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Modern defense readiness depends on faster innovation, more resilient supply chains and closer coordination across government, industry and capital providers.
JPMorganChase is championing long-term economic security and resiliency by supporting critical industries including supply chain and manufacturing, defense and aerospace, energy independence and resilience, strategic and frontier technologies, and pharma and healthtech. Learn more here .
The government has a critical role to play, but the private sector has an indispensable role to play in trying to ensure that the right investments are getting made to the right companies to ensure that we're innovating for our defense future.
Aerospace and defense specifically is a key foundation to our national security. So when you think of what the SRI initiative is designed to do, it's really about resolving our most critical national security issues. And aerospace and defense is one of the five key pillars that we've outlined.
The way this has been designed, it's a recognition that J.P. Morgan has a unique role to play. Given our experience, given our history, given our clients across all of these sectors, we have a critical role to play and we're going to play it, right? Whether it's making this just a priority, whether it's putting $10 billion off our own balance sheet into the mix to invest, this is something we're going to do. But it's not just J.P. Morgan alone. It's something we're going to have to do in cooperation with U.S. and other governments as we expand this out, but then also with partners throughout the private sector, first and foremost our clients, but other partners in this space. Because it's a big challenge, a big set of problems that didn't happen overnight. We're not going to get out of it overnight, but we do have a critical role to play.
So the government will spend roughly a trillion dollars...
...on defense. So as you think about the capabilities where we see a lot of the investment dollars going, I think it's critical areas like AI and cyber. It's areas like drones. It's subsea capabilities, recognizing that that's going to be a very important capability. So whether that's submarines, whether that's unmanned subsea, whether that's subsea sensors, that is a very active area where we're seeing a lot of investment dollars going. And then I think, look, there's a lot of interesting next generation capabilities that in as long as I've been covering this sector, for over 20 years, there is more venture capital-backed next generation technology companies emerging than I've seen at any other point in time in history. And so I think there's a lot of focus on bringing those next-gen capabilities, making sure they get funded and bringing those capabilities to the warfighting domain.
Technological innovation and military readiness are inextricably linked. They always have been. And this is a great example of an area where the synergies between the various components of SRI are absolutely essential because the work that, Mark, you're doing on the defense and aerospace side has got to be hand in glove with our colleagues working the frontier tech piece of SRI, also, by the way, with our colleagues working critical minerals and rare earths, because all of this is combined into military readiness. And so the investments in those domains will absolutely feed into our ability in defense and aerospace, and also building those synergies between companies in the frontier tech space that don't think of themselves necessarily as defense companies or aerospace companies, but will be creating technologies, innovating technologies that will change the way we think about defense and aerospace.
Our goals with SRI are very much mutually aligned with the goals of the administration, which is to solve the most critical problems facing our national security. And so, through our active dialogue with them, we're able to deploy our capital and our resources to those areas that are most prescient to that.
And what's been interesting for me to watch is how, first, the government, which obviously in this space, the defense and aerospace, has always understood and had a very close partnership with the private sector, I would say that's only really intensified and diversified in the last year and a half. And the government doing things that are not unprecedented in U.S. history, but certainly rare in recent history in terms of taking equity stakes in particular companies and really working so closely with the private sector in trying to bring about the kinds of investment that they judge are necessary for U.S. national security. But then the second thing that's been really interesting to watch, and something that SRI is critically part of in the defense and aerospace world, is working with partners. SRI is principally about the United States, but it's also about making partners stronger. And as partners are thinking about their national security needs and the resilience of their supply chains and the defense and aerospace reforms that they are undertaking, they are looking for the support of a global bank, a leading global bank like J.P. Morgan, for help. And we're learning a lot of lessons by our efforts to talk to companies about their investments and ways to help them in working with the U.S. government that we can apply to our partners around the world. Because we're seeing it's not just the U.S. defense budget that's going up to north of a trillion dollars. We're seeing a massive spike in European defense budgets. And that's something that's been a long time coming. And it's here, and it's going to change over time the defense and aerospace landscape inside Europe as well. And so, that's something that we think is important. We're excited about participating in, and so far, the conversations we've had with European clients as well as European governments has been quite positive, and they're very receptive and in fact eager to have our work and help with them in that effort.
There's a lot more investment going into defense in Europe, right? We've taken a number of companies public recently that have been very, very successful deals, books that are massively oversubscribed. So there's a lot of capital flowing into defense as a sector, not only in the United States, but also in Europe.
This is not going to change overnight, but I think we can already start to see, I think, in some of the work that we've been part of, in kind of that bending the curve in the right way where the most critical technologies, the critical industries, the critical innovations for the United States in terms of our own security writ large, that 5, 10, 15 years from now, we're going to be in a position where we're more resilient, where we're also going to be economically successful, right? And we're investing in systems of the future in a way that's going to make us all safer. And that's ultimately the larger mission here. And J.P. Morgan alone is not going to solve the problem, but we can use our unique capabilities and unique experience, and unique and diverse network to try to do our part to solve that problem. And I think we're already off to a good start, although there's a lot of work left to do.
Well, a lot of work left to do, and I think you hit on one of the most important parts is that we're not going to solve this alone, right? We need partners, we need allies abroad, we need the government working in partnership with us, we need other banks, other financial institutions, other sources of capital that all can come together and ultimately work towards solving the long-term problems that we've all talked about.
In the current defense environment, technology cycles are tightening. Priority areas span frontier tech including AI and cyber, drones, sub-sea systems and sensors, air defense and space-enabled capabilities. “Technological innovation and military readiness are inextricably linked,” said Derek Chollet, head of the JPMorganChase Center for Geopolitics. The implication is that the industry is no longer bounded by “traditional primes” alone; it increasingly intersects with frontier technology firms that may not self-identify as defense companies.
As focus on technology increases, investment is flowing toward capabilities that can be fielded faster and adapted in real time. “In as long as I’ve been covering this sector — over 20 years — there are more venture capital-backed, next-generation technology companies emerging than I’ve seen at any other point in time,” said Mark Marengo, head of Diversified Industries Investment Banking at J.P. Morgan.
“Technological innovation and military readiness are inextricably linked.”
Head of the JPMorganChase Center for Geopolitics
The defense industrial base faces headwinds including supply chain fragility and the practical challenge of ramping up production when demand spikes. The common thread is speed: accelerating solutions requires capital, but also coordination across procurement, production, permitting and talent. Capital does not translate into delivered capability if approvals, suppliers and labor pipelines do not keep pace.
One practical challenge lies in coordinating procurement of critical minerals , which are essential for advanced defense systems like combat aircraft and naval warships. The supply chain for critical minerals is highly concentrated in China, where 91% of refined rare earths are sourced. Diversifying the supply chain can help mitigate risks from bottlenecks by onshoring and nearshoring key resources.
Satellite technology has become a cornerstone of modern defense, underpinning command and control as well as communications networks that are vital to military operations. Disruption of satellites poses a real threat, with far-reaching implications for national security. The investment thesis for defense and aerospace, therefore, extends well beyond the development of physical hardware. It encompasses the creation of resilient networks, advanced sensing capabilities and secure communications systems that can withstand and adapt to evolving threats.
The Security and Resiliency Initiative connects multiple teams — including a technology group and an Innovation Economy group — that, together, enable coverage of both traditional defense industrial base participants and younger defense tech startups. By combining industry expertise, strategic guidance and access to capital, J.P. Morgan is able to support companies at every phase of development, from early-stage startups to established industry leaders.
“In as long as I’ve been covering this sector — over 20 years — there are more venture capital-backed, next-generation technology companies emerging than I’ve seen at any other point in time.”
Head of Diversified Industries Investment Banking, J.P. Morgan
The U.S. government is taking equity stakes in select companies and working closely with the private sector to catalyze investment in areas deemed critical for national security. This includes the public-private partnership between the U.S. Department of Defense and MP Materials , which aims to accelerate the buildout of an onshore rare earths supply chain.
Such actions reflect a recognition that the scale and complexity of today’s challenges — ranging from supply chain vulnerabilities to technological innovation — can’t be addressed by government alone. Instead, they require a coordinated approach that leverages the strengths of both public and private actors.
“The private sector has an indispensable role to play in trying to ensure that the right investments are getting made in the right companies to ensure that we’re innovating for our defense future.”
Defense readiness depends on a connected ecosystem: frontier tech, strategic materials, manufacturing capacity and resilient networks that can scale under pressure. The Security and Resiliency Initiative connects these themes to coordinate across government, private industry and multiple pools of capital.
Learn more about the Security and Resiliency Initiative and how the firm is facilitating, financing and investing in critical industries to strengthen economic security and resiliency.
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