Pentagon-Funded Drones and the Rare Earth Dilemma: Made in China?

The U.S. is preparing for drone warfare - but U.S. drone makers are highly dependent on Chinese suppliers for key parts, also including rear earth elements.

And it will take more than 2 years to change that.

Even top-tier U.S. drone startups, funded under programs like the Pentagon’s Replicator Initiative, remain tied to Chinese suppliers.

Here’s how that looks in detail:
→ Critical Components Dependency:
Chinese factories still supply flight controllers, motors, and imaging sensors - the essential guts of many U.S.-made drones.

→ Chinese Market Dominance:
DJI, the world’s leading manufacturer of commercial drones, alone controls over 70% of the global and 80% of the US commercial drone market, and U.S. firms in agriculture, construction, emergency response, and defense continue to buy from them.

→ Strategic Lag:
A Forbes investigation showed that even DoD-backed drone firms can’t fully trace or replace their Chinese-made parts.

But even wider implications for the defense sector have the fact that China is weaponizing rare earth: On April 4, 2025, China restricted exports of 7 critical rare earth elements (REEs) essential to drone motors, missile systems, radar, and stealth tech.

The restrictions specifically target medium and heavy rare earths, which are critical for high-performance magnets used in defense systems.

→ Immediate Supply Disruption:
While not a total ban, China now requires export licenses and placed 16 U.S. defense and aerospace firms on its export control list. Analysts expect delays of six months or longer. This has already caused shipments to grind to a halt, with several Chinese suppliers declaring force majeure on contracts.

→ Heavy REEs: A Critical Vulnerability:
Until 2023, China processed 99% of the world’s heavy rare earths.
The U.S., by contrast, has no operational rare earth separation capacity and remains years away from achieving full-scale readiness. Currently, there is only one active rare earth mine in the country - Mountain Pass in California - which still sends its ore to China for processing.

→ National Security at Stake:
For a better understanding of how serious the situation for the defense sector is: A single Virginia-class submarine requires over 9,000 pounds (4,082 kg) of rare earth elements. Without secure access to these materials, the U.S. cannot build—let alone scale—modern defense systems.

That’s why U.S. policymakers are pushing to pursue alliances to reduce reliance on China REE mines and processing facilities, for example in Brazil, and as we have witnessed in Ukraine - with no progress so far.

Supply chain dominance is highly critical for defense capabilities and ordnance in times of prolonged war.

And right now, China can easily turn the switch off.

What do you think:
Can the U.S. secure rear earth sourcing and processing for drones and other platforms from other places in time?

Photo: MP Materials