Cutting-edge AI-powered drone tests by AUKUS underscore the alliance’s pursuit of technology-based military superiority, but industrial constraints and China’s market dominance could hamper its readiness for future conflict.

This month, the UK’s Defense Science and Technology Laboratory (DSTL) reported that the AUKUS states – Australia, the UK and the US – have successfully tested AI-powered unmanned aerial vehicles (UAVs) that enable human operators to detect and neutralise ground targets.

According to DSTL, the test is part of the AUKUS “Resilient and Autonomous Artificial Intelligence Technologies” (RAAIT) series and represents the first real-time application of autonomous and AI sensor systems in the military.

The source says the exercise, conducted as part of the annual US-based Project Convergence exercise, showcased collaborative AI and autonomy, significantly reducing the time required to identify targets and minimizing risk to personnel.

It also mentions that the exercise highlighted the potential to protect military assets from electronic warfare and GPS attacks and demonstrated improved interoperability and access to advanced AI among AUKUS states.

Commodore Rachel Singleton, Head of the AUKUS Defence Artificial Intelligence Center (DAIC), stressed the importance of interoperable systems being developed in all three countries, according to DSTL.

According to the source, the technology, which has been evolving rapidly since its first test in the UK in April 2023, is intended to give the military an operational advantage over evolving threats.

These joint efforts can be part of the second pillar of AUKUS, which focuses on advanced military capabilities such as cyber capabilities, artificial intelligence and autonomy, quantum technologies, underwater capabilities, hypersonic and counter-hyperonic, and electronic warfare capabilities.

Although small drones have proven to be devastating weapons in the ongoing war in Ukraine, AUKUS has arguably been slow to adopt these weapons as a core part of the technology-driven alliance.

The bloc faces significant challenges in introducing small drones, including high production costs, competition from Chinese manufacturers, dependence on Chinese components and competition for resources from other projects.

Defense One noted this month that the U.S. military is facing a potential shortage in the production of small drones for military use, while Ukraine has a robust annual production of one million drones for first-person view capture.

Defense One points out that despite the increasing integration of drones into the U.S. military, inspired by Ukraine’s successes on the battlefield, domestic manufacturers such as Skydio and Teal are struggling to meet demand due to China’s market dominance and higher production costs.

The Defense One report says that limited support from the U.S. Department of Defense (DOD) and slow procurement processes are obstacles for startups in the drone market. In addition, concerns are raised about the higher cost and lower performance of American drones compared to Chinese alternatives.

However, Breaking Defense reported this month that the US had selected some systems for Tranche 2 of its Replicator program, which is designed to deploy disposable drones on a large scale. The US had previously included the kamikaze Switchblade drone in the program.

Australia’s dependence on China for drone capabilities is highlighted in the Defense Post in August 2023. A report by the magazine stated that the Australian government uses 3,000 Chinese-made drones whose components, such as cameras, gimbals and batteries, have been blacklisted by the United States because of alleged links to the Chinese People’s Liberation Army.

Defense Post points out that this situation leaves Australia vulnerable to supply chain disruptions because it lacks a sovereign drone manufacturing base. The institute says Australia has a mature drone ecosystem, but it is only used commercially.

Despite these challenges, Defense Post reported in February that Australia had awarded contracts worth $800,899 to 11 domestic companies to produce prototype unmanned aerial systems (UAS) for the Australian military.

The source says such a move will advance Australia’s sovereign drone industry, create jobs and increase the operational efficiency of its military.

In March 2024, Breaking Defense reported that the 216th Squadron of the British Royal Air Force (RAF), established in 2020 to test unmanned aircraft, has not conducted any drone tests. The report points out that this situation contradicts the national military drone strategy’s goal of rapidly integrating drone services.

The then British Defence Secretary James Cartlidge announced the squadron’s inactivity in a parliamentary statement, citing the cancellation of a planned test with the Koios reconnaissance drone due to resource conflicts.

To inject much-needed cash into the domestic drone industry and boost drone production, the UK’s Defence Drone Strategy 2024 will see the country invest $5.91 billion in unmanned drone capabilities over the next two years, drive procurement reform, create a resilient industrial base, define digital architectures for seamless integration and foster a culture of innovation.

While the AUKUS bloc faces several challenges in scaling up drone production and has already taken significant steps to address them, these measures may come too late and be too little.

The situation does not bode well for AUKUS vis-à-vis China, the world’s largest drone manufacturer and arguably the reason for the bloc’s existence.

In this context, the WSJ noted this month that while the US was focused on the Global War on Terror (GWOT), China saw an opportunity to modernize its military against the US.

The WSJ points out that AI-powered drones are crucial to China’s military modernization efforts. While the WSJ report says that fully autonomous drones may still be a long way off, drones with limited autonomy could be used in combat within a few years.

The report also says that while the US leads in large, complex drones such as the MQ-9 Reaper and RQ-4 Global Hawk, China is the global leader in consumer drones and dominates the global drone supply chain.

It points out that Chinese company DJI controls 72.3 percent of the global drone market share, while the United States is struggling to produce reliable and cost-effective small drones on a large scale.

The WSJ points out that China’s comparative advantage in manufacturing small systems gives the country an edge in drone swarm tactics. It also mentions that while the US is taking a man-in-the-loop approach to deploying AI-powered drone swarms, its potential adversaries, such as China, may not adhere to such norms.

In addition, in an article in Foreign Affairs this month, Mark Milley and Eric Schmidt argue that the U.S. is inadequately prepared for the evolving warfare landscape dominated by unmanned systems, artificial intelligence, and autonomous weapons.

Milley, until recently the US Chief of Staff, and Schmidt, CEO of Google, point out that despite the rapid advances of global competitors in these technologies, the US is lagging behind in the development and effective deployment of such capabilities.

They attribute the delays to bureaucratic inertia, outdated military doctrines and a lack of clear strategic focus on integrating artificial intelligence and autonomous systems into combat operations.

They say this inadequacy is particularly concerning as conflicts increasingly rely on these advanced technologies to gain an advantage on the battlefield. They warn that failing to close the gaps could leave the US vulnerable in future conflicts, as they believe dominance in AI and autonomous weapons systems will be critical.