Trump administration plans to take stakes in US drone companies: UMAC surges 70%, includes firms in which Donald Trump Jr. holds shares

According to a Wall Street Journal report, the Trump administration is in talks with multiple US drone companies through the Pentagon's "Office of Strategic Capital" regarding debt and equity investment proposals, effectively allowing the government to take direct stakes in these companies. Following the news, UMAC surged nearly 70% intraday, RCAT rose about 57%, and ONDS followed with a gain of around 27%. Notably, Donald Trump Jr. holds approximately 330,000 shares of UMAC and serves on its advisory board. US drone annual production capacity is only about 100,000 units, yet the Pentagon aims to acquire 300,000 units by the end of 2027. (Previously: To defeat China, Trump dismantled all AI guardrails: former Attorney General joins tech advisory team, legal strike force in place) (Background: Fed rate cut unlikely! US April PCE inflation rate jumps to 3.8%, domestic demand red-hot as savings rate falls to 2.6%) Key Highlights - The Trump administration plans to fund domestic drone companies through debt and equity, with UMAC surging nearly 70% intraday and RCAT up 57% - US drone annual production capacity is around 100,000 units, while the Pentagon's "Drone Dominance" program targets 300,000 units by the end of 2027 - Eight months after the DJI ban took effect, FAA data shows 96% of drones in US airspace still come from DJI According to a Wall Street Journal report, the Trump administration is in talks with multiple domestic US drone companies through the Pentagon's Office of Strategic Capital regarding direct financial support proposals, which may include debt and equity investments, effectively allowing the US government to take direct stakes. Following the news, drone concept stocks surged collectively: Unusual Machines (UMAC) soared nearly 70% intraday, Red Cat Holdings (RCAT) rose about 57%, and Ondas Holdings (ONDS) followed with a gain of around 27%. Notably, UMAC's advisory board members include Donald Trump Jr., who also holds approximately 330,000 shares of UMAC stock. The list of companies the Pentagon is considering funding also includes Powerus (formerly Aureus Greenway), a drone company invested in by Trump's two sons. The Pentagon wants to become a shareholder itself rather than just placing orders, indicating that simple procurement contracts can no longer keep pace with capacity expansion. Annual Production of 100,000 vs. Target of 300,000 The core issue behind the negotiations is the capacity gap. US drone annual production capacity is currently about 100,000 units, but the Pentagon's "Drone Dominance" program sets a target of acquiring 300,000 low-cost attack drones by the end of 2027. The FY2027 budget has allocated over $70 billion for this purpose, with Trump calling it a "presidential-level priority." By comparison, Ukraine's drone production in 2024 reached approximately 4 million units, and US capacity is less than 2.5% of that. Companies named in the talks also include Neros Technologies, backed by Sequoia Capital, and Performance Drone Works, which has already secured an Army reconnaissance contract. Neros currently produces about 2,000 drones per day and is building a 250,000-square-foot "Project Millennium" factory in Torrance, California, targeting annual production of 1 million units. The Office of Strategic Capital plans to deploy up to $200 billion through equity and debt instruments over three years, which would be the largest scale of government equity ownership in companies in US history. FAQ How does the Trump administration plan to fund US drone companies? The Pentagon's Office of Strategic Capital is in talks with companies such as UMAC and Neros Technologies regarding debt and equity investment proposals, with the government potentially taking direct equity stakes. The office plans to deploy up to $200 billion over three years to support companies in national security-critical supply chains. Why does the US urgently need to expand drone production capacity? US annual production capacity is around 100,000 units, while the Pentagon targets acquiring 300,000 units by the end of 2027. After the DJI ban took effect, FAA data shows 96% of drones in US airspace still come from DJI, while China controls 90% of rare earth processing and 99% of battery cell production capacity, making supply chain decoupling difficult to achieve in the short term.