President Trump speaks on major defense manufacturing deal
President Donald Trump makes remarks in Sparrows Point, Maryland, following a major investment to expand U.S. submarine production capacity.
FIRST ON FOX — New details of President Donald Trump's multibillion-dollar deal with a defense tech giant reveal that the U.S. government will own 40% of the firm holding its new submarine shipyard without controlling it.
But first, Anduril must prove it can build Navy-certified components before competing for future production work, a U.S. official told Fox News Digital.
The government will use authorities under the Defense Production Act and the Pentagon's Industrial Base Fund to acquire its stake in a newly formed company holding the Arsenal-2 shipyard in Baltimore, Maryland. The official described it as a "minority, non-control" investment designed to secure "tangible ownership and long-term value for American taxpayers."
Fox News Digital has asked the Department of War for the dollar value of the investment.
The Navy's up-to-$2.9 billion agreement is not a guarantee of future submarine production work for Anduril. The money will flow through General Dynamics Electric Boat, the Navy's lead Virginia-class submarine builder, and calls for Anduril to fabricate and qualify four test components. Anduril is separately committing $3.7 billion of its own capital to the project.
Anduril is not guaranteed future production work.
U.S. President Donald Trump appears on stage to deliver remarks at Tradepoint Atlantic on October 6, 2026, in Sparrows Point, Maryland. President Trump announced a $3.7 billion investment by defense contractor Anduril Industries to build a new shipyard at Tradepoint Atlantic, which will manufacture Virginia-class attack submarines, in what is expected to create thousands of permanent jobs and become the largest single private investment in the state. (Win McNamee/Getty Images)
Instead, Electric Boat will set the specifications and oversee testing, qualification and Navy certification. If Anduril meets those milestones, it will have "the opportunity, but not the entitlement, to compete for future production work," the official said.
"The ultimate proof of our commitment to ensuring the shipyard's enduring success: American taxpayers will receive a 40 percent stake in the new shipyard," Trump said Tuesday at Sparrows Point shipyard. "We get 40 percent."
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The size of the stake stands out even as the Trump administration has increasingly taken direct government interests in companies and projects it considers critical to national security. The administration has struck equity arrangements involving chipmaker Intel, rare earths producer MP Materials and other strategic industries.
The arrangement is part of a broader $6.6 billion effort to expand production of Virginia-class attack submarines as the U.S. struggles to keep pace with China's vast shipbuilding capacities and the Navy falls behind on its production goal.
Anduril is committing $3.7 billion of its own capital to build the facility and manufacturing capacity, while the Navy could spend up to $2.9 billion purchasing what it produces.
USS Newport News, right, secures itself next to its sister Los Angeles-class submarine USS Boise after returning to Norfolk Naval Station in Norfolk, Virginia, April 23, 2003. (Mike Heffner/Getty Images)
The project is aimed at closing a persistent U.S. submarine production shortfall as China rapidly expands its naval and shipbuilding capacity. American shipyards are delivering roughly 1.3 Virginia-class attack submarines a year, short of the Navy's goal of two, which it does not expect to reach until around 2032. Once fully operational, Arsenal-2 is expected to add about 9 million labor hours annually to the submarine industrial base, increasing Virginia-class production capacity by roughly 15%, an administration official told reporters on a call before Trump’s remarks.
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An industry official on the call emphasized that Anduril would finance the new production capacity itself while the government paid for the resulting output.
"I wouldn't say that the government's paying us back. We feel the government [is] buying the results of what we're able to produce," the industry official said.
The 40% government stake was not disclosed on the call, which included questions from reporters about how the project would be financed.
USS Billings (LCS 15), a Freedom-variant littoral combat ship, is seen as members of the U.S. Navy listen as President Donald Trump speaks at Anduril Industries in Sparrows Point, Maryland, on October 6, 2026. (Jim WATSON / AFP via Getty Images)
The submarine crunch is part of a broader shipbuilding gap with China, whose vast commercial maritime industry also supports its rapidly expanding navy. China now accounts for more than half of global commercial shipbuilding output, while the U.S. accounts for only a fraction of 1%, giving Beijing an enormous industrial base that can also support military ship construction.
Anduril plans to begin with critical components including torpedo tubes, which a senior administration official described as a current "gating component" slowing Virginia-class production. The company eventually plans to manufacture larger modules and sections of submarines at Arsenal-2.
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The more than 2 million-square-foot facility is expected to create 3,100 direct jobs and roughly 11,000 indirect jobs nationwide, with operations slated to begin around 2030.
