The U.S. government has entered into a $6.6 billion agreement with defense technology company Anduril to develop a new submarine production facility in Baltimore, aimed at expanding the nation’s capacity to build Virginia-class attack submarines. The facility, projected to be operational by 2030, will span two million square feet and is intended to address the current shortfall in submarine production needed to counter potential threats such as a Chinese invasion of Taiwan.

Under the deal announced last week by President Donald Trump, Anduril will invest $3.7 billion of private capital alongside up to $2.9 billion in contracts from the U.S. Navy. In return, taxpayers are set to receive a 40 percent equity stake in the new shipyard. This government ownership stake has drawn mixed reactions, with concerns raised about potential conflicts of interest and market inefficiencies arising from the federal government holding equity in a project where it is the primary customer.

Anduril, known primarily for autonomous vehicle technology, aims to modernize submarine production by breaking down complex manufacturing processes into simpler tasks, reducing reliance on highly specialized labor. The facility will initially focus on producing smaller components such as torpedo tubes, with plans to eventually manufacture larger and more critical submarine parts. These components will then be shipped to existing government contractors in Connecticut and Virginia for final assembly.

Chris Brose, Anduril’s President and Chief Strategy Officer, emphasized the need to build production capacity in line with current technological standards without compromising safety or mission requirements. He highlighted the importance of certifying outcomes rather than adhering strictly to traditional production methods.

Despite strong bipartisan support for increasing submarine production, some industry observers question the wisdom of granting the government equity. They argue that government ownership could create barriers for other competitors, affect market dynamics, and potentially discourage private investment, especially given the guaranteed customer status Anduril already enjoys through Navy contracts. The 40 percent government stake reportedly was not discussed prior to the announcement, adding to concerns about transparency and proper market functioning.

The project has also secured significant local support, with Baltimore County expected to benefit from over 3,000 jobs and planning to provide subsidies amounting to as much as 13 percent of the private investment. This regional backing underscores the economic impact anticipated from the new shipyard.

Shortly before the Anduril announcement, competing firm Saronic broke ground on Port Alpha, a Texas-based shipyard focusing on autonomous and crewed vessels. Saronic’s investment of more than $3 billion is entirely privately funded, with no government ownership involved, illustrating a contrasting approach to defense manufacturing expansion. Both projects reflect a broader effort to revitalize and diversify the U.S. defense industrial base amid rising geopolitical challenges.