equipment is available, shortages of specialized materials or approved components can slow production.
Timing presents another challenge. With initial operations at Arsenal-2 not expected until 2030, the facility will provide little immediate relief to a submarine construction program facing delays today.
There is also a difference between producing more components and delivering more completed submarines. Improvements at one stage of production may have limited effects if other parts of the supply chain remain constrained.
The Navy’s performance-based contract provides a financial incentive for Anduril to meet its production commitments. However, planned investments and projected capacity gains should not be confused with results already achieved.
For defense manufacturers, the project will provide a test of whether software-led production methods can improve output in one of the industry’s most demanding sectors.
Anduril’s performance will ultimately be measured by its ability to establish reliable production, meet naval quality requirements and deliver components that help existing shipbuilders reduce their backlogs.
Source:
Yahoo Finance
