When Vice President J.D. Vance visited a Marine Corps drone demonstration at Quantico earlier this year, the event was meant to showcase the best of American ingenuity. Instead, it revealed a stark truth: even the most advanced U.S. military drones rely on Chinese-made technology. In photos, Vance was seen wearing Skyzone goggles — manufactured in China — to view the demonstration. The Marines were quick to clarify that the gear wasn’t standard issue, but the moment was telling. It exposed a hidden crisis: America’s most promising drone innovations are deeply entangled with Chinese supply chains.

The Hidden Dependency

Over the last decade, China has come to dominate the global drone market, manufacturing nearly 90% of commercial drone hardware. From airframes and batteries to cameras and radios, Chinese factories have become the world’s one-stop shop. This didn’t happen by accident: decades of government investment, aggressive subsidies, and a relentless drive for efficiency have made China the undisputed leader in drone components.

For American drone startups in Silicon Valley, this dominance has created a paradox. The U.S. government is urgently calling for homegrown alternatives to Chinese drones — especially as tensions with Beijing rise and the specter of conflict over Taiwan looms larger. Yet, even the most innovative U.S. companies find themselves dependent on Chinese parts. As one industry insider put it, “We are almost completely reliant on our major adversary for them, and our ability to make them.”

The Battery That Broke the Camel’s Back

The risks of this dependency are not theoretical. Last October, China imposed sanctions on Skydio, the largest U.S. drone manufacturer, abruptly cutting off its supply of batteries. The impact was immediate and severe: Skydio was forced to ration batteries to customers, limiting them to just two per drone. For months, the company scrambled to find alternative suppliers, but the damage was done. “This action makes clear China will weaponise supply chains to advance their interests,” said Skydio CEO Adam Bry.

This wasn’t an isolated incident. The Trump administration’s tariffs on Chinese goods, intended to boost American manufacturing, triggered retaliatory measures from Beijing. Prices for essential components like rare earth magnets soared, and U.S. drone makers found themselves squeezed from both sides — caught between rising costs and the ever-present threat of supply chain disruption.

Bureaucratic Bottlenecks and Market Realities

The U.S. military has tried to insulate itself from this vulnerability. The Defense Innovation Unit (DIU) maintains a “Blue List” of drones approved for military use, requiring them to be free of banned Chinese components. But the approval process is slow and opaque. Out of more than 300 companies that applied in 2025, only 23 made the cut. Startups like Darkhive and BRINC were rejected with little explanation. As BRINC’s Andrew Cote put it, “It’s easier to get sanctioned by China than approved by the DIU.”

Meanwhile, China’s DJI continues to dominate the commercial drone market, supplying everyone from U.S. farmers to local police departments. Efforts to ban DJI have repeatedly stalled, thanks to intense lobbying and the simple reality that American alternatives are often more expensive and less capable. As long as DJI remains on the market, there’s little incentive for investors to fund the long, difficult process of building a truly independent U.S. supply chain.

Rethinking the Supply Chain: Design Thinking for Resilience

So, how do we break free from this dependency? The answer lies in reimagining the entire supply chain. Currently, most drone manufacturers operate within an “hourglass” model: multiple suppliers feed into a single, vulnerable node — like batteries or rare earth magnets — before branching out again. This creates a single point of failure.

A more resilient model is the “branching” supply chain, with decentralised, redundant nodes. This approach is more expensive and complex, but it reduces the risk of catastrophic disruption. In Ukraine, for example, military engineers have adopted a modular, “Lego block” approach, sourcing interchangeable parts from Turkey, Poland, and the U.S. This not only reduces dependency on any one supplier but also speeds up battlefield repairs.

The Path Forward: From Dependency to Independence

To secure the future of America’s drone industry, experts argue that the U.S. must “rip the Band-Aid off” and accept short-term pain for long-term gain. This means:

• Expanding the Blue List with transparent, streamlined criteria so more innovative companies can qualify.
• Mandating resilient supply chains for critical components, with tax incentives for startups that use non-Chinese materials.
• Investing in public-private R&D hubs focused on next-generation technologies like solid-state batteries and open-source flight software.
• Collaborating with allies — especially Australia and the UK — to secure supplies of rare earth minerals and advanced chips.
• Setting NATO-wide standards for drone interoperability, creating a larger market for U.S.-approved designs.

The Stakes

Every day, dozens of U.S. police departments buy DJI drones. Every month, China refines 85% of the world’s rare earth magnets. Without urgent action, the next crisis won’t just be about rationed batteries — it could be a warfighting capability gap that hands Beijing a strategic advantage.

The question is no longer whether America can innovate. It’s whether America can innovate its way out of a dependency it created — and whether it can do so before the next supply chain shock hits. As Josh Steinman, former National Security Council supply chain lead, warns: “Either we choose to fix this, or China will choose for us.”