$5 billion policy dividend! Is the US expanding the ban on drones to components, and the local industry chain is welcoming a wave of domestic substitutions?

The Zhitong Finance App learned that the US Needham & Co. According to a report released, a new round of regulatory measures introduced by the US side, which restricts drones manufactured overseas and their components (entering the domestic market), may reshape the US domestic unmanned aerial vehicle market pattern, and will accelerate procurement activities starting next year.

This week, after fully completing the national security assessment work, the US Federal Communications Commission (FCC) officially included unmanned aerial systems manufactured overseas, as well as drone components from key overseas channels, into the “Controlled List”. This certification measure means that drones and their parts affected by this will not be able to obtain permission from the FCC. Unless specifically exempted by the US Department of Defense or Homeland Security, these products will actually be prohibited from being imported into the US, sold within the US, and cannot legally operate in the US.

A team led by Needham analyst Austin Bohlig (Austin Bohlig) pointed out in a report released on December 23 that the move to include parts in the scope of restrictions shows that the ban covers a wider range than previously anticipated, greatly expanding the scope of restrictions, and is no longer limited to complete drone platforms. The controlled components listed by the FCC include communication equipment, flight controllers, navigation systems, batteries, motors, etc. Currently, approved or existing drone systems can continue to operate and use; however, newly launched products will be subject to new regulations.

The ruling is expected to limit the future participation of overseas drone manufacturers in the US market. The impact includes large Chinese suppliers that have long dominated commercial and consumer drone sales. The report indicates that with the official entry into force of the new “domestic procurement” requirements, the policy will gradually guide market demand to drone and parts manufacturers in the US.

Drone Dominance plan

Needham analysts believe that the FCC's move is an important part of the US policy package and capital transfer strategy to support the development of drone systems. The “Drone Dominance” (“Drone Dominance”) program mentioned by the company allocated more than 1 billion US dollars in special funding for small drone projects; in addition, the 2026 Defense Authorization Act also added additional financial support to the unmanned systems field. According to Needham's estimates, a series of recent legislative and budget measures have added more than 5 billion US dollars to unrelated projects.

Taken together, these changes may drive procurement activities to become more active from 2026, particularly in the field of defense-grade and expendable drone platforms. Needham said that restrictions at the regulatory level are superimposed on each other, and the impact may spread further to the commercial and consumer drone markets. After all, the new system must use components from within the US.

At the same time, the report emphasizes that although changes in policy orientation have brought development opportunities to mainland US drone and parts suppliers, it will still take quite a while for existing systems manufactured overseas to gradually withdraw from the US market. As domestic manufacturers make every effort to respond positively to potential demand growth, key links such as controlling the pace of defense procurement, the enforcement of regulatory policies, and the ability to expand production in the supply chain still harbor many risks.

Needham tracks a number of drone and defense technology companies focused on the US market and believes that if funding and contract activities accelerate as expected next year, these companies can benefit from the evolving new regulatory environment.