Diplomacy
NATO summit focuses on arms race in the Silicon Valley age

The NATO summit in The Hague begins today, June 24, with a large-scale meeting attended by numerous defense ministers, defense experts, and representatives from the arms industry.
According to the alliance’s statement, the NATO Defence Industrial Forum aims to assist NATO countries in a quantitative rearmament “at an unprecedented pace” and to make the latest technologies more useful in future wars.
Israel’s attacks on Iran, where artificial intelligence (AI) technology is being used more extensively than ever, are currently setting the standard for military technology. According to reports, the Israeli armed forces are integrating “air, cyber, and ground operations,” primarily with the help of AI, to coordinate “drone swarms, clandestine networks, and sabotage missions in real time.”
While the US is also rapidly advancing the integration of AI into its defense, German startups are achieving success in producing AI-controlled unmanned aerial vehicles (UAVs). Among these is the defense startup Helsing, which is considered Germany’s most valuable startup, surpassing even civilian companies.
Ukraine as a testing ground
At this year’s Defence Industrial Forum, NATO is drawing conclusions from experiences showing that wars are largely decided by the defense industry capacities of the warring parties.
For example, according to Dutch Defense Minister Kajsa Ollongren’s State Secretary, Christophe van der Maat, the war in Ukraine has become a “war between industries.” Van der Maat’s ministry is organizing the forum jointly with NATO and in cooperation with the industry association VNO-NCW and the Dutch Ministry of Foreign Affairs.
It is emphasized that those who can produce large quantities of military equipment, and do so quickly, have a decisive advantage. More than 400 participants, including defense ministers, defense experts, and particularly representatives of the defense industry, have been invited to the forum.
According to pre-meeting statements, discussions will focus on “expanding and intensifying arms production at an unprecedented pace.” In addition to quantitative increases, the meeting will address financing options and how the latest technologies, “including autonomous systems,” can be used in warfare.
AI warfare: The examples of Azerbaijan and Ukraine
A look at reports on the Israeli armed forces’ operations in the conflict with Iran provides insight into how the latest technologies are being employed. The use of UAVs is not new, but the turning point for drone warfare occurred in 2020 during the Azerbaijan-Armenia war. UAVs are now playing a crucial role in the war in Ukraine.
The widespread use of artificial intelligence has also come into play in the conflict with Iran. According to an analysis by Al-Monitor, AI-based warfare has taken center stage for the first time. An expert from the Washington-based Middle East Institute (MEI) stated that Israel is using AI to integrate “air, cyber, and ground operations, coordinating drone swarms, stealth jets, and sabotage missions in real time.”
AI-based cyberattacks and electronic warfare have also made it possible to neutralize Iran’s air defenses. The MEI expert cites a prime example: Mossad established a secret drone base near Tehran, from which Tel Aviv launched AI-controlled attacks. Israel is also reportedly using civilian vehicles equipped with explosives as offensive weapons in Iranian cities, guided by AI.
Silicon Valley’s growing influence in NATO
In the US, the current administration continues the policy of shifting towards 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% to $1.01 trillion.
Simultaneously, resources and capabilities are being shifted from the five traditional US defense companies (General Dynamics, Lockheed Martin, RTX, Northrop Grumman, and Boeing) to startups in the artificial intelligence and aerospace industries. An example of this is the “Golden Dome” project, a continental missile defense system modeled on Israel’s Iron Dome. Elon Musk’s SpaceX and Starlink companies, along with young tech firms like Palantir and Anduril, hope to secure major contracts from this project.
Despite Elon Musk’s official withdrawal from government advisory roles, technology companies from Silicon Valley remain strongly represented in the administration in terms of personnel. For instance, employees of Palantir CEO Alex Karp hold influential positions in the State Department and the Pentagon. According to reports, there is now “a new tone” at the US Department of Defense, which is causing “near euphoria” among “startups and tech companies on the US West Coast.”
Germany’s most expensive startup
Although the German Armed Forces are far from achieving similar success, the first signs of progress are emerging in efforts to establish high-tech startups in the German defense industry, 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 Federal Defense Minister Ursula von der Leyen’s “Commissioner for Strategic Arms Control.” Helsing made a name for itself by producing kamikaze drones for Ukraine that are controlled with the help of artificial intelligence and cannot be stopped by jammers. Recently, it has been reported that Ukrainian soldiers consider Helsing drones to be too expensive and of lower quality compared to some competing models.
Nevertheless, Helsing is in talks to supply equipment for a “drone wall” planned for NATO’s eastern flank. Besides drones, the company primarily develops artificial intelligence for fighter jets, submarines, and tanks, which will enable these vehicles to be used more efficiently in the future. Valued at €12 billion, Helsing is currently Germany’s most expensive startup and is preparing to equip Eurofighter jets for electronic warfare in collaboration with the Swedish company Saab.
German AI efforts focus on Ukraine
In addition to the AI and drone company Helsing, Quantum Systems, a drone manufacturer based 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 produces not only for the German military but also for Ukraine.
It will also work closely with Airbus Defence in the future. A letter of intent regarding this collaboration was recently signed at the Paris Air Show at Le Bourget Airport. According to the letter, Quantum Systems will participate in the Future Combat Air System (FCAS) project, a sixth-generation fighter jet that will work in conjunction with drones and drone swarms. To date, Quantum Systems has been financed with €40 million from Airbus Defence.
Pentagon-linked capital flows to Europe
While Helsing and Quantum Systems are German companies, Rheinmetall is collaborating in the drone and AI sector with the American company Anduril, which is partly financed by the renowned US tech billionaire Peter Thiel. Last week, Rheinmetall and Anduril signed a strategic partnership agreement to produce military drones.
According to a statement from Anduril, the partnership focuses on developing three proven capabilities, with the aim of expanding over time: integrating a European version of Barracuda, part of Anduril’s family of low-cost, mass-producible autonomous aerial vehicles, into Rheinmetall’s digital sovereignty framework (“Battlesuite”); incorporating a European version of Anduril’s high-performance, multi-mission Group 5 autonomous aerial vehicle (AAV), Fury, into Rheinmetall’s digital framework; and exploring opportunities for solid rocket motors for use in Europe by leveraging Anduril’s new production approaches.
Anduril Industries CEO Brian Schimpf said, “This is a different model of defense collaboration, built on mutual respect for co-production, operational fit, and sovereignty. Together with Rheinmetall, we are developing systems that can be produced quickly, deployed widely, and adapted as NATO missions evolve.”
This agreement allows a US tech company to gain a significant position in the proliferation of weapons technology in Europe, which runs counter to the efforts of Berlin and Brussels to become as autonomous as possible from the US in arms production.
Anduril sets its sights on Europe
Last March, it was announced that Silicon Valley giant Anduril was considering manufacturing drones in the UK and signing contracts with European arms manufacturers as the continent prepares to increase its defense spending. Rich Drake, Anduril’s UK and Europe general manager, said in an interview with Bloomberg, “If we get enough orders, we definitely plan to open a facility in the UK. We are determined to become a standalone British company.”
American defense technology companies like Anduril and data analytics developer Palantir have seen growing interest in Europe since the start of the war in Ukraine. In early February, Anduril and the British government announced a deal worth approximately £30 million ($38 million) to supply offensive drones to Ukraine. In June 2024, Anduril and Rheinmetall signed an agreement to collaborate on air defense systems focusing on small unmanned aerial vehicles. Drake mentioned that the company has also started talks with defense companies in “several other countries” besides Germany.
Anduril is backed by a number of leading Silicon Valley venture capital funds, including Andreessen Horowitz and Founders Fund, and has recently achieved a series of successes, including an agreement with Meta to provide mixed-reality headsets for soldiers.
The importance of Europe for traditional American arms companies
Leading US defense companies have long-standing ties in Europe, which account for a significant portion of their annual revenue, and they hope that deeper partnerships will allow them to continue doing business on the continent.
In 2024, this region represents approximately 11% of the annual revenue for both Lockheed Martin and RTX. Many European armies operate Lockheed’s F-35 fighter jet, while RTX’s Patriot missile is the clear market leader in air defense. Both Lockheed and RTX’s defense subsidiary, Raytheon, have announced the establishment of extensive co-production partnerships on the continent over the past two years. Lockheed will establish large-scale missile production with Rheinmetall, and a joint venture between Raytheon and European missile manufacturer MBDA will produce Patriot missiles for NATO in Germany.
Thomas Laliberty, president of land and air defense systems at Raytheon, noted that countries exhibit “different approaches to the concept of sovereignty.” He added that Raytheon tries “to understand each one and help them meet those requirements as best 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 establishing production facilities. He added that partnerships ensure the region’s financing is appropriate and that European requirements can be met.
Boeing also states it is “examining what collaboration opportunities are available.” The company has indicated its desire to replicate the joint development approach it used with Australia to develop the MQ-28 Ghost Bat unmanned combat aircraft in Europe as well.