Why U.S. Defense Needs a Private-Sector Overhaul to Counter China

At the recent Fortune Brainstorm Tech summit, industry leaders and venture capitalists argued that the U.S. defense sector must fundamentally modernize its approach to maintain a competitive edge against China. Experts highlighted that the current defense playbook is ill-equipped for the age of AI, noting that the U.S. remains dangerously reliant on vulnerable supply chains for critical minerals and high-tech components. To bridge the gap, panelists emphasized the need for deeper public-private partnerships and a more agile government procurement process that can scale innovation at the speed of modern warfare.

The discussion underscored several critical vulnerabilities, most notably China’s dominance in rare earth elements and its superior capacity for drone manufacturing and robotics. Industry figures pointed to the stagnation of U.S. ammunition infrastructure and the depletion of stockpiles during recent conflicts as evidence that current production rates are insufficient. With the U.S. military struggling to replenish assets like Tomahawk missiles at the pace they are consumed, the consensus is that the status quo is no longer sustainable in an era of economic and tactical warfare.

To address these challenges, the panel suggested that AI is the key to transforming military readiness. By utilizing advanced sensing and data analytics, the military can better monitor supply chains and industrial output, effectively linking inputs to tactical results. Furthermore, the rise of dual-use technology startups—such as those developing autonomous space-based defense systems—represents a shift toward integrating private-sector agility into national security. As Washington continues to develop new regulatory frameworks for AI, the integration of these private innovations will be essential to closing the industrial and technological gap with global competitors.