Ukraine, Iran wars challenge defense’s playbook
Industry observers told CNBC that the battle is undergoing a fundamental shift in which technology with big price tags is being challenged by a more agile, decentralized model spearheaded by Silicon Valley-backed start-ups.
The traditional defense model, notorious for development cycles that can last decades, is coming under increasing pressure. Instead, companies are investing in a new type of warfare based on shorter lead times that allow for rapid deployments and more cost-effective solutions.
Blythe Crawford, former commander of the RAF’s Air and Space Warfare Centre, said war had previously been about expensive platforms and precision strikes, leading to the downsizing of military forces as countries increasingly relied on the latest technology.
“I would argue that everything changed when the first $500 drone destroyed a $5 million tank on the battlefield in Ukraine,” Crawford told CNBC’s “Squawk Box Europe.”
The company Ark Robotics is developing autonomous robots for rapid deployment, using feedback from the battlefield to shape the technology. The CEO, who uses the pseudonym Achi for security reasons, told CNBC that the war in Ukraine demonstrates a paradigm shift in warfare, part of a larger shift also seen in the Iran war.
“[It’s] a completely new approach to how to handle military conflict… game [has] “It’s evolved into mass, affordable systems that will be orchestrated with AI,” the CEO told CNBC’s Ritika Gupta.
The urgency of this change stems from a serious economic reality.
“History tells us that the last 400 wars have been won because of economics,” said Andy Baynes, co-founder of Tiberius Aerospace. “If we keep firing $4 million Patriot systems at $20,000 Shahed drones, we’re going to lose.”
Crawford also noted that high-end products such as the Eurofighter Typhoon were vital but now needed “low-cost packaging” to survive. noted the UK’s Storm Shadow missiles; These missiles increased their success rate dramatically in Ukraine only after they were supplemented with cheap drones and electronic warfare to overwhelm Russian defenses, he said.
“We call it a high-low mix,” Crawford said. “When a $500 drone could destroy a $5 million tank, the character of war changed.”
Tiberius Aerospace is one company betting on the need for low-cost, scalable combat equipment. The two-year-old company, founded by Silicon Valley entrepreneurs, focuses on weapons design and development and licenses designs for domestic manufacturers.
It offers a new way to quickly separate design and development from production through the GRAIL platform.
company announced on thursday It said Ukrainian defense technology IP would be available for licensing and production in the UK through the AI-powered platform, which it positions as a defense-as-a-service model.
“This will show that separating design from production is commercially viable. It’s a way to reduce defense budgets or dependence on perfect, high-cost systems and move to high-impact, cost-effective systems in the future,” Baynes told CNBC.
“This is a significant difference in how defense primers operate today, where they have monolithic systems where they do both design and manufacturing under one roof, as my previous sector in the electronics industry did in the 1990s,” he told CNBC’s “Squawk Box Europe.”
Safety net?
Beyond efficiency, there is also a strategic play for European autonomy. rhetorically about the future of NATO and US resolve is wavering; The ability to produce sovereign, low-cost munitions could provide a safety net for regional governments.
Ark Robotics’ Achi warned that the West was ill-equipped for the “massive, affordable” reality of modern conflict laid bare by the Ukraine war. “Most military personnel [are] “We’re still trying to prepare for the previous generation of wars,” he said.
His company is currently developing technology that allows a single operator to control hundreds of unmanned systems in the air, on land and at sea. He said accessing UK manufacturing capacity through the GRAIL platform would allow Ark to efficiently scale production of its systems.
The platform aims to solve the “supply bottleneck” by creating a secure market where NATO members can access battle-proven technology and set up local production in weeks rather than years.
This Silicon Valley approach, with rapid iteration—the time it takes to design, test, deploy, and improve a piece of military technology based on real-world feedback—and software updates delivered over-the-air, contrasts sharply with the lengthy processes of legacy contractors.
Major defense companies on both sides of the Atlantic have seen their stock prices rise over the past few years as investors bet that increased government spending on military capabilities will benefit them.
Revenues of these companies have increased sharply since Russia invaded Ukraine in 2022; Gains are met by order intake alone, as many struggle to meet increased demand.
weapons manufacturer Rheinmetall and fighter jet developer Saab saw the fastest growth among the big European names in order intake between 2021 and 2025, at 323% and 284% respectively.
Rheinmetall estimates its sales could grow as much as 45 percent this year and has said it is in a “priority position” to arm the United States amid the war in Iran.
“Now it’s about who innovates the fastest, scales the fastest, and makes it the cheapest. [that’s] “These are problem sets and pain points that Silicon Valley and other industries are already solving,” Crawford said.
While historically there has been a reluctance among early investors to become defensive, this is now changing as a result of recent developments.
“There was a mood among private equity venture capitalists in Silicon Valley to not touch defense, but that mood has now changed,” Baynes said. “One of the main reasons for this is that there is now a more transparent market in the defense field than before.”
— CNBC’s Jackson Peck contributed to this report.
