🔷 Drone Boats!

Drone Boats

There has been a flurry of happenings in the unmanned/optionally unmanned surface vessel (USV) segment, so its time for us to catch you up.

What

First, the basics. Generically, the US Navy views drone boats in terms of 3 size classes:

• LUSV: Large unmanned surface vessel class that’s up to 300ft long and 2,000 tons

• MUSV: Medium unmanned surface vessel class that’s 50-200 ft long and <500 tons

• sUSV: small unmanned surface vessel class that’s less than 50 ft long

Yes the “s” in sUSV is small, and the “M” and “L” on the other USVs are not—blame the Navy for the naming convention.

There’s also a CUSV (common unmanned surface vessel), but it's more of a class type than a size class. Just go with it.

The LSUV was sized to support anti-surface and strike warfare—specifically the Mark 41 vertical launch system (VLS) with 16-32 missile tubes. This enables these corvette-sized lightly/optionally manned ships to shoot everything from an SM-6 to a Tomahawk cruise missile. Recall the Ghost Fleet Overlord program.

The smaller MSUV was sized to support ISR—no VLS required. Think the Sea Hunter.

L+M=C?

Notice the ‘was’ above in the LSUV and MSUV.

After years of framing these classes and missions, the Navy has decided to scrap it. The LSUV and MSUV are being combined into a single (common?) class, supported by modular payloads that could either be for strike (VLS) or surveillance (ISR).

The idea is to simplify the production and supply chain.

This common platform would permit co-production arrangements whereby several companies could simply build the same design USVs, much like the Liberty ship program from World War II.

Our Take: This is the best idea the surface Navy has had in a long time—run with it! Too bad ‘CUSV’ is taken…or will the name be repurposed?

Expect to see some more common USV news—and hopefully progress—in 2025 as the Navy looks for ways around the national shipbuilding crisis and alternatives to the $1 trillion plan (yes, that’s a ‘T’) it currently has to build a traditional-looking 381-ship battle force.

Small

The sUSV segment is much more diverse—ranging from weaponized waverunner-like drones to purpose-built long-endurance drones that can sail through hurricanes.

The barrier of entry is comparatively low, and several startups have entered the fray.

There are venture-backed Saronic and HavocAI competing with privately-held companies like MAPC (GARC maker) and Aevex, as well as a dozen+ other defense and commercial efforts (Sea Machines, ACUA Ocean, Saildrone, etc.).

OBTW, don’t forget the sUSV efforts in Ukraine that put this market in the spotlight.

The US Navy is all aboard, too—it activated its first Unmanned Surface Vessel Squadron (USVRON Three) last year and equipped them with GARCs.

But there may be significant challenges ahead.

Saturated?

As this really good article details, it’s a niche that is nascent but might already on the verge of saturation—even before some of the companies establish recurring revenue (or profitability).

The issue: While the ocean covers 70% of the Earth’s surface, due to the size of sUSVs, there are only so many places (and distances) an sUSV can go—and where they can go determines the size of the market.

Let’s take ‘blue water’ ocean out of the equation, the vast expanses of deep water open ocean (there are relatively niche sUSV use-cases).  

Less than 30% of the ocean is ‘green water’ suitable for sUSV-sized craft. And only a fraction of that is in places that matter, and even less than that are strategic locations.

Analyzing sea lines of communication (SLOC) and geography, there are 20 key maritime areas of interest for sUSVs.

Most of these are either global choke points or strategic locales near China.

This article analyzes each of those, breaking down coverage, cost per sUSV, etc. The result: the sUSV is only a $250m market and, despite being nascent, is already 50% saturated.

Maybe this is all wrong, but if that analysis holds even partially true, sUSV companies—especially those backed by venture capital—could face turbulent waters ahead.

This isn’t to say that sUSVs aren’t urgently needed at scale to establish a credible deterrent in the Pacific, but the long-term demand signal to build a business around remains a bit of a question mark.

Make Way

The US Navy needs USVs—of all sizes—as a viable parallel effort to detour the shipbuilding trainwreck.

What sizes, how many, and for how long will ultimately determine how the industry supporting them will look.

Good, bad, or ugly, 2025 is set to be a big year for USVs.

In That Number

$60 million per month

Ukraine will provide combat units $60 million per month so they can buy drones. The move circumvents centralized purchasing and allows commanders to acquire the types and quantities of drones that meets their needs.

TRIVIA

On this day in 1974, the F-16 officially flew for the first time. What key technology in the F-16 came from NASA?

A) Side-stick controller
B) Fly-by-wire control system
C) Reclined seat for high G-forces

 Together with The Rundown AI

Learn AI in 5 minutes a day

What’s the secret to staying ahead of the curve in the world of AI? Information. Luckily, you can join 1,000,000+ early adopters reading The Rundown AI — the free newsletter that makes you smarter on AI with just a 5-minute read per day.

Sign up to start learning.

On the Radar

‘Iron Dome for America’ is coming. President Trump signed an executive order to prioritize investments into a multilayered homeland air defense system. The Pentagon now has 60 days to come up with a plan to address the 7 items outlined in the order.

• The Merge’s Take: Don’t let the name distract you—this is not Israel’s Iron Dome system. The announcement marks a shift in homeland defense that addresses peer threats from Russia and China (most efforts to date were based on one-off threats from North Korea or Iran). While most of the items are already in development in some shape or form, the order should accelerate or expand them. That said, item 2 of 7 is new: space-based interceptors capable of boost-phase intercept of ballistic and hypersonic missiles. Investors estimate it may add tens of billions of dollars to existing defense programs (over-the-horizon radar, interceptors, etc.), not including the space-based interceptors.

The F-35 program is showing signs of progress. ICYMI: The Tech Refresh 3 (TR-3) mods on new F-35s enable Block 4 capabilities, but the TR-3 upgrade itself ran into development issues that stalled deliveries (planned for April 2023). With a compromise software patch in place, the Pentagon resumed acceptance in July 2024 but started withholding $5m per jet until TR-3 is completed.

• The Merge’s Take: The Pentagon just reduced the TR-3 withhold to $3.8M per jet, signaling confidence progress is being made. Both sides hope TR-3 will be fully resolved by 2025, but neither side has a timeline to share. That said, Lockheed Martin plans to deliver up to 190 F-35s in 2025, up from 110 in 2024. Those 2025 figures include the jets that were built but not accepted, but even so, that’s more jets delivered in 1 year than the entire F-22 program. The sooner this gets resolved, and production stabilizes to the 156-jet-per-year plan, the better for everyone. OBTW, bar napkin math on the withholds shows that once TR-3 is fully resolved, the Pentagon will write a $769M check to Lockheed Martin.

Next-Gen Adaptive Propulsion (NGAP) lives on. The Pentagon awarded matching $3.5B contracts to both GE and RTX to continue building prototypes of these next-gen engines. While these are adaptive engines, they are not the same efforts as the Adaptive Engine Transition Program (AETP); that was for the F-35 (RIP). NGAP is the propulsion program for NGAD—the Air Force’s next-gen fighter that’s presently paused, pending review.

• The Merge’s Take: Regardless of the outcome of NGAD, NGAP cannot die—the long-enjoyed US propulsion advantage is rapidly eroding due to a combination of generational under-investment and technical advancements from China. The contract language includes “weapon system integration,” which tells us that these NGAP engines will fly. Whether it’s in a flying test bed or one of the NGAD prototypes remains to be seen, but we’re looking forward to seeing true performance metrics—not theoretical claims.

They Said It

“We thought that it was going to be small ratios. And what we’re finding is, actually, it’s bigger than we thought.”

— Maj. Gen. Joseph Kunkel, on the manned-unmanned teaming (MUM-T) ratios for the Air Force’s Collaborative Combat Aircraft (CCA) program.

This is significant, as it can influence some considerable force design decisions. How many F-35s does the Air Force really need, how many CCAs can it scale to, and when can all of this be achievable?

 Together with Eagle Law

Elevate your business with Eagle Law Group, P.C.

Work with industry experts to implement cost-effective and precise legal solutions to your corporate, aviation & space law, government contracting, and litigation challenges.

Contact them today

Knowledge Bombs

• Cummings Aerospace completed flight testing its 3D-printed jet-powered kamikaze drone and is pitching it for the Army’s LASSO program

• Kongsberg was awarded a $69M Air Force contract for more Joint Strike Missiles (JSM)—now totaling $208M for JSMs intended for F-35A internal carriage

• Northrop Grumman announced its second low-rate production B-21 contract and is in talks for accelerating production

• AscendArc emerged from stealth with an AFWERX contract and plans to target small-sat GEO market

• Castelion raised $100M to develop a mass-producible hypersonic weapon

• Poland signed a $745M deal to buy 200 AARGM-ER anti-radiation missiles (2029 delivery)

• RTX reported 9% sales growth in Q4 2024

• The Space Force’s Rapid Capabilities Office selected 10 companies for its new tech accelerator and is running it as 5 teams of 2-company pairs (Anduril is in the mix)

And Finally…

• Iran officially confirmed it bought Russian Su-35s. Reporting indicates the first 2 jets were delivered in November 2024, and Iran has expanded plans to buy 50 jets instead of 25—to replace both the F-14A and F-4E fleets. Does this finally open the door for the US to restore an F-14 for legacy flight at airshows? These are the questions America needs answers to!

💎 Free Merch! 💎 

Don't keep us a secret!
Share the Merge = earn free swag.
It's that simple.

You currently have 0 referrals, only 3 away from receiving Stickers.

Or copy and paste this link: https://themerge.co/subscribe?ref=PLACEHOLDER

ANSWER
Answer: B. The F-16 fly-by-wire came from NASA’s Apollo program and was adapted for aircraft testing on the F-8 DFBW (digital fly-by-wire) testbed (it used an Apollo flight computer). NASA did play a role in the side-stick—the same F-8 DFBW was modified to add a side-stick for evaluations—but did not directly develop the technology. The same goes with the reclined seat (the Navy played a large role in that, interestingly enough).