The Trump administration is turning to a defense technology giant in a $6.6 billion effort to speed production of submarines as the U.S. struggles to keep pace with China's vast shipbuilding capacity.

The ramp-up in production brings a Silicon Valley-style manufacturer into one of the Pentagon's most troubled industrial bases as they fall behind expected pace of two Virginia-class attack submarines per year.

Anduril will build a more than 2-million-square-foot shipyard at Sparrows Point shipyard just outside of Baltimore to manufacture critical submarine components, eventually scaling up to large sections of the vessels. A senior administration official said the facility could add roughly 9 million labor hours a year, equivalent to about a 15% increase in submarine production capacity.

President Donald Trump will visit the shipyard on Tuesday afternoon to formally announce the new initiative in Baltimore alongside Anduril leadership.

NAVY SECRETARY WARNS SHIPYARDS MUST ‘ACT LIKE WE’RE AT WAR’ AS CHINA’S AI-POWERED FLEET RACES AHEAD The investment takes aim at a problem the Navy has struggled for years to solve: shipyards are delivering roughly 1.3 Virginia-class submarines a year, well short of the Navy's goal of two, even as demand for the nuclear-powered attack boats grows. The Navy currently projects reaching the two-per-year rate around 2032. It currently has 26 Virginia-class submarines and expects to add two more in the spring, according to a senior administration official.and For the submarine project, Anduril plans to invest $3.7 billion of its own capital to build the facility, workforce and manufacturing capacity. The Navy could spend up to another $2.9 billion purchasing the resulting production.

The deal represents an unusual bet on a commercial model for fixing one of the Pentagon's most stubborn industrial problems: Anduril will risk billions of dollars of its own capital building new submarine production capacity, while the Navy pays for what the company can successfully produce.

"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," an industry official told reporters of the deal.

EMERGING TECH HAS NEW ARMY LEADERS WARNING TROOPS CAN'T ‘AI’ THEIR WAY TO VICTORY ON THE BATTLEFIELD The deal also deepens Anduril's growing relationship with the Pentagon just days after War Secretary Pete Hegseth tapped company founder Palmer Luckey, along with Elon Musk and former House Speaker Newt Gingrich, to launch Project Meridian — a 120-day study of how future wars will be fought and what weapons and technologies the U.S. military will need.

The arrangement puts Luckey in a position to help shape recommendations about the Pentagon's future technology needs as the company he founded expands its own business selling weapons and other systems to the department. Project Meridian does not have procurement authority, and the Pentagon has said "appropriate" safeguards will be used to address potential conflicts of interest.

Anduril will work under General Dynamics Electric Boat and alongside HII's Newport News Shipbuilding, initially producing components that have become bottlenecks in the construction of new Virginia-class boats.

Among the first will be torpedo tubes , which a senior administration official described as a current "gating component" holding up production. The official said getting those tubes earlier could allow the Navy to move.

Anduril has already begun work on torpedo tubes at a facility in California and plans to shift that production to Baltimore as the new shipyard, dubbed Arsenal-2, comes online. The company eventually hopes to move from individual components to complex modules and large sections of submarines.

"We just need new production capacity," an industry official said. "We need to grow the maritime industrial base, the submarine industrial base, so that we can produce more submarines." The company plans to build Arsenal-2 around software, automation and digital manufacturing to break historically complex shipbuilding work into simpler tasks that can be done without years of shipyard experience.

The push comes as the Navy faces growing pressure to expand the attack-submarine fleet while also preparing to transfer Virginia-class submarines to Australia under the AUKUS security pact. Meeting those commitments will require the industrial base not only to reach the Navy's longstanding two-per-year goal, but eventually move beyond it.

Arsenal-2 is expected to create 3,100 direct jobs and another 11,000 indirect jobs nationwide. Anduril expects the Baltimore facility to begin operations around 2030, though the company said production of some submarine components is beginning now in California.

The approach will still have to clear the certification and safety requirements that govern nuclear submarine construction. Anduril acknowledged that it will have to prove it can meet those standards before graduating from individual components to increasingly complex sections of the boats.