Tech Geopolitics and Defence, 2024 in review
Hi all, this newsletter is a few days later than I hoped. I had a long overdue and extended trip to 🇫🇷 Paris last week to visit some of the brightest local minds. It was great to catch up with so many of you 👋
📣 PSAs:
2024 roundups: read the ‘deeptech roundup’ and ‘robotics roundup’ published this last month. They cover all the key talking points, themes and technology progress in REALTECH
✈️ Travel: I will be in Amsterdam (18th-19th February)
🧑🏼🔬 Research: Alongside Dealroom, we have compiled 40+ pages of in-depth analysis on trends in REALTECH. We analysed 15k companies, 11k investors over 10 years - read it here
💌 Please share: A big goal of mine this year is to grow the subscriber base of this newsletter. So do me a favour and please click the button below and share it with someone you think would enjoy being part of the community 👇🏼
We’re living through some pretty insane times right now, across both the geopolitical and technological spectrums. There is increasing nationalism, a rewriting of global trade relationships, and fierce competition for future technology, namely AI, energy and chips —as seen with DeepSeek’s latest open-source model causing a $1 trillion sell-off in US public markets.
We cover everything that mattered in 2024 from tech nationalism, Palantir and Anduril becoming primes, what Trump means for Europe and NATO, the evolution of drones and the West’s race to rebuild our infrastructure.
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2024’s big themes
Trump-onomics 2.0: Trump’s return signals a shift toward economic nationalism, hitting global trade and security. But is the US accelerating the multipolar world it wants to prevent?
Western reindustrialisation and ‘resilience’: Energy, AI, and chips are the new critical infrastructure. The US is doubling down on supply chain security, while Europe scrambles to avoid past mistakes like overreliance on Russian gas
Evolving drone warfare: Drone warfare is evolving fast—fiber-optic controls bypass jamming, swarming to dominate, and Replicator 2 is scaling counter-drone tech (c-UAS). The future is cheap, fast, and autonomous
Tech companies became primes: A cadre of technology-first companies crossed the chasm into fully fledged defence primes. In the US, Anduril and Palantir won Program of Record contracts from the DoD. Notably, Palantir is larger than legacy US primes such as RTX and Lockheed by market capitalisation.
EU wakes up on security: With NATO uncertain, Europe is ramping up defence spending (€326B in 2024, up 14% YoY). But bureaucracy and protectionism still slow progress— how will the EU finally integrate its defence industry?
Tech Geopolitics
🇺🇸 Trump-onomics - sanctions, tariffs and MAGA vibes
The predominant tech vibes are long USA and short Europe. Though, the fundamentals look different. Donald Trump’s re-election and renewed “America First” doctrine may signal a shift in the global security landscape.
For decades, a US hegemony has been defined by its role as the world’s security guarantor, championing global trade and open supply chains. However, Trump’s policies—marked by aggressive trade sanctions on China and, notably, Taiwan (the linchpin for advanced chip supply)—suggest a move toward economic nationalism at the expense of traditional alliances. This strategy, ostensibly aimed at curbing China’s ascent, paradoxically accelerates the multipolar world the US has long sought to avoid. These measures are largely unprecedented for a country of the US’ size and stature, though they have been successful in Millei’s Argentina.
It remains to be seen whether this is merely political posturing from Donald or a genuine reconfiguration of America’s global role, but the consequences for defence alliances, supply chains, and technological supremacy are profound.
🇪🇺 EU wakes up on security
Trump’s re-election sent a shockwave through European defence policy. His wavering commitment to NATO forced Europe to reckon with a hard truth: US security is no longer guaranteed. While European defence spending hit record highs—€326 billion in 2024—funding alone isn’t enough. Fragmentation, overregulation, and national protectionism continue to slow progress.
Europe’s biggest hurdle? (itself?) Lack of focused coordination. Procurement is still dictated by national interests rather than strategic efficiency. Restrictive national security M&A provisions, like those that forced local sales of Exosens and Preligens in France and thwarted a takeover of Thyssenkrupp’s maritime division in Germany, stifle cross-border consolidation and deter investment in defence tech. Despite a push toward an EU ‘Defence Union’, regulatory bottlenecks and political hesitancy mean Europe remains a patchwork of competing national industries.
Still, there are signs of change. The EU is increasing its role in defence with the European Defence Fund (EDF) and new initiatives like the Defence Industrial Reinforcement Programme (EDIP). NATO’s AI and biotech strategies and NATO-Ukraine Innovation Cooperation Roadmap signal a shift towards new tech.
The big question remains: Can Europe break from decades of dependence and build a truly integrated defence ecosystem? The US is likely to extract economic or territorial concessions in exchange for security (see the US and Greenland). 2024 was a huge wake-up call.
Western (re)industrialisation
Reindustrialisation starts with chips and energy—the backbone of the modern economy. The US and Europe are scrambling to secure clean baseload power to progress AI enterprise, while the lessons from Germany’s disastrous dependence on Russian gas serve as a stark warning: energy security is national security
China’s recent critical mineral export bans exposed just how vulnerable Western supply chains still are, forcing policymakers to move fast. The US released the National Defense Industrial Strategy that prioritises industrial resilience alongside military readiness, mirroring the EU’s European Defence Industrial Strategy (EDIS) to unify defence and industrial production. Biden’s now under threat, ‘CHIPS Act’ poured billions into semiconductor fabs, with TSMC’s $65bn Arizona chip fab aiming to reduce reliance on Taiwan and Samsung. Meanwhile, TSMC broke ground last year on its first-ever European fab in Germany, a €10B project backed by Bosch, Infineon, and NXP. The fab will produce trailing edge nodes for the automotive industry. Though delays have hit both projects.
Politicians want quick wins, but reindustrialisation is a long game. Energy, chips, batteries, and rare—earth magnets are the new industrial battlegrounds.
⛓️💥Technology sanctions don’t work
US sanctions on China were designed to throttle access to cutting-edge semiconductor capabilities. If recent developments are any indication, they’re failing. Despite export controls on Nvidia’s advanced GPUs, China has found ways to source restricted chips— through intermediaries and domestic production.
DeepSeek’s R1 LLM, which outperforms OpenAI’s models, is case in point. The assumption that restricting hardware would slow China’s AI progress has proven misguided. China’s leading chip manufacturer, SMIC, has been trailing TSMC for about three years, but that gap is closing fast. Meanwhile, reports suggest that China Telecom has trained a 1-trillion-parameter language model on domestically produced silicon. If true, it underscores a key point: US containment strategies are not just ineffective—they may be accelerating China’s push toward technological sovereignty.
Increasingly, AI supremacy won’t be won by access to chips alone—it will be won by talent, capital, and the right incentives to build frontier capabilities.
Defence technology - Drones, drones, counter-drones and also AI.
🛡️ AI in defence
AI is no longer an add-on in defence—it’s the backbone of modern warfare. From evolving threats from deepfakes and autonomous drones to a need for real-time battlefield coordination, AI is driving defence’s shift from siloed domains to multi-domain coordination amongst forces.
Private sector firms are stepping up to integrate their capabilities, launching more national security-specific technologies. Data labelling company Scale AI announced ‘Defense Llama’, a forked version of Meta’s Llama 3 (LLM) trained on specific government data and the DoD’s Ethical Principles. Palantir and Anthropic announced their joint release of Anthropic’s Claude 3.5 LLM for national security professionals.
Implementing AI is more urgent now than ever as geopolitical tensions mount and the gap between China and the West’s computing capabilities narrows. However, adoption remains sluggish - as defence departments are riddled with a lack of digital infrastructure, perverse incentives, outdated procurement paradigms and test-and-evaluation (T&E) processes:
“That sort of continuous capability development in a software environment is a real challenge culturally to the department because our processes are gates for hardware programs,” Lt. General Michael Groen, Joint Artificial Intelligence Center (JAIC) Director
The US Chief Digital and Artificial Intelligence Office (CDAO) made impressive strides last year. It released the Open DAGIR, a multi-vendor ecosystem with enterprise-level contracts and licenses to facilitate access to DoD’s data infrastructure. The CDAO also awarded Anduril for implementing its Tactical Data Mesh, which will allow frontline forces to rapidly access data from over a hundred different types of sensors over existing tactical networks. The CDAO also expanded the Lattice Software Development Kit (SDK), allowing third-party AI integrations into military systems.
🚁 Drones - the autonomous and attritable era
Ukraine continues to demonstrate the ‘cat and mouse’ nature of modern drone warfare. In 2023, EW jamming was the key threat—by 2024, Russian forces adapted with fiber-optic-controlled drones, bypassing radio frequency. As drones become attritable and single-use, hardware costs have dropped significantly, while software complexity and cost have surged
Military vendors and frontline hackers are racing to develop FPVs, GPS-denied navigation, and drone swarms. GPS-denied autonomy is a top priority, with solutions ranging from inertial sensor navigation to quantum geomagnetic wayfinding. In 2024, we saw Palantir’s Visual Navigation (VNav), Helsing’s HX-2 drone, and Auterion’s Skynode S, an autonomous terminal guidance system-on-chip for GPS-denied flights.
☯️ Drones to counter-drones, the yin to your yang
The advent of 10,000s of low-cost, dispensable drones has created a huge need for systems to counter this threat. Today, defence departments are taking a layered approach to C-UAS, with multiple weapons and sensors, such as electronic warfare (EW), kinetic and directed energy (e.g., lasers), to defeat drones. An increasing number of startups, such as Delian and Frankenburg Technologies are building new capabilities here.
In the US, the DIU launched the Replicator 2 program, which perfectly encapsulates this phase shift. We previously covered the US’s Defense Innovation Unit’s (DIU) Replicator program led by the US Deputy Secretary of Defense, Kathleen Hicks. The original Replicator program's mission was to:
In normal parlance, this means building thousands of autonomous drones fast. The Replicator 2 program, released as an internal memo last month, is focused on counter-UAS:
"A juggernaut is emerging. This is the software century, and we intend to take the entire market." Alex Karp, Palantir CEO
🥇 Palantir becomes the first software Prime
2024 cemented Palantir as the first true software prime, redefining how AI and data integration power modern defence. The company has shipped many AI systems to the DoD, such as TITAN ($178m—autonomous target recognition), MAVEN ($480m—sensor fusion system), and the aforementioned drone visual navigation technology (VNav).
Palantir’s stock was up +400% in 2024, benefitting from years of hard earned data integration into physical industries, model-agnostic AI enablement and an incoming Trump presidency. Palantir now surpasses the traditional primes in terms of market capitalisation. This truly marks the defence’s software defined future.
Anduril is also prime now
Anduril also had a seminal 2024, with a flurry of product releases, a $1.5bn fundraising and securing its first US Program of Record. The company’s stock was one of the most in-demand on private secondary markets, likely signalling the near-term top of this defence tech wave.
Notably, the US Air Force awarded Anduril and General Atomics Increment 1 of the Collaborative Combat Aircraft (CCA) drone program. The largest autonomy program to date. They beat out giants Lockheed Martin, Northrop Grumman, and Boeing, in the development-for-production phase. Anduril also won a program of record for a Space surveillance mesh network.
The company released several new products, including a series of Autonomous Air Vehicles (AAVs), Bolt drones, Roadrunner interceptors, Barracuda missiles, and Pulsar EW. To meet this demand, the company has also committed to creating 4,000 new jobs in Ohio by building Arsenal-1, a large manufacturing facility.
💰Both Anduril and Palantir will likely continue to thrive, given the proximity of Peter Thiel affiliates in the current government, namely Vice President J.D. Vance, who previously worked for Thiel.
🛫 A new golden era for aerospace?
Defensive capabilities are ushering in a new era of aerospace innovation. The rise of long-endurance drones, vertical takeoff capabilities, and high-speed hybrid aircraft is reshaping airpower and logistics
DARPA has chosen six firms for its Advanced Aircraft Infrastructure-Less Launch and Recovery (ANCILLARY) program. This program aims to develop drones that can take off and land vertically from ships. These drones will carry cargo (>30kg) and conduct intelligence, surveillance, and reconnaissance missions (100 miles range, 20 hours of flight time)
Aurora Flight Sciences announced their 'fan in wing’ concept, as part of DARPA’s Speed and Runway Independent Technologies (SPRINT) program - the aircraft can “cruise at speeds from 400 to 450 knots at relevant altitudes and hover in austere environments from unprepared surfaces."Airbus has revealed the ‘Racer,’ a half-plane, half-helicopter. The aircraft has a traditional overhead heli rotor and two fixed forward-facing propellers. Dubbed the ‘Racer,’ it’s designed for vertical takeoff and speed, which is crucial in search-and-rescue missions. Leonardo and Bell, are working on tilt-rotor technology and are vying for NATO’s Next Generation Rotorcraft Capability (NGRC) program.
This also coincides with institutional distrust of the fallen aerospace giant Boeing, which has been plagued by a string of accidents. Market forces are maintaining Boeing and Airbus’s oligopolistic positions—today, there is an order backlog of over 15,000 aircraft. I hope this is an opening for a new generation of aircraft manufacturers.
Notable funding rounds
Anduril ($1.5bn Series F), the round was co-led by Founders Fund and Sands Capital
Helsing (€450m Series C) the European defence AI company raised from General Catalyst, with participation from Elad Gil, Accel, Saab, Lightspeed, Plural and Greenoaks
Saronic ($175m Series B), the producer of Automated Surface Vessels (ASVs), the round was led by a16z
Skydio ($170M Series E extension) manufactures autonomous drones for commercial and defence use, backed by Linse Capital
Chaos Industries ($145M Series B) develops advanced defence technologies for military applications, with funding led by Accel
Tekever ($74M) builds dual-use drone platforms for defence and commercial applications, with funding led by Bailie Gifford and NATO Innovation Fund
Good work Sam.