U.S. can spend billions less on defense, says Anduril Industries founder
Defense spending has been the talk of Singapore’s Airshow this week but that’s not an accurate way to measure military strength, Palmer Luckey, founder of defense tech firm Anduril Industries, said on CNBC’s “Squawk Box Asia” Wednesday.
That comes after U.S. President Donald Trump in January expressed interest in raising the U.S military budget to $1.5 trillion in 2027, which he said would allow Washington to build a “Dream Military.”
“Too many people measure the success of the defense base in terms of dollars,” Luckey said.
Rather, military strength should be measured by output, or what countries actually receive from their spending, he said.
This is part of the reason why American defense companies aren’t incentivized to produce military products that cost less, Luckey added.
Ranked No. 1 on the 2025 “CNBC Disruptor 50” list, Anduril Industries was founded by Luckey in 2017. The company, which makes AI-powered autonomous defense products, is currently valued at $30.5 billion.
Measuring output, not dollars
“Unfortunately, we have a pretty inefficient defense industrial apparatus,” Luckey said. “I don’t think that we’re getting nearly as much for our dollar as a lot of other nations are.”
Luckey said China is “getting a lot more aircraft, a lot more missiles, certainly a lot more ground forces for every dollar they spend. And so you can be in a situation where China is spending less than the United States, but the output is double or triple or quadruple.”
China’s military budget in 2025 was set at 1.78 trillion yuan (about $249 billion).
China’s shipbuilding capacity is roughly 232 times that of the U.S., and Beijing has held onto 66.8% of global orders as of end-December 2025, according to its state media.
Palmer Luckey, CEO, Anduril attends the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, California, U.S. December 6, 2025.
Jonathan Alcorn | Reuters
“We need to get our act together so that we can get everything that currently costs $1.5 trillion for well under a trillion dollars,” he said. “I would love to see a sub $500 billion defense budget if it’s getting us the things that we need.”
However, U.S. defense spending isn’t set up in a way that will make that happen, he said. The current system rewards companies that move slowly, make products that “break often,” and “spend money building the wrong thing.”
‘Perfectly fair’
Trump in early January criticized U.S. defense companies for prioritizing capital returns and executive pay over investment and on-time deliveries.
Though he did not name names in the Jan. 9 Truth Social post, Trump said he would not permit defense companies to issue dividends or stock buybacks “until such time as these problems are rectified.”
Luckey called this criticism “perfectly fair.”
“Defense companies are unique in that they make almost all of their money straight out of the wallet of the taxpayer,” he said.
“Remember, he didn’t say, hey, you people are making too much period. He said…if you’re going to be billions of dollars over budget and years behind on your delivery, you don’t get to then pay yourself tens of millions of dollars and shovel huge piles of money out to your investors, as if you’re a successful company,” Luckey said.
He added that major American defense companies can’t blame supply chain problems which ramped up during the Covid-19 pandemic – and continue to plague the industry today.
“This is not a one-year mistake – this is a pattern. It’s been going on, not for months or years, but for decades,” he said.
He also rejected those who say Trump’s criticism may soon apply to Anduril Industries, which will “almost certainly” go public in the future.
“We are delivering on time,” he said. And “we are staying on budget.”
