Artificial intelligence experts at German defense companies are putting in quite a bit of overtime these days. They are preparing for the secret tendering of a German military project with the cryptic name Uranos KI. The project aims at developing a military artificial intelligence system (KI is the German abbreviation for artificial intelligence) that will assist troops identify enemy movements in real time and figure out what they are planning.

The aim of the project: the transparent battlefield.

The project isn’t just about the billions of euros involved. It is also about the future of warfare. It is the first time that the Bundeswehr, Germany’s military, will be deploying AI systems, and the primary adversary on the watch list is Russia. Next year, plans call for a brigade of 4,800 German soldiers to be sent to Lithuania, and the Bundeswehr is intending to support the unit with AI-backed reconnaissance technology. Sensors deployed in the field, for example, would be able to immediately detect an attack, right down to the type of tank used by the invading army. NATO’s eastern border with Russia is critical territory, and in the future, surveillance efforts are to be highly automated.

Initial experiments conducted on a German military training ground were quite convincing, according to those involved. The time it took to disable vehicles, for example, was cut in half, says one participant, and ammunition use fell by a third. The Bundeswehr intends to award the tender following German parliamentary elections next Sunday. Plans call for the system to be ready in 2026.

Armies across the world are facing major changes. The technological disruptions caused by AI aren’t just changing the way we work and live, it also has significant implications for war and for the armaments industry. It is a revolution that can be seen every day on the battlefields of Ukraine.

The Russian military, which is vastly superior in terms of the amount of war materiel and the number of troops at its disposal, is facing a country that has been fearlessly fighting back over the last three years using the latest technologies. Cheaply produced Ukrainian drones that are controlled by artificial intelligence search out targets on their own – and are able to destroy multi-million-euro tanks. Russia is also relying heavily on drones and AI. Indeed, the war has become a race to deploy the most intelligent systems possible.

Germany has to "find ways to adapt and modernize our armed forces as quickly as possible,” German Defense Minister Boris Pistorius said recently on the eve of the Munich Security Conference. This especially applies, he said, to four areas of technology that "will shape the future of defense.” Artificial intelligence, he said, "has the potential to revolutionize defensive capabilities.” Second, quantum technology will "have a profound impact on digitalization and information security in particular.” The third important category, he continued, are drones, with Ukraine being "the first major drone war.” Finally, he concluded, cybersecurity will be decisive.

All of that has deep implications for the armaments industry. "The structure of the defense industry is facing fundamental change,” says Oliver Dörre, who has been head of the military electronics company Hensoldt for just under a year. The shell of a tank, a warship or a fighter jet is becoming less important, he says. Real value is now coming in the form of sensors, data processing and the networking of materiel. Indeed, experts believe that so-called Software Defined Defense is the future of warfare.

For established companies like Rheinmetall, KNDS and Airbus Defence, which produce tanks, artillery, munitions and warplanes, that future represents a threat. They suddenly find themselves challenged by startups with names like Anduril, Helsing and Quantum Systems. In some cases, investors are already valuing these up-and-comers higher than established companies. In the last four years, according to a study by the business consulting firm McKinsey, investments in defense startups have skyrocketed (see graphic). With the result that the new players are now siphoning off money from defense budgets that traditionally went to the established company since they possess capabilities that some household defense names simply don’t have.

The defense industry is redefining itself, opening up plenty of conflict potential. The outgoing German government pumped 100 billion euros into a special fund for the Bundeswehr following the Russian invasion of Ukraine. And the next coalition, it seems safe to say, will not be skimping on defense expenditures either. As a result, competition has erupted among defense companies and startups to secure as much of that money as possible, with lobbyists not always resorting to the cleanest of methods. Despite the scramble for contracts, however, a crucial ethical question must be addressed: When it comes to killing as efficiently as possible, will a human being or an AI program be making the call?

The General

When Michael Vetter joined the military, computers still used magnetic-tape data storage and monitors displayed green letters on a black background. Today, the 62-year-old wears three gold stars on his shoulder. As a lieutenant-general, he is head of the Directorate General for Cyber/Information Technology at the German Defense Ministry, essentially making him the chief information officers of the German Bundeswehr. Vetter’s job is that of digitalizing the military.

The Bundeswehr must also become "digitally prepared for war,” he says. The proverbial "fog of war,” which refers to the lack of information on the battlefield, has, says Vetter, been replaced by a "fog of data,” thanks to countless sources of information and sensors. Those who are best able to combine signals from land, air, sea, space and cyber will "dominate the battlefield.”

The notoriously poorly equipped Bundeswehr has to catch up. And it begins with infrastructure. Because of the money from the 100-billion-euro special fund, the military is at least able to rent data centers from German service providers like T-Systems and Stackit. Building their own would have taken too long, says Vetter. On top of that are mobile data centers in containers. Meanwhile, Airbus is currently building two geostationary satellites and Vetter is purchasing software and communications systems that will soon network parts of the army.

The general describes one of the primary goals as follows: Weapons systems whose hardware is built to last for decades will, like smartphones today, be updateable through the installment of new software and thus can also be provided with new capabilities through a kind of Bundeswehr app store. First steps in that direction have already been taken. For example, the integration of a corvette-type warship into the Bundeswehr cloud is under consideration. In order to develop, test and improve new software applications for modern weapons systems, the Bundeswehr has begun setting up its own software factory, called Platform 42, within its own tech organization BWI.

A team of 40 soldiers, reservists and civilians – known as the Cyber Innovation Hub – is also to assist the Bundeswehr with digitalization. The unit has already identified several areas where AI can be used in the armaments field, such as a startup that has thus far focused on geoinformation and the examination of earth layers. Using the company’s sensor-packed drones, soldiers will be able to detect mines from a distance and recognize their laying patterns. The Bundeswehr has already tested the technology from a distance of 1.5 kilometers. It will allow tank drivers to safely navigate their way through mined areas.

This time, the German military wants to play a leading role. The question is: What company might be able to make the Bundeswehr’s digital plans reality?

The Contenders

Palmer Luckey has blazed the trail. At age 20, the American co-founded the virtual reality company Oculus in Irvine, California. Just two years later, the company was sold for more than $2 billion to Mark Zuckerberg’s Facebook (now Meta). In 2017, Luckey and several others then founded the defense startup Anduril, named after the sword wielded by Aragorn in the "Lord of the Rings” saga.

With his shoulder-length hair, goatee and penchant for wearing colorful shirts, Luckey is the sartorial antithesis of standard defense company representatives. His public relations message only magnifies that contrast. He calls the weapons systems belonging to the U.S. military "zombie programs,” because he considers their procurement and production to be cumbersome.

Anduril wants to inject the Silicon Valley spirit and speed into the armaments industry. The company sells surveillance technology, unmanned reconnaissance drones, kamikaze drones and underwater drones along with anti-drone defense systems. Currently, an additional financing round is underway that would boost the startup’s value to up to $28 billion. Furthermore, the young company has a powerful partner – the data analysis giant Palantir.

Perhaps Anduril’s most important product is called Lattice, a software platform where data from thousands of weapons and surveillance systems can be merged – such as from drones, airplanes and satellites. Using such data, Luckey says, Lattice is able to produce 3D views of battlefields in real time, mark all of the objects within that area with metadata and provide recommended actions using integrated artificial intelligence – such as how an incoming drone can quickly be eliminated. The company says that the U.S. military’s Special Operations Command is already using the platform. And Anduril, on the strength of such innovations, has become the model for companies around the world aiming to revolutionize the defense industry.

In Germany, the Munich-based company Helsing, founded in 2021, has staked its future on Western militaries pursuing a massive digital upgrade. And it even shares an investor with Anduril – the venture capital firm General Catalyst. The two companies are united in their efforts to shorten and optimize the military "kill chain,” the series of processes used by armed forces to attack and eliminate targets in battle.

Like Luckey, two of the three Helsing founders are likewise new to the defense industry. Co-founder Gundbert Scherf’s resume includes a stint at the German Defense Ministry, but Torsten Reil is a biologist who built a startup aimed at creating natural-looking movements for characters in video games.

And the youngest of the three Helsing founders is 33-year-old Niklas Köhler, who studied theoretical physics in Munich and initially focused his attentions on artificial intelligence applications in precision medicine. "It was quite an emotional jump for me and my team,” says Köhler in a video call when asked about moving from cancer and diabetes research to battlefield AI. Today, he is head of the engineering and AI team at Helsing.

"We determined that defense capability is part of the democratic set-up and identified technological gaps,” he says. It’s about "gaining an information advantage through the transportation and processing of data, which leads to a decision-making advantage and then to an impact advantage.” It is quite a sentence. The word "impact” in the military context means destroying and killing.

Helsing drones and the company’s software platform Altra is already in operation in Ukraine. One problem for Ukrainian drone operators, he says, is Russia’s electronic operation aimed at jamming the frequences used to control drones. Helsing’s robust software counters that, says Köhler, by ensuring that "once the drone’s lock onto their targets, they fulfill their missions,” even if the connection is lost through jamming. Helsing has just recently announced that it will be producing another 6,000 drones for Ukraine.

Helsing is hoping to form a future cooperation with the French company Mistral, which is considered the strongest European competitor to American AI giants like OpenAI. Germany’s established defense companies have this far primarily viewed Helsing as a competitor, in part because the startup’s value spiked to 5 billion euros thanks to its most recent round of financing. But companies like Rheinmetall, Airbus and Saab are also seeking to work together with young companies on certain projects. Or, in some cases, they simply try to buy them outright.

The Established Leaders

Timo Haas, 46, has been charged with leading Rheinmetall into the digital future. The founder of the startup Blackned discovered his destiny in northern Afghanistan, where, as an officer stationed in Mazar-i-Sharif, he set up the IT infrastructure for the Bundeswehr base there. When he returned to Germany, he studied IT and ultimately founded Blackned together with a partner.

"I learned in Afghanistan that soldiers in the field sometimes need different IT systems, networks and software than what is produced by the industry back in Germany,” says Haas. His company started as an IT consultancy and grew as it moved from project to project – but its primary focus was always on how soldiers could be securely networked with each other and with various weapons systems.

The problem: "In the smartphone world, everyone uses the same IT architecture. But in the defense industry, thus far everyone has been intent on doing their own thing.” Blackned wants to change that. The company has developed a software platform called Tactical Core that is open to government clients and enables all units on a battlefield to communicate with each other and exchange data.

Tank manufacturer Rheinmetall first showed an interest in Blackned and Tactical Core in 2018. Company CEO Armin Papperger recognized that the industry is shifting toward software and networks, but because Rheinmetall initially wanted a software solution only for its products and wasn’t interested in cross-manufacturer architecture, Blackned wasn’t a good match. The Bundeswehr, though, also began demanding an open software to network its land forces, and Rheinmetall was forced to change its tune.

The defense company invested in Blackned and brought Haas onboard as head of digital, and it is now in the process of expanding its initial investment into a controlling stake of just over 50 percent. Rheinmetall’s hope is to be able to combine its financial firepower with the innovative spirit of a startup.

It remains to be seen if the strategy will succeed. Early returns have been mixed. The Blackned-Rheinmetall partnership was able recently to pull in two large contracts for the digitalization of the Bundeswehr. But Blackned’s lobbying efforts relating to the pair of deals have raised questions.

Shortly before the Budget Committee in the Bundestag, Germany’s parliament, rubberstamped the second contract, a Berlin-based Blackned employee allegedly offered eight parliamentarians party donations of just under 2,000 euros each, as the influential weekly Die Zeit reported last week. Blackned approached Green Party lawmaker Sebastian Schäfer with a personal email, justifying its donation offer with the fact that the politician had "made a contribution to equipping the Bundeswehr, especially in the digital field.”

German laws forbid donations made with the expectation of receiving something in return. Haas, who left the leadership of Blackned in late January as part of the Rheinmetall takeover, hasn’t commented on the accusations. Blackned says the company supports "parties from the democratic center out of full conviction” and that donation recipients are always parties, not individual members of parliament. "Our donations are not associated with concrete expectations regarding specific political decisions.” Blackned says that in 2025, it made donations to the Christian Democrats, the Christian Social Union in Bavaria and the Free Democrats in 2025, "each in the low four-figures.” Because of their transparency regarding the donations, the company says they were "strictly within the framework of the law.” Rheinmetall declined to comment since its majority takeover of Blackned has not yet been approved and the donations were thus none made under its auspices.

Still, there is significant concern about the donations at Rheinmetall, sources say. The deals at stake are huge, and Haas dreams of "expanding Tactical Core within NATO.” Contracts from the Bundeswehr are decisive for that kind of success.

On the medium term, the German military wants to mandate that all producers it works with open up the digital interfaces of their weapons systems. Only then would it be possible for autonomous combat systems to interact with all elements of the military.

Doing so, however, is a radical step for Germany’s large defense companies. There are some who are trying to defend the expertise they have accumulated over the decades.

A Rheinmetall competitor says that the expertise of defense start-ups such as Helsing is being used to close a capability gap. Think of it like "Star Wars,” says the defense company executive: Luke Skywalker pilots the spaceship, the robot R2-D2 observes the technology and the enemy. Algorithms could be helpful in relieving the commander. Ultimately, however, the aim for a defense company is to develop a secure overall system.

They are careful about what information an expensive combat vehicle allows its digital assistants to access, says the manager. The interface will always be designed in such a way that it only accepts input from sources that the system knows.

The Future

Ultimately, startups and established defense companies must come to view the transformation of the European defense industry "as a joint task,” says Dörre, the Hensoldt head. There is a "risk of disillusionment” among newcomers to the scene, he says. Plus, the pace of change is being dictated elsewhere, and global competition in the defense field is brutal. The consulting company PwC sees the U.S. in "pole position” when it comes to AI, with the company writing in a new study that the recent unveiling of the Stargate Project, as part of which private companies like OpenAI, Softbank and Oracle intend to invest $500 billion in a data center, underlines the "unique ecosystem” in the U.S.

China views AI as a strategic opportunity to more rapidly approach military parity with the U.S. The technology is under state control and being pushed ahead with no concern for ethical issues, PwC writes. The emergence of the AI company DeepSeek in the civilian sector shows just how quickly China is proceeding with development, the report notes. Russia, meanwhile, has placed its "strategic focus on military applications” when it comes to AI.

The omnipresent deployment of software and the planned networking of entire armies entails new risks, particularly in sensitive geopolitical situations. Enemies could hack into the systems and destroy them – or take over control and turn them into a weapon of their own. If weapons are able to attain new capabilities by way of a download, it is imperative that the code is not corrupted in any way. When an aircraft receives new software capabilities, they must harmonize perfectly with the existing system.