President Donald Trump and Anduril Industries unveiled a $6.6 billion deal to expand U.S. submarine production, with the defense tech firm investing $3.7 billion in a Maryland shipyard to boost Virginia-class submarine output, creating 3,100 jobs and addressing bottlenecks in the Navy’s shipbuilding capacity.
Anduril Industries, a defense technology company backed by Silicon Valley investors, secured a $2.9 billion Navy contract to build critical submarine components, while investing $3.7 billion of its own capital to establish a 2-million-square-foot facility in Baltimore’s Sparrows Point, a former Bethlehem Steel site. The project, dubbed Arsenal-2, aims to increase production of Virginia-class attack submarines, a key pillar of U.S. naval strategy, by addressing supply-chain bottlenecks such as torpedo tubes and hull sections. The deal was announced on October 6, 2026, with President Trump scheduled to visit the site to formally endorse the initiative.
Deal Structure and Production Goals
The agreement, announced on October 6, 2026, combines $2.9 billion in Navy funding with Anduril’s private investment, totaling $6.6 billion for the submarine industrial base. The company will manufacture components for General Dynamics Electric Boat and Huntington Ingalls Industries’ Newport News Shipbuilding, which assemble the submarines. A senior administration official stated the facility could add 9 million annual labor hours to the industrial base, a 15% increase in capacity, by 2032. Anduril plans to begin producing parts in California in 2026, with full operations at Sparrows Point starting in 2030. The contract is controversial, having been awarded just days after Anduril co-founder Palmer Luckey was appointed to a Pentagon weapons advisory group, according to a source.
We need to grow the maritime industrial base, the submarine industrial base, so that we can produce more submarines,
said Anduril President Chris Brose, emphasizing the project’s role in meeting the Navy’s goal of building two Virginia-class submarines annually. The company’s software-defined production system, ArsenalOS, will streamline workflows, enabling faster training of workers and maintaining quality standards for nuclear submarine parts. The facility will initially focus on smaller components, including torpedo tubes, before expanding into larger sections like bows and sterns, according to a senior administration official.
HII’s Newport News Shipbuilding welcomed Anduril as a future subcomponent partner,
while General Dynamics, which builds Virginia-class submarines, has a $76.6 billion contract with the Navy for new vessels. Anduril has started manufacturing torpedo tubes at a California site and intends to move this production to Baltimore when the newly named Arsenal-2 shipyard becomes operational.
Political Tensions and Economic Impact
The project sparked political friction when President Trump barred Maryland Gov. Wes Moore from speaking at the event, citing a disagreement over state incentives. Moore, a Democrat, had been invited to the ceremony at Tradepoint Atlantic but was removed after the White House opposed his participation. The governor criticized the move, calling it “unfortunate,” while Anduril and the Trump administration emphasized the deal’s economic benefits. Maryland officials estimated the facility would generate $2 billion in annual economic output and 14,000 jobs, including 3,100 direct positions.
The state and Baltimore County committed to matching up to 13% of Anduril’s investment through tax incentives, including a $210 million property tax break over 30 years. The project also includes a workforce-training center, part of Maryland’s effort to secure a Maritime Prosperity Zone
designation. With this facility, thousands of Marylanders will have new pathways to work, wages, and wealth,
Moore said, calling it the state’s largest private investment in a decade. Baltimore County Executive Kathy Klausmeier highlighted the site’s historical significance, noting its role in World War II shipbuilding.
Anduril’s plan faces hurdles, including securing permits and proving its ability to meet nuclear-grade production requirements. The company’s Orange County facility, set to begin operations in 2026, will test manufacturing methods before scaling to Baltimore. We’re going to be working quickly,
said an industry official, though no timeline for full-scale production was disclosed. The Navy has identified torpedo tubes as a gating component
holding up production, and Anduril’s facility aims to address this bottleneck.
Reactions from Industry and Government Officials
The deal also deepens Anduril’s growing relationship with the Pentagon, following War Secretary Pete Hegseth’s appointment of company founder Palmer Luckey, alongside Elon Musk and former House Speaker Newt Gingrich, to spearhead Project Meridian, a 120-day analysis on future warfare strategies and required military technologies. The project, outlined in a Pentagon memo, aims to map the trajectory of future warfare, identify critical capability gaps, and propose actionable solutions,
according to the memo. Pentagon Chief Technology Officer Emil Michael was directed to oversee the initiative.
The company’s portfolio includes systems like the Ghost Shark autonomous undersea vehicle and the Roadrunner reusable missile-like air vehicle. This is an opportunity to really reimagine how a shipyard is built and how this work is done,
Brose said, emphasizing the facility’s potential to innovate beyond traditional shipbuilding methods.
Broader Strategic Implications
The deal aligns with Trump’s broader push to revitalize U.S. shipbuilding, including an executive order to strengthen the maritime industrial base. It also supports the AUKUS security pact, which requires the U.S. to transfer Virginia-class submarines to Australia. Anduril’s expansion reflects the Trump administration’s focus on using private-sector innovation for national defense, with venture capitalist Marc Andreessen, founder of Andreessen Horowitz, named to the Pentagon’s defense policy board this summer alongside Thiel Capital’s Blake Masters.
This is about putting more food on the table and being able to meet the requirements that our country has to produce more submarines,
said Brose, who described the project as a software-defined shipyard
capable of adapting to future threats. The facility’s 187-acre site, once home to a steel mill, symbolizes a return to industrial leadership, with Trump calling it one of the biggest and one of the most significant shipyards anywhere in the world.
The project’s success will depend on its ability to scale production while adhering to the Navy’s rigorous safety standards, a challenge Anduril acknowledges but remains optimistic about overcoming.