China currently controls over 90% of global rare-earth magnet production and about 80% of the US commercial drone market, giving it a major edge in cost and scale. US-made military drones can cost around $15,000, roughly three times more than Chinese equivalents, and replacing Chinese components could raise costs by up to 400%, reports The Wall Street Journal. On the battlefield, demand is massive—Ukraine uses about 10,000 drones per month, while Iran launched over 4,000 in a single month. The WSJ writes:

The degree to which China has helped build the suicide drones Iran is using to cause havoc in its war with Israel and the U.S. is less clear. But defense analysts and industry experts say Chinese control over global drone production means Iran is likely just as dependent as Russia and Ukraine.

“It has already won World War III because everything is in its hands,” Bulava’s drone specialist, who goes by the call sign Udav, said of China. “No one will be able to change that in the near future, or even in the long run.”

To close this gap, the Pentagon plans to purchase 340,000 drones at a target price of $2,300 each, but building a competitive domestic supply chain is expected to take years, with major policy shifts and bans not fully taking effect until around 2027. Against this backdrop, Skydio, the largest US-based drone manufacturer, has announced a $3.5 billion investment over five years to expand US drone manufacturing, increase R&D, and strengthen domestic supply chains, a move expected to create more than 2,000 jobs at the company and support over 3,000 additional roles across its supplier network.

A key part of this effort is “SkyForge,” an initiative designed to build a stronger US-based drone ecosystem, including a significantly expanded manufacturing facility and deeper investment in domestic suppliers.

Together, these steps aim to scale production, reduce dependence on foreign components, and reinforce US leadership in drone technology for public safety, national security, and industrial use.