The Victory Plan Reborn: Forcing the Surge of America’s Drone Industrial Base

Leveraging artificial obsolescence to operationalize the domestic supply chain.
by Ed Dodd

In my previous article, we explored the 1941 Victory Plan as a masterclass in industrial foresight, where the US moved from isolation to becoming the “Great Arsenal of Democracy.” As President Franklin Delano Roosevelt noted in 1940¹ the goal was not just to design weapons, but to produce them in sufficient volume to save future generations the “agony and suffering of war.” Today, as we face a new era of near-peer competition, the Victory Plan has been reborn, with a new focus shaped by the modern battlefield. While the 1940s emphasis was on steel and aircraft, our current challenge lies in the rapid, high-volume production of electronics and sensors like those that power modern unmanned systems.

In this new reality, the ability to scale manufacturing has become as important as the ability to innovate. Secretary Hegseth has signaled that the Department of War will do business only with industry partners that share a relentless focus on speed and volume above all else.² This pivot moves the priority from a handful of massive prime contractors toward dynamic vendors capable of surging American manufacturing at scale. As Hegseth noted during his nationwide tour, the goal is to transform factories of the heartland into the foundries of a new golden age of peace through strength.³ For manufacturers, this is a call to move beyond prototyping and demonstrate the industrial capacity to sustain a protracted, high-attrition conflict.

While declarations of acquisition reform are not new for DoW leadership, they often lack specifics and typically result in policy changes that have less impact on the broader industry than hoped. Secretary Hegseth’s Arsenal of Freedom speech talked about changes aimed at enabling a larger part of the national industrial base and spoke in general terms about the potential opportunities those changes would have for those nimble enough to achieve speed and scale. Now, just months after Secretary Hegseth’s speech, the December 2025 FCC drone ban has effectively moved the conversation from general strategy to a specific opportunity for the American electronics industry.

The Dependency Trap

The Chinese drone industry accounts for more than 90% of the commercial drone market. This is a result of a 10-year program called Made in China 2025 launched in 2015.⁴ Under this initiative, the Chinese government provided huge, multilayered subsidies to companies like DJI, ranging from direct capital investment, low-interest loans from state-owned banks, to subsidized land and R&D tax credits. These financial advantages enabled Chinese firms to engage in aggressive product dumping, selling drones and drone components at prices often below cost. This artificially low pricing suppressed the emergence of a domestic US manufacturing base, since American startups couldn’t match the scale or prices offered by Chinese companies.

Despite these obvious signs of market manipulation, formal anti-dumping actions were avoided for years, primarily due to the complex interdependence of the global electronics supply chain. Federal regulators and industry leaders feared that aggressive trade litigation would lead to retaliatory strikes on critical components, such as the rare earth magnets and lithium-polymer batteries, where China holds a near-monopoly. By the time the US began discussing targeted restrictions, the dependency trap was already set: there was so little domestic industry that immediate decoupling threatened to ground the very public safety and infrastructure programs the government sought to protect.

Dependency as a Strategic Risk

Concerns over Chinese dominance of the drone market are more than simply economic. Reliance on foreign-produced UAS and their components presents a significant risk regarding surveillance and data security. These systems can enable foreign actors to monitor US territory, military bases and critical infrastructure. The security risk extends beyond the airframe to include subsystems like flight controllers, navigation systems and data transmission devices, all of which can provide remote access to sensitive information.

Beyond data security threats, foreign-produced unmanned aircraft systems (UAS) pose significant risks of remote system disruption. National security determinations have highlighted that foreign-manufactured drones can be “disabled at will via software updates,” effectively permitting a foreign adversary to shut down or cripple critical equipment on demand. This capability is particularly concerning for drones used in public safety and emergency response, where any reduction in operational performance could have immediate, life-threatening consequences.

The risk of disruption is a critical priority when considering the kinetic and operational threats to mass gatherings, especially as the United States prepares for high-profile events such as the 2026 FIFA World Cup, the America250 celebrations and the 2028 LA Olympics. The FCC and interagency commissions have noted that foreign-made UAS and their critical components could enable “destructive operations” over these dense urban areas, making the transition to secure, domestic technology a highest-priority national security mandate.⁵

The other risk associated with the Chinese government-sponsored market dominance is the continued suppression of the domestic drone supply chain. The dependence on foreign manufacturers has hollowed out American manufacturing capacity, resulting in chronic supply chain fragility. This strategic bottleneck means that even as the US attempts to pivot toward secure systems, it remains dependent on an adversary’s production lines for the very components required to keep domestic alternatives flight-ready.

This dependency grants foreign actors substantial control over when and how supplies would be cut off. Whether through a sudden halt in parts exports or a malicious firmware update, the operational lifespan of US drone technology is largely subject to foreign influence. By controlling the flow of essential parts and the software that governs them, Chinese companies and their government sponsors decide when a fleet becomes obsolete or non-functional. To avoid being at the mercy of a nation at a time when conflict may be imminent, the US must take control of that timing, and do it in a way that is gradual enough to avoid a collapse of US drone manufacturing, but fast enough to provide the demand shock necessary to shore up existing domestic suppliers and encourage new market entry.

The Regulatory Pivot: A New Victory Plan

Back in 2024, Congress laid the foundation for action in the drone market. Section 162 of the 2025 National Defense Authorization Act (NDAA) established a legal mandate for the supply chain resiliency of small UAS, while Section 164 prohibits the procurement of LIDAR made in restricted countries, including China.⁶ This created budgetary and legal pressure for the Executive Branch to act against foreign drone technology dependency.

In 2025, two executive orders (EOs) were issued. The Restoring American Airspace Sovereignty EO acknowledges the risks that drones pose to public safety in the hands of bad actors, and establishes a range of activities to minimize any exposure to the risk of drones to public infrastructure, military and federal facilities and large events.⁷ The Unleashing American Drone Dominance EO establishes efforts to accelerate the testing and operation of UAS while encouraging the expansion and scale-up of domestic production.⁸

Section 7 specifically addresses strengthening the American drone industrial base and requires the Secretary of Commerce to propose rulemaking to secure the United States drone supply chain against foreign control or exploitation.” The proposed Commerce action to ban or restrict Chinese drones and components was met with industry resistance, with one expert responding, “Immediately removing all foreign adversary-based sources of supply for critical drone components would have a catastrophic effect on the American drone industry.”⁹

While the FY2025 NDAA included some language to encourage the domestic drone industry, stronger language from the Countering CCP Drones Act was originally incorporated into the House Version of the NDAA. The Senate did not include that language in its version, indicating a successful lobbying effort by DJI and drone operators, many of whom cited that DJI provided data. Commerce action was met with similar resistance to include domestic drone manufacturers that depend on Chinese-made parts. Active efforts to ban Chinese drones and components have not been effective. There was a ticking bomb inside the NDAA, however.

Section 1709 of the FY2025 NDAA required the executive branch to assess whether DJI communication and surveillance technology or services pose an “unacceptable risk to the national security of the United States.” Furthermore, the section includes a clause stating that if no determination is made, the FCC will automatically add them to the covered list, a list of equipment that under the Secured Networks Act cannot be authorized, imported or sold in the United States.

Essentially, if the government did not assess the DJI technology in time, an automatic ban would be put in place. On December 21, 2025, the FCC released a draft of its National Security Determination on the Threat Posed by Uncrewed Aircraft Systems (UAS) and UAS Critical Components Produced in Foreign Countries.⁵ On December 22, the FCC added UAS and critical components to the covered list.¹⁰ This was revised based on the DoW’s January 7th input to temporarily include a few exceptions. Next, we will unpack what this means.

Artificial Obsolescence and the Domestic Mandate

As of December 22, no new UAS or UAS critical components will be approved for import or sale in the United States; previously approved items may continue to be sold. In the short term, this does two things: freezes the level of technology being imported and starts the clock on availability. In the medium term, it provides drone manufacturers and commercial operators with the current equipment they need to stay in business while establishing the urgency needed to nurture the domestic supply chain.

Key drone components include

• Flight controllers and autopilots: The strategic brain of the aircraft, these are the highest priority targets for replacement.
• Radio and data Transmission links: Critical for data security.
• Ground control stations (GCS): Trusted HW and SW prevent data breaches at the point of operation.
• Navigation and positioning modules: Control where the drone is permitted to fly and what it can see.
• Sensors and LIDAR: Essential for high-fidelity mapping.
• Smart batteries and power management (BMS): A potential point of remote system disruption.
• Propulsion systems (motors and ESCs): High turnover consumables that must be produced at scale.

By targeting only new equipment authorizations, the FCC has effectively frozen the level of foreign technology permitted within the US national airspace. This move prevents further entrenchment of sophisticated foreign sensors and communication protocols that have become increasingly difficult to audit. While legacy systems currently in the field can continue to operate, they are now technologically “static,” unable to introduce new hardware-based capabilities that might pose further security risks. For the first time in a decade, American manufacturers are no longer chasing a subsidized, moving target; the foreign technological “ceiling” has been fixed, permitting domestic firms to close the capability gap without the fear of being undercut by a state-funded iteration before their products even hit the market.

While the technological freeze provides a temporary baseline, it simultaneously triggers a state of artificial DMSMS (diminishing manufacturing sources and material shortages). In a typical product lifecycle, obsolescence occurs naturally as newer, more efficient parts replace the old. Here, however, obsolescence is being dictated by legislation. By prohibiting new authorizations, the government has essentially placed a “death date” on the foreign-made fleet currently in use. There will come a time when manufacturers commit resources to manufacturing new versions of their products. While these versions might technically be compatible upgrades for existing equipment, they will not be authorized in the US, and it will be as though the product ceased to be manufactured, with no replacement. For operators, this creates an immediate, high-stakes countdown. Even if a foreign-made drone is physically functional today, the inability to import new, authorized replacement parts or certified subsystems means the entire platform is on a predetermined path to operational extinction.

To ensure this countdown does not lead to a catastrophic collapse of public safety and commercial operations, the government has provided a critical bridge through the Blue UAS initiative. On January 7, the Undersecretary of War for Acquisition and Sustainment carved out exceptions for items on the Blue UAS Cleared List and for components that qualify under the Buy America Act.¹¹ While they provide some flexibility and may soften the shock of the ban, these exemptions are temporary and expire at the end of 2026.

Managed by the Defense Contract Management Agency (DCMA), the Blue UAS Cleared List is a curated catalog of drones and components that have undergone rigorous cybersecurity scrubs and are verified as NDAA-compliant.¹² By excepting these vetted systems from the most stringent restrictions, federal policy ensures that the pipeline for verified, secure components remains open. This framework provides a stable environment that enables operators to maintain their missions as the domestic market prepares to take the lead.

Ultimately, this managed transition is designed to clear a huge space in the market that only domestic electronics manufacturers can fill. By removing the pressure of subsidized foreign dumping and establishing clear standards for compliant tech, the government has created a guaranteed demand for domestically manufactured components. This is the new Victory Plan in action: a policy-driven shock that signals to investors and engineers that the era of foreign dependency is over. As the US prepares to secure its skies for the 2026 World Cup and beyond, the market space has been created, and the opportunity for a domestic industrial surge is now clear and actionable.

Conclusion

The vacuum created by the FCC is more than a policy shift; it is a generational invitation to the American electronics industry. The Victory Plan of 1941 succeeded because America’s foundries rose to meet a challenge that seemed industrially impossible. Today, our foundries are our clean rooms and assembly lines. Our steel is the PCB and SMT parts that make autonomous flight possible. The artificial obsolescence of foreign drone technology has cleared the board, but that vacancy will only be filled if domestic manufacturers move with speed, at scale.

As the clock winds its way through 2026, the era of convenient dependency has officially ended. We are no longer waiting for the market to correct itself against subsidized foreign dominance. The government has stepped in to force that correction. For the domestic innovators and investors willing to seize this moment, the mandate is clear. Build the vetted sub-systems that will define the next century of aerospace. The Arsenal of Freedom is being rebuilt, and its success will be measured, in part, by the resilience of the American-made components that secure our skies.End of article content 

References

1. F. D. Roosevelt, The Great Arsenal of Democracy, fireside chat, American Rhetoric, https://www.americanrhetoric.com/speeches/fdrarsenalofdemocracy.html.
2. P. Hegseth, Hegseth at National War College, November 2025, https://www.rev.com/transcripts/hegseth-at-national-war-college.
3. P. Hegseth, Remarks by Secretary of War Pete Hegseth at Newport News Shipyard, January 2026, https://www.war.gov/News/Transcripts/Transcript/Article/4371304/remarks-by-secretary-of-war-pete-hegseth-at-newport-news-shipyard/.
4. Association for Uncrewed Vehicle Systems International, Partnership for Drone Competitiveness: At a Glance, https://www.auvsi.org/advocacy/advocacy-initiatives/partnership-for-drone-competitiveness/at-a-glance/.
5. Federal Communications Commission, National Security Determination for UAS, Dec. 21, 2025, https://www.fcc.gov/sites/default/files/National-Security-Determination-for-UAS.pdf.
6. United States Congress, FY2025 National Defense Authorization Act, Dec. 23, 2024, https://www.govinfo.gov/content/pkg/PLAW-118publ159/pdf/PLAW-118publ159.pdf.
7. The White House, Restoring American Airspace Sovereignty, Jun. 6, 2025, https://www.whitehouse.gov/presidential-actions/2025/06/restoring-american-airspace-sovereignty.
8. The White House, Unleashing American Drone Dominance Executive Order, Jun. 6, 2025, https://www.whitehouse.gov/presidential-actions/2025/06/unleashing-american-drone-dominance.
9. D. Jeans, “Silicon Valley’s Military Drone Companies have a Serious ‘Made in China’ Problem,” Apr. 16, 2025, Forbes, https://www.forbes.com/sites/davidjeans/2025/04/16/silicon-valley-drones-china-problem.
10. Federal Communications Commission, List of Equipment and Services Covered by Section 2 of the Secure Networks Act, Jan. 7, 2026, https://www.fcc.gov/supplychain/coveredlist.
11. M. P. Duffey, National Security Determination on the Threat Posed by Certain Uncrewed Aircraft Systems and Certain Uncrewed Aircraft Systems Critical Components, Jan. 6, 2026, https://www.fcc.gov/sites/default/files/NSD-FCC-Covered-List-Waiver0126.pdf.
12. Defense Contract Management Agency, Blue UAS Framework, Feb. 5, 2026, https://bluelist.appsplatformportals.us/Framework.
13. Z. Dukowitz, “DJI Ban Update – Senate Revises the Countering CCP Drones Act from the 2025 NDAA,” Jul. 25, 2024, Commercial UAV News, https://www.commercialuavnews.com/dji-ban-not-moving-forward-senate-drops-the-countering-ccp-drones-act-from-the-2025-ndaa.

Ed Dodd is vice president of business development at Cofactr (cofactr.com); ed.dodd@cofactr.com.