Foreign investment security

Pentagon reports boost in predatory foreign investment to US tech firms amid pandemic

Since the coronavirus pandemic began, the Defense Department has seen a small increase in predatory foreign investment in U.S. companies, such as small drone manufacturers, the Pentagon’s head of industrial policy said Wednesday.

“In general terms, there has been of an uptick, but it’s always been pretty high,” Jennifer Santos, deputy assistant secretary of defense for industrial policy, said Wednesday during the C4ISRNET Conference.

The Pentagon has become increasingly concerned about what it calls “adversarial capital” — a tactic whereby foreign nations, particularly China, make investments into U.S. technology startups that are part of the defense market. Once those countries make their investments, they could own or have access to unique American technologies, while the Pentagon loses its own access due to security considerations.

With the U.S. economy increasingly fragile due to COVID-19, the Defense Department must be vigilant about potential risk to American companies, Santos said. “We simply cannot afford during this period of economic uncertainty the loss of American know-how in critical tech.”