President Donald Trumps War Department is wagering heavily on a new generation of weapons manufacturers as part of a broader effort to rebuild and re?shore Americas defense industrial base.
According to The Daily Caller News Foundation, this shift marks a deliberate move away from the entrenched legacy contractors that have dominated Pentagon spending for decades and toward leaner, more innovative firms that promise speed, lower costs, and independence from hostile foreign supply chains. Secretary of War Pete Hegseth has framed the change as both a strategic necessity and a philosophical correction, signaling that the era of politically connected defense giants enjoying near-automatic rewards despite chronic underperformance is coming to an end.
The days of rewarding the comfortable old guard for failure are finished, Hegseth told aerospace company Rocket Lab in Long Beach, California. Washington plays games with lobbyists and accountants and bureaucrats. It plays games to block out new contestants, new competitors. Thats the whole point a circular process that enriches and benefits the same people.
Hegseths message to these emerging firms was unambiguous: the administration intends to back them with real money and long-term commitments, not just rhetoric. We will provide larger, longer, and more predictable contracts to companies like this one, he said at Rocket Lab. The field is wide open.
The War Departments Arsenal of Freedom tour, which took Hegseth and senior officials to multiple states earlier in January, included stops at Rocket Lab and Castelion, two California-based companies emblematic of this new-guard approach. A senior War Department official traveling with Hegseth explained that these firms lack of legacy systems and bureaucracy is precisely what makes them attractive in an era when the United States is racing to catch up with adversaries like China.
The idea with these new entrants is they dont have a legacy technology stack to build on theyre starting from scratch, the official told reporters during Hegseths California tour. Theyre using new manufacturing techniques at the start, and therefore, ideally, they could produce mass quantities cheaper.
One of the most striking distinctions between these upstarts and the traditional defense behemoths is their explicit rejection of Chinese components and materials. Both Castelion and Divergent Technologies, another firm highlighted on the tour, operate under a zero Chinese-reliance policy in their supply chains, a stark contrast with major incumbents that have woven Beijing-linked suppliers into critical systems.
The scale of that dependence is sobering. The second-largest U.S. military contractor in 2022, RTX (formerly Raytheon), relies on Chinese suppliers for 95% of the commodities related to aircraft and spacecraft parts 100% of tubes, pipes, hoses, and fittings [and] 54% of Raytheons electric motors and generators, according to a 2023 TenderAlpha analysis.
The administrations strategy is not only about diversifying suppliers but also about changing the financial model that has long governed defense procurement. Were trying to adopt the same model, where they invest their capital first the venture capitalist, they take the risk, not the American taxpayer. And when they deliver, we buy it, the senior War Department official continued.
This is a big revolution for the Department of War. Weve never had that kind of business model, if you will. And if we get that, we can have increased competition and were not subject to just five clients.
Castelion, a hypersonic missile manufacturer headquartered in Long Beach, is a prime example of this venture-backed, innovation-first approach. Co?founder and CFO Andrew Kreitz underscored just how young and aggressive the company is compared to the defense establishment it aims to disrupt.
We started the company in 2022. Castelion is barely 3 years old, Kreitz told reporters during Hegseths tour of the company headquarters in Long Beach, California. The reason we exist is to change the way the United States develops and manufactures hypersonic missiles.
Hypersonic weapons missiles capable of traveling at more than five times the speed of sound while maneuvering unpredictably are widely viewed as a decisive technology in modern great-power competition. Yet Kreitz warned that the United States, after years of complacency and procurement inertia, is badly trailing its chief geopolitical rival.
Hypersonics, he suggested, are an area where the cost of bureaucratic delay and overreliance on legacy contractors is now painfully visible. Americans, he argued, would be stunned to learn just how far the country has fallen behind.
Our adversaries, particularly the Chinese, are without exaggeration two decades ahead of us in [hypersonic] technology and far ahead in manufacturability and production rate, he said.
Castelions answer is to combine cutting-edge engineering with a patriotic insistence on domestic control of critical inputs. The company boasts a supply chain operating entirely independent of China, and hires only American citizens, a stance that aligns with conservative concerns about national sovereignty and industrial self-reliance.
Its strategically critical, right? The whole point is that were able to build things here, Kreitz said. You need to get to hardware early, you need to test, then you need to iterate fast, and then do it again. The way that youre able to do that is, anywhere that you need to, vertically integrate. So were not afraid to do manufacturing in-house.
In December, Castelion announced that it had raised $350 million in private funding, a game-changing capital infusion that Kreitz said will allow the firm to complete and fly its first weapon system, a hypersonic missile dubbed Blackbeard. That level of private investment, rather than taxpayer seed money, is precisely the kind of risk-sharing model the Trump administration is seeking to normalize across the defense sector.
Senior War Department officials say Castelion and similar firms are now on the cusp of transitioning from promising prototypes to real production capacity. These companies havent yet developed huge production lines like Lockheed theyve got great technology, and now were trying to get them their first production line, said a senior War Department official.
Whats unique about Castelion, they make a hypersonic missile the Chinese have those kinds of things, we have them too, but theyre very expensive. We pay $50-60 million pertheyre trying to do the same thing for $300,000-400,000.
That staggering cost differential, if realized, would not only transform U.S. hypersonic capabilities but also expose how decades of cost-plus contracting and bureaucratic padding have distorted the true price of advanced weaponry. Castelions leadership believes its culture is a key differentiator, and it is no accident that the companys DNA is heavily influenced by Elon Musks SpaceX.
Kreitz noted that he and his fellow co-founders are all SpaceX veterans, and that many of their engineers and technicians come from the same high-velocity, risk-tolerant environment. All three of the co-founders are ex-SpaceX, a lot of folks out on the floor, the engineers or technicians, a lot of them are ex-SpaceX, Kreitz said.
Having a culture that is risk-on, that is aggressive, that is willing to get to hardware as early as possible, test as early as possible, iterate as fast as possible that is the team.
Hegseths tour also included Divergent Technologies, a firm founded in 2016 that initially focused on automotive manufacturing before pivoting into defense applications. Divergent has developed advanced 3D printing processes using laser powder bed fusion a form of additive manufacturing that it says can dramatically accelerate the production of complex, high-performance parts.
Divergent is a company that is pioneering additive manufacturing they can basically 3D print missile bodies and structures, the War Department official said of the company. This holds tremendous promise to support things like the Patriot [missile] deal, where were trying to triple production in the defense industrial base, and scale it up with these additive manufacturing machines that give us the ability to build with fewer humans in the loop, using modern technology and digital engineering.
A senior Divergent official walked reporters through the technical distinction between conventional plastic 3D printing and the metal-based powder bed fusion process the company uses. In plastic 3D printing, youre adding new bits of hard material to the print bed, layer by layer by layer, the official said during the tour.
In laser powder bed fusion, you have an ocean of powder thats loose, and you are melting the specific pieces of the ocean that you want to turn into a shape.
While additive manufacturing has existed in aerospace since the 1990s, Divergent argues that only recent advances in robotics and artificial intelligence have made it truly transformative at scale. The companys approach integrates AI-driven design with robotic assembly, allowing entire systems to be optimized and built with far fewer parts and far less manual labor.
The reason we are able to make it work on our systems is because, as you said, weve combined it with AI driven design and robotic assembly at the end of the line, the Divergent official said. If youre just making small piece parts with additives, it doesnt matter how advanced your machine is, in my view, its not a good enough reason to use additive. You need some system level, functional integration.
The payoff, according to Divergent, is speed and scalability two attributes the Pentagon has repeatedly failed to achieve with traditional contractors and processes. We can get to actual hardware faster, and at faster speeds, too, the Divergent official said.
We can actually scale it faster than you can with conventional cast technologies because we have way fewer parts to deal with here.
Like Castelion, Divergent has made a conscious decision to cut China out of its supply chain entirely, a stance that reflects growing recognition that economic entanglement with a strategic adversary is a liability, not an asset. The company describes independence from Chinese supply chains as a core national security priority, not a marketing slogan.
We recognize the importance of independence from Chinese supply chains as just a core focus in the national security environment that were currently in, the Divergent official said. So today we have zero Chinese supply chain reliance.
Divergent believes its technology could significantly boost production of systems like the Patriot missile by printing missile bodies in fewer steps and reducing what it calls touch-labor, or the number of human interventions required in the manufacturing process. That reduction in humans in the loop not only lowers costs but also makes it easier to surge production in a crisis.
This is why every major contractor works with us, right? the Divergent official said. We are kind of their silver bullet to solving all of these structural supply chain issues, with castings, with forging.
The firm, like Castelion, has also tapped into the SpaceX talent pool, importing a culture of rapid iteration and engineering rigor that stands in sharp contrast to the slow, committee-driven ethos of many legacy defense firms. One Divergent engineer, who previously ran the Dragon spacecraft production team at SpaceX, said he brought that experience directly into his new role.
He explained that his goal was to increase their iteration rate leveraging this kind of iterative, fast paced design approach that I brought over from my time at SpaceX. That mindset move fast, test often, learn quickly is precisely what the administration is trying to institutionalize across the defense industrial base.
All of this is unfolding against the backdrop of a major budgetary and policy push from President Trump, who on Jan. 7 called for a dramatically expanded 2027 military budget and signed an Executive Order tightening expectations on defense contractors. The order targets firms that, in the administrations words, are single-mindedly [pursuing] investor profits at the expense of warfighter capability and readiness, a pointed rebuke to the Wall Street-driven priorities that have increasingly shaped the behavior of large defense corporations.
The proposed $1.5 trillion 2027 budget would represent a massive increase over current military spending of $901 billion, reflecting both the scale of the global threats facing the United States and the cost of reversing years of neglect and mismanagement. That request comes only weeks after the Pentagon failed its annual audit for the eighth consecutive time, a stark reminder that pouring more money into the same broken systems will not be enough.
For conservatives, the emerging picture is clear: rebuilding American military strength requires more than just bigger appropriations; it demands a fundamental reorientation toward accountability, competition, and national self-reliance. By elevating firms that shun Chinese supply chains, invest private capital first, and embrace rapid, hardware-focused innovation, the Trump administration is attempting to realign the defense sector with core American principles of free enterprise and national sovereignty.
Whether Congress and the entrenched defense establishment will fully embrace this course correction remains to be seen, but the stakes are unmistakable. As Hegseths Arsenal of Freedom tour highlighted, the choice is between clinging to a comfortable but failing status quo or empowering a new generation of American manufacturers determined to ensure that the United States is never again two decades behind its adversaries in critical warfighting technologies.
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