Ukraine, Iran wars challenge defense’s playbook

Warfare is undergoing a fundamental shift where tech with big price tags is being challenged by a more agile, decentralized model, spearheaded by Silicon Valley-backed start-ups, industry watchers told CNBC.

The traditional defense model — notorious for development cycles that can span decades — is coming under increasing pressure. Companies are instead betting on a new type of warfare, based on shorter lead times that allow for rapid deployments and more cost-effective solutions.

Previously, warfare was about expensive platforms and precision strikes, driving a downsizing in military forces as countries increasingly relied on cutting-edge technology, said Blythe Crawford, former commandant of the RAF’s Air and Space Warfare Centre.

“That all changed, I would argue, when the first $500 drone took out a $5 million tank on the battlefield in Ukraine,” Crawford told CNBC’s “Squawk Box Europe.”

The company Ark Robotics, develops autonomous robots for rapid deployment using feedback from the battlefield to shape the technology. The CEO, who goes by the pseudonym Achi for security reasons, told CNBC that the war in Ukraine shows a paradigm shift in warfare, part of a bigger change also seen in the Iran war. 

“[It’s] a totally new approach, how you handle the military conflict… the game [has] changed into the mass, affordable systems that are to be orchestrated with AI,” the CEO told CNBC’s Ritika Gupta.

The urgency for this shift is driven by a sobering economic reality. 

“History tells us that the last 400 wars were won on economics,” said Andy Baynes, co-founder of Tiberius Aerospace. “If we continue to fire $4 million Patriot systems at $20,000 Shahed drones, we’re going to lose.”

Crawford also noted that while high-end products like the Eurofighter Typhoon remain vital, they now require a “low-cost wrapper” to survive. He pointed to the U.K.’s Storm Shadow missiles, which saw dramatically increased success rates in Ukraine only after being complemented by swarms of cheap drones and electronic warfare to overwhelm Russian defenses.

“It’s what we refer to as a high-low mix,” Crawford said. “The character of war has changed when a $500 drone can take out a $5 million tank.”

Tiberius Aerospace is one company betting on the need for low-cost, scalable warfare equipment. The two-year-old company, founded by Silicon Valley entrepreneurs, focuses on design and development of weapons and licenses designs out to domestic manufacturers.

It’s introducing a new way to speedily segregate design and development from manufacturing, through its GRAIL platform. 

The company announced Thursday that Ukrainian defense technology IP will be available for license and manufacturing in the U.K. through the AI-powered platform, which it positions as a defense-as-a-service model. 

“It’s going to show that separating design from manufacturing is commercially viable. It’s a way to reduce defense budgets or dependency on exquisite, high-cost systems and move into high-impact,…