“The challenge to mass producing hover-optimised […] drones has revealed systemic vulnerabilities in the West, stemming from a heavy reliance on Chinese-origin rare earth elements […] It is critical for Western governments to strengthen cooperation across supply chains.”
This is according to a new RUSI research report, entitled “Drones: decoupling supply chains from China”, by Robert Tollast. The report warns that the United Kingdom (UK) and its NATO partners face serious deficits in domestic drone-production capacity, leaving the Alliance highly dependent on Chinese-origin components to make unmanned aircraft systems (UAS).
The report finds that despite the UK’s ambition to position itself at the forefront of the drone-capability coalition for Ukraine, Britain and its allies lack the industrial depth to sustain the scale of drone production which defines modern conflict. While Ukraine has demonstrated extraordinary adaptability in the mass use of drones on the battlefield, the paper notes that NATO members have yet to build a comparable supply-chain ecosystem.
The report highlights that the People’s Republic of China (PRC) currently supplies around 80 percent of the global multirotor-UAS (MUAS) market, including components such as flight controllers, motors and thermal sensors. With tightening Chinese export controls, and growing cooperation between Beijing and Moscow, NATO’s exposure to supply disruptions is acute.
The UK, which took delivery of only 6,000 first person view (FPV) drones in 2025, (while Ukraine currently uses 9,000 drones a day) is singled out as emblematic of the West’s slow pace in scaling up production.
The report urges policymakers to treat drone supply as a fundamental pillar of defence resilience, akin to munitions or fuel, and warns that unless the UK and NATO establish resilient, diversified manufacturing capacity, they risk entering future peer conflicts with a critical shortage of drones, drone components and raw materials.
The key findings are:
• Material shortages and related price volatility are already affecting drone production.
The report says: “NATO allies seeking to develop MUAS production will be hindered in their efforts by near-term material shortages. Some dual-use material, and particularly permanent magnets made with neodymium, iron and boron (which are critical for motors), have extremely high and competing civilian demand.”
• UK and NATO industrial capacity falls far short of operational demand.
“Ukraine’s affordable ‘dronisation’ model …] will be difficult for NATO to substitute when shortages arise. The UK- and Latvia-led Drone Capability Coalition goal of providing one million drones for Ukraine will be a major challenge to accomplish without any Chinese input.”
• Flexible, modular design is critical and places a premium on subcomponents.
“The highly flexible, often modular Ukrainian drone design currently facilitates diverse roles at a low cost […] This approach fuels Ukraine’s tactical innovation and allows for rapid adaptation.”
• Formalised drone construction and innovation alliances could offset UK and NATO dependence on China.
“There is a potential to transform drone cooperation agreements among democracies into formal drone alliances […] not only on assembly – at which Ukraine excels – but also on subcomponent fabrication, by building supply-chain resilience for key components.”
The key recommendations are:
• Expand coordinated Allied production of key inputs to overcome shortages.
“Allied states can build more resilient hardware supply chains for drones, mitigating the impact of a major disruption, such as a crisis in the Pacific that would interrupt shipping in East Asia.”
• Establish NATO-wide procurement frameworks.
“International collaborations based on organic demand domestic production.”
• Do not replicate Ukraine’s ‘cheap mass’ model but build economies of scale to keep prices down.
“Either manufacturers will pivot towards Ukraine-style COTS [commercial off-the-shelf] generation of cheap mass […] or a shift to greater standardisation and exquisite capability of drones at a high price point. Western producers must balance cost, scale, and resilience.”
• Secure raw-material inputs through multilateral policy.
“Within NATO, the Multinational Capability Delivery Initiatives […] require concrete action from members, and perhaps similar actions to the US Department of Defense’s [War Department’s] move to secure neodymium supply by guaranteeing prices.”
Conclusion
The report concludes that NATO’s current trajectory leaves it poorly equipped to meet the tactical and industrial demands of high intensity warfare where drones will play a critical role. Despite government announcements and private-sector initiatives, the UK and European allies remain heavily reliant on imported components – particularly from the PRC – and lack the scale of secure production that would allow autonomy in a crisis. Even if we do not fight like Ukraine, it is certain that NATO armies will need many more drones.
The report warns that the challenge extends beyond procurement and that without stronger international cooperation across the entire MUAS supply chain – from mining to unit production – NATO will remain strategically vulnerable. The UK’s Defence Drone Strategy and NATO’s drone-capability pledges must be matched by investment in raw-material extraction, microelectronics and modular design capacity. RUSI’s analysis concludes that without decisive industrial mobilisation, the Alliance risks being technologically outpaced in the next conflict dominated by uncrewed systems.