Anduril to Build $3.7 Billion 'Arsenal-2' Shipyard in Maryland, Backed by Up to $2.9 Billion Navy Contract

Anduril Industries is establishing a new shipyard in Baltimore County, Maryland, to manufacture components for Virginia-class submarines, the company and the White House announced on October 6, according to Breaking Defense. The facility, dubbed Arsenal-2, represents a $6.6 billion investment combining $3.7 billion in private capital with up to $2.9 billion from the Navy, Breaking Defense reported. President Donald Trump was expected to deliver remarks in Baltimore County the same day, per the outlet.

Deal Structure and Site

The project will rise at Tradepoint Atlantic in Baltimore County, the Sparrows Point site outside Baltimore, Breaking Defense and CNBC reported. Anduril said the Navy contract is structured so the company, not taxpayers, bears most execution risk. "This contract structure ensures that Anduril, not the taxpayer, takes on the majority of the execution risk, aligning incentives to ensure on-time, high-quality submarine production," the company said in a release cited by Breaking Defense.

The 2 million-square-foot plant is expected to launch initial operations in 2030, with permitting slated to begin immediately and construction to follow administrative approvals, Breaking Defense reported. Job estimates differ by outlet: Breaking Defense cited Anduril's projection of more than 3,000 direct jobs and more than 11,000 indirect jobs, while CNBC reported the investment would create about 3,100 jobs. On Anduril's own projections as reported by Breaking Defense, the indirect-jobs figure exceeds the direct-jobs figure by 8,000 positions (3,000 - 11,000 = -8,000), meaning direct hiring would be roughly 73 percent below the indirect total ((3,000 - 11,000) / 11,000 x 100 = about -72.7 percent). Both are company projections rather than realized employment.

What Arsenal-2 Will Build

Anduril plans to start with basic modules such as torpedo tubes before expanding into more complex work, including full hull sections like the bow, Breaking Defense reported. The company described Arsenal-2 as positioned to produce "complex components and large scale assemblies" for Virginia-class boats, which are jointly built by General Dynamics Electric Boat and HII's Newport News Shipbuilding.

Anduril President and Chief Strategy Officer Chris Brose told CNBC the ambition is to grow within the existing supply chain rather than displace it: "Our goal here is to be a critical, and hopefully, over time, much larger and growing part of the supply chain for our lead shipbuilders... And over time, we hope that'll grow up to very large sections of the ship." Brose also told Breaking Defense, "This is not about taking food off the plate of anybody. This is about putting more food on the table and being able to meet the requirements that our country has to produce more submarines."

Ahead of Arsenal-2's 2030 start, some submarine parts, including torpedo tubes, will be manufactured at a 160,000-square-foot facility in Orange County, California, CNBC reported. Anduril said the Orange County site gives it "a two-year operational head start to develop and validate manufacturing methods, production workflows, and quality systems before Arsenal-2 comes online," according to Breaking Defense.

A Navy Program Under Strain

The move comes as the submarine industrial base has struggled to meet Navy targets. A Government Accountability Office report released in July found shipbuilders were producing Virginia-class submarines at a rate of one per year as of June 2025, against a Navy goal of two, Breaking Defense reported. The GAO attributed the shortfall to "late material deliveries from suppliers and limited availability of experienced workers due to competition in the labor market."

The Navy's May shipbuilding plan called reaching at least one Columbia-class and two Virginia-class submarines annually "the top industrial base priority," according to Breaking Defense. Chief of Naval Operations Adm. Daryl Caudle told the House Appropriations Committee in May that he expects industry to reach two Virginia-class deliveries a year by around 2032, the outlet reported.

A senior administration official told reporters Anduril's facility would add roughly 9 million hours annually to the submarine industrial base, which the official translated to a 15 percent increase for Virginia-class production, per Breaking Defense. The same official said earlier torpedo-tube deliveries could speed up boats already under construction: "Having those torpedo tubes earlier would let us move production of current Virginia submarines under construction faster... This brings both resilience and capacity to the submarine industrial base that should absolutely translate to improved Virginia-class construction."

Anduril framed the added capacity similarly in its release, stating that "adding another source of this work will allow more submarine construction to happen in parallel across the industrial base and increase the overall capacity available to the Virginia-class program," according to Breaking Defense. Seeking Alpha's coverage characterized the facility as expected to "ease bottlenecks by adding capacity to manufacture submarine components, potentially increasing the U.S. industrial base's ability to meet military requirements." That framing reflects the outlet's own characterization of the announcement rather than an independent Navy assessment.

Context: Incumbents and Washington Ties

General Dynamics won a $76.6 billion Navy award to build submarines this summer, CNBC reported, underscoring the scale of existing commitments to the two lead shipbuilders even as the Navy adds Anduril to the supply base. Breaking Defense noted the Arsenal-2 announcement marks Anduril's first entry into the supply chain for a major legacy defense program; the company is otherwise known chiefly for autonomous drones and craft, and the Wall Street Journal reported over the summer that Anduril was in talks to build drone boats at the same site, according to CNBC.

The Navy award also lands days after the Department of Defense named Anduril co-founder Palmer Luckey to Project Meridian, a new initiative to identify and develop capabilities for future conflicts that also includes former House Speaker Newt Gingrich and SpaceX CEO Elon Musk, CNBC reported. CNBC said the appointment "raises questions over defense tech's growing sway in Washington as the companies compete for government contracts," noting that Andreessen Horowitz's Marc Andreessen, whose firm has invested in Anduril, was named to the Pentagon's defense policy board this summer alongside Thiel Capital's Blake Masters. CNBC did not report any formal conflict-of-interest finding tied to Luckey's appointment or the Navy contract; the outlet framed the overlap as a matter raising scrutiny rather than a confirmed procurement issue.

Brose told CNBC the project is also a chance to rethink shipyard construction itself: "This is an opportunity to really reimagine how a shipyard is built and how this work is done, and that's just not something that our current industrial base has the luxury of doing." Separately, Brose told Breaking Defense that Anduril has been discussing the need for additional shipyard capacity with the administration and Navy for nearly two years.

Bottom Line

Arsenal-2 adds a new entrant to a submarine supply chain that the GAO says is falling short of Navy production goals, with Anduril and a senior administration official, as quoted by Breaking Defense, framing the facility as additive capacity rather than a rival to General Dynamics Electric Boat and HII's Newport News Shipbuilding. Interpreting the announced terms: because Anduril says the contract structure puts most execution risk on the company and initial operations are not slated until 2030, the practical effect on Virginia-class delivery rates will not be testable for several years. The cited reporting did not detail any market reaction to the announcement. The Luckey-Project Meridian overlap, as reported by CNBC, is worth watching as a disclosure question, though no sourced report has identified a confirmed conflict tied to this specific award.