China Weaponizes Supply Chain, Sends America’s Largest Drone Maker Into Crisis

America’s largest drone company and supplier of unmanned aircraft to the Ukrainian Armed Forces has been thrown into a supply chain crisis after Beijing imposed sanctions, barring it from sourcing drone parts from Chinese suppliers, according to a new Financial Times report. This is another wake-up call for American companies heavily reliant on China, highlighting the urgent need to ‘friend-shore’ or ‘reshore’ critical supply chains away from the world’s second-largest economy.

Sources familiar with the situation told FT that Beijing imposed sanctions on Skydio to prevent it from sourcing battery components from Chinese firms. 

On Wednseday, Skydio said the sanctions by China were “for selling drones to Taiwan, where our only customer today is the National Fire Agency.”

Skydio CEO Adam Bry met with US Deputy Secretary of State Kurt Campbell and senior White House officials last week to discuss the dire situation as the Chinese paralyzed part of the drone company’s supply chain.

“This is a clarifying moment for the drone industry,” Bry told customers in a letter obtained by FT. He said, “If there was ever any doubt, this action makes clear that the Chinese government will use supply chains as a weapon to advance their interests over ours.”

Bry continued, “This is an attempt to eliminate the leading American drone company and deepen the world’s dependence on Chinese drone suppliers.” 

China initially unveiled the sanctions on October 11 as retaliation for Washington’s move to sell attack drones to Taiwan. The FT noted that the company recently secured a contract with Taiwan’s fire agency. 

FT sources did not mention which of Skydio’s Chinese suppliers were affected by the sanctions.

Using public trade data compiled by counterparty and supply chain risk intelligence firm Sayari, about 94.44% of Skydio’s drone component shipments came from Vietnam, 4.9% from Hong Kong, and .65% from China. 

A list of Skydio’s suppliers – mainly in Asia. 

Here is the latest drone part shipment data for Skydio. 

One official told FT, “We suspect Skydio was targeted by Beijing because it is likely seen as a competitor to DJI,” adding, “If there is a silver lining, we can use this episode to accelerate our work to diversify drone supply chains away from . . . China.”

It seems like a tit-for-tat-sanction war between America and the Chinese to weaken each other drone-manufacturing capabilities.

US CBP Agents Halt Some DJI Drone Imports Over ‘Forced Labor’ Concerns https://t.co/Ub8sdyP3xd

— zerohedge (@zerohedge) October 18, 2024

These Chinese sanctions undermine US defense and drone manufacturers … it’s time for ‘America First’ policies to avoid this kind of shitshow.