NATO summit: Armament frenzy and the era of Silicon Valley
The NATO summit in The Hague starts today (June 24) with a large-scale meeting attended by numerous defense ministers, defense experts and arms industry representatives.
The NATO Defense Industry Forum aims to help NATO countries rearm quantitatively at an “unprecedented speed” and to make the latest technologies more useful in future wars, according to the alliance.
Israel's attacks on Iran, where artificial intelligence (AI) technology is more widely used than ever before, are currently setting military technology standards.
According to reports, the Israeli armed forces are “coordinating drone swarms, secret networks, and sabotage missions in real time,” by integrating “air, cyber, and ground operations,” especially with the help of AI.
While the US is rapidly advancing the integration of AI into defense, German initiatives are also achieving success in the production of AI-controlled drones (UAVs).
These include defense startup Helsing, which is considered the most expensive venture in Germany, leaving civilian companies behind.
Ukraine as a test site
At this year's Defense Industry Forum, NATO draws conclusions from experiences that show that wars largely end according to the defense industry capacities of the warring parties.
For example, according to Dutch Defense Minister Ruben Brekelmans, the war in Ukraine has become a “inter-industrial war”. The ministry of Brekelmans organizes the forum with NATO and in cooperation with the industrial union VNO-NCW and the Dutch Ministry of Foreign Affairs.
It is underlined that those who can produce large quantities of military equipment and especially those who can do so quickly have a decisive advantage.
More than 400 participants, including defense ministers, defense experts and especially representatives of the defense industry, were invited to the forum.
According to the statements made before the meeting, the discussions will focus on "expanding and intensifying weapons production at an unprecedented rate".
In addition to quantitative increases, financing options and how the latest technologies can be used in warfare, including "autonomous systems", will be discussed at the meeting.
AI war: Azerbaijan and Ukraine example
Looking at the reports of the Israeli armed forces' operations in the Iran war, an idea of how the latest technologies are used can be obtained.
The use of UAVs is nothing new, but the turning point of the UAV war was in the Azerbaijan-Armenia war in 2020. UAVs are currently playing an important role in the Ukrainian war.
The widespread use of artificial intelligence has also been activated in the Iran war: According to Al Monitor's analysis, the AI-based war has been centralized for the first time. According to an expert from the Washington-based Middle East Institute (MEI), Israel is “coordinating drone swarms, secret jets, and sabotage missions in real time by integrating air, cyber, and land operations.”
AI-based cyber attacks and AI-based electronic warfare also made it possible to neutralize Iran's air defenses. The MEI expert shows that the Mossad has established a secret drone base near Tehran, and Tel Aviv has launched AI-controlled attacks from there.
Israel also uses civilian vehicles equipped with explosives used as assault weapons in Iranian cities with the help of AI.
The weight of Silicon Valley is increasing in NATO
In the USA, the Trump administration continues its policy of turning to high-tech warfare with various tools, including artificial intelligence.
The military budget, which already accounts for more than a third of global military spending, has been increased by 13.4 percent to 1.01 trillion dollars.
At the same time, resources and capacities are shifted from 5 companies known as traditional U.S. defense companies (General Dynamics, Lockheed Martin, RTX, Northrop Grumman, Boeing) to startups in the artificial intelligence and aerospace industries.
An example of this is the "Golden Dome" project, a continental missile defense system that takes an example of Israel's Iron Dome system. Elon Musk's SpaceX and Starlink companies and young technology companies such as Palantir and Anduril hope to get big tenders from this project.
Despite Elon Musk's withdrawal from the government, technology companies from Silicon Valley remain strongly represented by Trump's administration in terms of personnel.
For example, Palantir CEO Alex Karp's employees are in influential positions at the State Department and the Pentagon. According to reports, there is currently a “new tone” in the U.S. Department of Defense, and this is causing “almostly enthusiastic” among “startups and tech companies on the West Coast of the US.
Germany's most expensive startup
Although the German Armed Forces are still far from achieving a similar success, the first signs of success have begun to be seen in the German defense industry in its efforts to establish high-tech startups similar to those in the US.
Currently, Germany's most valuable startup is Munich-based Helsing. The company's co-founder, Gundbert Scherf, was once sent by McKinsey to serve as the “Strategic Weapons Control Commissioner” of Federal Defense Minister Ursula von der Leyen.
Helsing made a name for itself by producing kamikaze unmanned aerial vehicles for Ukraine, which is controlled with the help of artificial intelligence and cannot be stopped by signal jammers.
Recently, it has been reported that Ukrainian soldiers considered Helsing unmanned aerial vehicles too expensive and of low quality compared to some competing models.
However, Helsing continues its negotiations to supply equipment for an "unmanned aerial vehicle wall" planned to be established on the eastern flank of NATO.
In addition to unmanned aerial vehicles, this company is primarily developing artificial intelligence for fighter jets, submarines and tanks. In this way, these tools can be used more efficiently in the future.
Helsing, which is currently worth 12 billion euros and is the most expensive startup in Germany, is preparing to equip Eurofighter aircraft for electronic warfare in collaboration with Swedish Saab.
German AI studies focus on Ukraine
In addition to the AI and drone company Helsing, drone manufacturer Quantum Systems, located in Gilching near Munich, is also on the rise.
Quantum Systems was founded in 2015 by former German Armed Forces officer Florian Seibel. The company manufactures not only for the German Armed Forces, but also for Ukraine.
It will also be in close cooperation with Airbus Defence in the future. A letter of intent on this subject was signed at the Paris Aviation Fair held at Le Bourget Airport recently.
According to the letter, Quantum Systems will be involved in the Future Combat Air System (FCAS) project, a sixth-generation fighter aircraft that will work together with unmanned aerial vehicles and unmanned aerial vehicle swarms.
Quantum Systems has been funded by Airbus Defence with 40 million euros to date.
Pentagon-linked capital flows to Europe
Although Helsing and Quantum Systems are German companies, Rheinmetall cooperates with the U.S. company Anduril, which is funded in part by famous US technology billionaire Peter Thiel in the field of drones and artificial intelligence.
Rheinmetall and Anduril signed a strategic partnership agreement last week to produce military unmanned aerial vehicles.
According to the statement from Anduril, the partnership focuses on the development of three proven capabilities aimed at covering more over time: the integration of the European version of Barracuda, part of Anduril's family of low-cost, mass-produced autonomous aircraft, into Rheinmetall's digital sovereignty framework (“Battlesuite”); the inclusion of Anduril's high-performance, multi-group 5 autonomous aircraft (AAV) of the European version of the Fury into Rheinmetall's digital dominance framework (“Battlesuite”); and exploring opportunities for solid rocket engines for use in Europe by taking advantage of Anduril's new manufacturing approaches.
Brian Schimpf, CEO of Anduril Industries, said, “This is a different model of defense cooperation based on co-production, operational compliance and mutual respect for sovereignty. Together with Rheinmetall, we are developing systems that can be produced quickly, widely deployed and adapted to the development of NATO missions," he said.
This agreement allows a US technology company to gain an important position in the spread of weapons technology in Europe, which is contrary to the efforts of Berlin and Brussels to become as autonomous as possible independently of the US in arms production.
Anduril caught his eye on Europe
Last March, it was announced that Silicon Valley giant Anduril was considering producing unmanned aerial vehicles and signing contracts with European arms manufacturers in the UK while preparing to increase the Defence spending of the European continent.
Rich Drake, Anduril's UK and European general manager, told Bloomberg, “If we receive enough orders, we definitely plan to open a facility in the UK. We are determined to be an independent British company," he said.
American defense technology companies such as Anduril and data analytics developer Palantir have started to attract attention in Europe since the start of the war in Ukraine.
Early last February, Anduril and the British government announced a deal of about £30 million ($38 million) to supply Ukraine with offensive drones.
In June 2024, Anduril and Rheinmetall signed an agreement to work together on air defense systems focusing on small unmanned aerial vehicles.
Drake said the company has also started negotiations with defense companies in "a few other countries" outside of Germany.
Anduril is backed by a number of investors, including Silicon Valley's leading venture capital funds, Andreessen Horowitz and the Founders Fund, and has recently achieved a number of successes, including a deal with Meta to provide mixed reality headlines for soldiers.
The importance of Europe for traditional American arms companies
Leading U.S. defence companies have long-standing ties in Europe, which account for a significant portion of their annual revenue, and hope that deeper partnerships will enable them to continue to do business on the continent.
This region accounts for about 11 percent of the annual revenues of both Lockheed Martin and RTX in 2024. While many European armies own Lockheed's F-35 fighter, RTX's Patriot missile is by far the market leader in the field of air defense.
Lockheed and RTX's defense subsidiary Raytheon have announced that they have established extensive co-production partnerships on the continent over the past two years. Lockheed will establish large-scale missile production with Rheinmetall, and the joint venture of Raytheon and European missile manufacturer MBDA will produce Patriot missiles for NATO in Germany.
Thomas Laliberty, head of land and air defense systems at Raytheon, said that countries exhibit "different approaches to the concept of sovereignty".
He added that Raytheon is trying to "understand each of them and help them meet these requirements as much as we can."
Lockheed Martin's chief operating officer Frank St John told the Financial Times in Paris that the company is not only expanding its supply chain in Europe, but also building production facilities.
Lockheed added that the partnerships ensure that the region is affordable for its financing and can meet European requirements.
Boeing also says it is "examining what cooperation opportunities are available". The company stated that it wants to apply the joint development approach it applied to Australia to develop the unmanned fighter aircraft MQ-28 Ghost Bat in Europe as well.