LowV Technology Geopolitics & AI27 October 2026, Tuesday
Export permits stall Ukrainian drone makers as the Pentagon delays a round
The bomber drone phase of the Pentagon's 1.1 billion dollar Drone Dominance Program has been pushed back to November. About half of the 17 invited companies are Ukrainian, and waits for export permits, shipping and US visas upset the schedule.
According to a 27 October report by the Kyiv Independent, Phase 2.5 aims to procure up to 1,200 bomber drones for about 30 million dollars. Invitees were announced on 21 September and had to send six drones each to Camp Grayling in Michigan by mid-October. By 13 October at least four invitees, two of them Ukrainian, had withdrawn from testing, and Gurzuf Defence said it had asked for an extension until December. The Pentagon said export and shipping times were not the only factor, and that the US visa process had also contributed to the delay.
The first end of the bottleneck is in Kyiv. Ukraine aimed in July to cut export approvals to 30 days, but approval can still take weeks, and shipping to the US adds another two to three. Because the US Embassy in Kyiv does not process standard business visas, applicants must travel to another country, and the process can take weeks or months. Skycutter-Skyfall, which won Phase 1 in March, received an order for 2,560 FPV drones but was the last of 11 companies to deliver.
Euromaidan Press reported on 19 September that the four Ukrainian companies competing under their own names in Phase 2 failed to reach the top five in either of the two categories. The Pentagon does not buy directly from Ukrainian firms, which must set up a US legal entity to bid. That is why some companies are relocating to the US. General Cherry has partnered with Wilcox Industries in New Hampshire, and F-Drones operates in Ohio. The Pentagon has requested 54 billion dollars for drone warfare and procurement in fiscal 2027.
Talay assessment
Bottom line
Ukraine's battle-tested drone technology can enter the US market only through companies set up in the US, not as a product. The 54 billion dollar budget request shows the size of the market, but export permit and visa delays shift value from Ukraine to US legal entities. The most likely path is Ukrainian producers moving technology and engineering abroad by forming US partnerships and production sites.
Likely effects
- Ukrainian defence industryNegative6 months+
The requirement for a US legal entity pushes part of engineering and production abroad; the tax and employment benefits do not stay in Ukraine.
- US drone procurementUncertain1–6 months
Ukrainian partnerships give the US battle-tested designs, while delivery delays slow the programme's 340,000-drone target.
- Export regimeUncertainWeeks
Missing the 30-day approval target adds pressure on Kyiv to loosen export rules.
Possibilities, ranked
- 1US partnerships multiply55%
Ukrainian companies accelerate partnerships and facilities in the US and enter later phases through US legal entities.
Watch: Ukrainian-linked US companies on the invitee list for Phase 3, starting in February 2027
- 2Kyiv speeds up exports30%
Ukraine brings drone export approvals down to the 30-day target, and direct shipments become easier.
Watch: A rule on approval times from Ukraine's State Export Control Service
- 3Ukrainians pull out15%
Delays and requirements lead Ukrainian companies to withdraw from the programme and turn to the European market.
Watch: The number of Ukrainian companies taking part in the Phase 2.5 test in November
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Bomber drone phase budget▲ ~$30m
- Companies invited▲ 17