The founder of defense technology company Anduril, Palmer Luckey, stated on Wednesday that the strength of the United States military should not be measured by the size of its budget, but by the efficiency of its spending.

During an interview, Luckey argued that the U.S. defense industrial base is highly inefficient. He claimed that current defense objectives requiring a $1.5 trillion budget could be achieved for under $1 trillion with systemic improvements. In an ideal scenario, he suggested the defense budget could even be reduced to under $500 billion.

Luckey endorsed recent criticism aimed at traditional defense contractors, calling it "completely reasonable." He emphasized that his own company, Anduril, consistently delivers products on time and within budget.

Defense spending was a key topic at the Singapore Airshow this week. However, Luckey pointed out that focusing solely on expenditure amounts is an irrational way to gauge military capability. This follows a January statement from former President Donald Trump, who expressed a desire to increase the U.S. defense budget to $1.5 trillion by 2027 to build an "ideal military."

"Too many people measure success in defense by how much money is spent," Luckey remarked. He believes military power should be measured by output—the actual equipment and capabilities a nation acquires from its defense spending. He added that the current system lacks incentives for U.S. defense firms to lower costs.

Anduril, founded by Luckey in 2017, topped the CNBC Disruptor 50 list in 2025. The company specializes in AI-powered autonomous defense systems and is currently valued at $30.5 billion.

Luckey highlighted the inefficiency of the U.S. defense industrial system, noting that the U.S. gets significantly less for each dollar spent compared to other nations. "For every dollar spent, China acquires more fighter jets, more missiles, and a larger ground force than the U.S. This could lead to a situation where China spends less than the U.S. but produces two, three, or even four times the military output," he said. China's defense budget for 2025 was 1.78 trillion yuan (approximately $249 billion). Official Chinese media reported that as of December 2025, China's shipbuilding capacity was about 232 times that of the U.S., accounting for 66.8% of global shipbuilding orders.

"We must reform the defense industrial base quickly, aiming to achieve our current $1.5 trillion objectives for well under $1 trillion. If we can get the needed equipment and capabilities, I would love to see the defense budget drop below $500 billion," Luckey stated. He criticized the current system for rewarding companies with slow development, frequent product failures, and a tendency to spend money on useless equipment.

In early January, Trump criticized defense contractors for prioritizing capital returns and executive compensation over research investment and on-time delivery. In a Truth Social post on January 9th, he threatened to ban dividend payments and stock buybacks for defense companies until these issues were corrected. Luckey called this criticism "completely reasonable."

"The unique thing about defense companies is that almost all their revenue comes from the taxpayer," Luckey explained. "The criticism isn't that these companies are too profitable. It's that they cannot act like successful businesses—paying executives tens of millions, returning huge sums to investors—when their projects are billions over budget and years behind schedule."

Luckey also noted that major defense contractors cannot blame their problems solely on supply chain issues that began during the COVID-19 pandemic. "This isn't a momentary mistake; it's a long-standing pattern that has persisted for decades, not just months or years," he said.

When asked if Anduril—which he said will "almost certainly" go public—might face similar criticism in the future, Luckey dismissed the notion. "We deliver all our products on time and strictly within budget," he affirmed.