As low-cost attack drones reshape modern warfare, a Japanese startup believes a key battle lies as much in supply chains as in the skies.
The company, which also makes drones for agricultural and other purposes, announced its entry to the defense-equipment market in March. Terra Drone’s answer: Unmanned aerial vehicles that use radar, cameras and artificial intelligence to collide with hostile drones, minimizing the need for highly trained pilots. Its strategy draws on lessons from Ukraine’s rapidly evolving drone war and the combat experience gained through two Ukrainian subsidiaries. Autonomous interceptors are a solution, but building a secure industrial base behind the technology presents a challenge. China dominates global drone supply chains, from batteries and controllers to motors. Western or Japanese alternatives can cost up to five times more than Chinese components, leaving defense contractors looking to Taiwan—an electronics powerhouse that can offer a middle ground. The real goal is securing the supply chain before a crisis hits. Meanwhile, Terra Drone has partnered with Japanese precision manufacturers to develop components like batteries—the costliest part of a drone. Tokushige’s concerns are echoed by the U.S. and some allies. As Washington seeks to wean itself off Chinese technology, U.S. defense startups like Anduril have attracted billions of dollars to build systems on home soil. Terra Drone hopes to follow a similar path. With customers including Saudi Aramco and Shell, Terra Drone is seeking to parlay its commercial drone expertise into defense, targeting opportunities in the U.S., Europe and the Middle East. Terra Drone’s presence in Ukraine gives it access to the front lines of drone warfare technology. His takeaway was that though traditional contractors excel at threat detection and tracking, they move too slowly to keep up in the rapidly evolving field of drones. The debate is no longer just about who builds the best drone. Write to Yang Jie at [email protected] and Megumi Fujikawa at [email protected]
Terra Drone’s interceptor built for the Japanese government in three months via a fast-track program is only about 20% locally sourced, the CEO said, but it aims to increase that portion significantly. Tokushige is also urging Japan’s defense ministry to require domestic production of key drone components, mirroring U.S. procurement rules requiring 65% local content for many federally purchased manufactured products. Chasing 100% domestic production is unnecessary, Tokushige said. Investors have taken note, sending the stock up over 860% year to date. During 15 visits to Ukraine over the past year, Tokushige was struck by the fact that production was decentralized across offices, apartments and shopping malls, with part-time workers assembling smaller drones using soldering irons.
Terra Drone develops autonomous interceptors that founder and chief executive Toru Tokushige says offer a more sustainable way to counter the one-way attack drones Russia has used in the Ukraine war than relying on expensive missile interceptors. It is a massive waste to shoot down cheap drones with multimillion-dollar missiles, he told The Wall Street Journal. “With autonomous operation, you push a button on a computer and the drone flies by itself,” said Tokushige, who previously manufactured electric scooters before founding Terra Drone in 2016. Tokushige said countries can no longer rely on expensive missiles, China-made components or peacetime procurement models to counter the threat from cheap, easy-to-make drones. But Tokushige said overreliance on Taiwan, which Beijing claims as its territory, carries its own geopolitical risks. “If Taiwan gets encircled by fleets, no supplies will be able to get through,” he said. Without government-set quotas, small local suppliers will never receive the orders needed to justify mass production, he said. Its push gained credibility last month when it won a Japanese defense contract to mass produce its “Terra B1” interceptor drone. Its “A1” manually operated drone has been deployed in Ukraine, while its local units develop new interceptor systems. It is about who can manufacture them at scale, secure the supply chain and adapt fast enough to survive, Tokushige said. “Once you establish a production line, scaling output by 10 times is not that difficult,” he said.
