Palmer Luckey's start-up Anduril just proved it can challenge legacy defense contractors and win

• Anduril has just been selected as one of two vendors for a major US air force contract.

• The 7-year-old start-up beat out legacy defense contractors Boeing, Lockheed, and Northrup Grumman.

• "Impossible to overstate the importance of this win," tweeted founder Palmer Luckey.

Anduril Industries, the defense tech startup run by Palmer Luckey, has just been awarded a major contract by the US Air Force, beating out legacy names like Boeing and Lockheed Martin.

Anduril, founded in 2017, has been contracted to design and test autonomous fighter jets as part of the Collaborative Combat Aircraft (CCA) program, a core part of the Air Force's efforts to modernize its fleet.

The Air Force hopes to eventually buy at least 1,000 CAA systems at a cost of $30 million per drone. In the latest fiscal 2025 budget request it requested $557 million for the program and has said it plans to spend almost $9 billion on the initiative by 2029.

The joint contract will be split between Anduril and General Atomics. The companies will now work on designing, manufacturing, and testing the unmanned aircraft and drones.

The decision proves just how important autonomy and AI are to the future of US national security strategy.

The final choice came down to five companies: Anduril, General Atomics, Boeing, Lockheed Martin, and Northrup Grumman. Rather than the stalwart giants of the defense industry with a long track record of building fighter jets, it was seven-year-old Anduril that the Air Force selected.

"Impossible to overstate the importance of this win," tweeted Luckey following the announcement.

"Anduril is proving that with the right team and business model, a seven-year-old company can go toe-to-toe with players that have been around for 70+. The real winner? The United States of America."

The US military is increasingly turning to the growing pool of private defense tech start-ups as it races to compete with rivals like China to develop the most advanced military technology.

"As a country, we are actually making really good strides and moving fast enough," said Luckey in an interview with CNBC. "I'm confident we're going to deliver on budget and on schedule some really sick AI-powered fighter jets," he added.

The success of Anduril will give hope to other AI players from Silicon Valley hoping to break into the defense sector.

And the demand is there for them if they can make it: venture capitalists have put more than $100 billion into defense tech since 2021, according to PitchBook data.

"Anduril is proud to pave the way for other non-traditional defense companies to compete and deliver on large-scale programs," the company wrote in a statement.

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