The US Department of Defense has awarded Raytheon Technologies (NYSE: RTX) two defense contracts worth a combined $1.28 billion for missile and weapons-system production, accelerating efforts to rebuild a strained defense industrial base. The announcement follows warnings from senior military commanders that the Pentagon’s munitions stockpile is "dangerously low" after managing a more than five-month military campaign against Iran with dwindling supplies of missiles and interceptors.

The Pentagon announced on Friday that the Missile Defense Agency awarded Raytheon a $745.4 million contract to manufacture and assemble Standard Missile-3 Block IIA missiles for the US government and Japan’s Ministry of Defense. Additionally, the US Army awarded the company a $536.0 million contract modification for full-rate production and engineering services supporting the TOW Weapon System.

Depleted Interceptor Stocks

The Department of Defense has exhausted nearly 80% of its interceptors for a key missile-defense system since February 28, when the US and Israel launched strikes to set back the Iranian nuclear weapons program. The Center for Strategic and International Studies (CSIS) estimated the US had around 2,330 Patriots and 452 THAAD missiles in its stockpile before the Iran war started. Stockpiles have since dropped to 759–827 for Patriots and 234–278 for THAAD, according to CSIS.

"The U.S. shortage of key munitions has entered the national debate and reportedly become a major element in presidential decisionmaking in the ongoing U.S. conflict with Iran," CSIS analysts Mark F. Cancian and Chris H. Park wrote on July 31. They noted that while use during the war against Iran is a major driver, it is not the only one.

Industrial Base Expansion

In response to questions about stockpile shortfalls, the White House issued a statement from President Donald Trump asserting the US had "far more munitions than anyone in the world" and "far more than we need." Trump added that defense companies are making more munitions than ever before while expanding plants and equipment at record levels.

Raytheon manufactures the PAC-2 series interceptors, while Lockheed Martin (NYSE: LMT) produces the more advanced PAC-3 interceptors and serves as the prime contractor for THAAD interceptor missiles and launchers. The strain on stockpiles has accelerated efforts to rebuild the industrial base, with the second Trump administration recognizing in its November 2025 National Security Strategy that revitalizing the defense industrial base is a top priority.

Broader Strategic Risks

CSIS analysts identified regional Middle Eastern conflicts, the ongoing war in Ukraine, and the structure of the US industrial base as additional factors behind depletion. Under the Biden administration, the campaign against the Houthis used hundreds of SM-2/3/6 ship-based interceptors and at least 135 Tomahawk missiles. Approximately 600 Patriot interceptors have been sent to Ukraine since February 2022, with some drawn from US inventories.

Hudson Institute experts Nadia Schadlow and Michael Dressler wrote that the "Pentagon remains severely compromised in terms of surge capacity." While CSIS stated the US has enough munitions for any plausible scenario in the current Iran war, risks loom for potential future conflicts with China, Russia, or North Korea. Long-range anti-ship munitions such as LRASM, Maritime Strike Tomahawk, and the Naval Strike Missile would be critical in a war against China.

What the Numbers Show

The data reveals a sharp divergence between political assurances of abundance and operational reality on the ground. With Patriot stocks falling by approximately 65-67% and THAAD stocks dropping by roughly 40-48% since the start of the Iran campaign, the reliance on legacy Cold War-era procurement models is evident. The shift from preparing for two shorter regional conflicts to countering superpower assertiveness has left surge capacity insufficient for prolonged high-intensity engagements, as highlighted by the Hudson Institute's assessment of compromised mobilization speed.

The United States is reviewing its restrictions on China's offshore access to Nvidia chips, a move triggered by recent artificial intelligence breakthroughs originating from Chinese entities. According to a report by Bloomberg on August 7, 2026, this regulatory scrutiny underscores the intensifying competition in the global AI landscape and the US government's efforts to maintain technological supremacy. The review focuses on how Chinese firms are potentially circumventing existing export controls to acquire advanced semiconductor technology, which is critical for training large language models and other AI applications.

Regulatory Context

The current review process involves an assessment of existing export control mechanisms designed to limit China's access to high-performance computing hardware. Nvidia, a leading manufacturer of graphics processing units (GPUs) essential for AI development, has been at the center of these export restrictions. The US government's decision to re-evaluate these rules suggests concerns that current measures may not be sufficiently effective in preventing the transfer of sensitive technology through offshore channels or third-party intermediaries.

Key Developments

The implications of this review extend beyond immediate trade policies, affecting global supply chains for semiconductors and the broader strategic balance between major economic powers. Investors and industry stakeholders are closely monitoring the outcome of this review, as any tightening of restrictions could impact Nvidia's revenue streams and alter the competitive dynamics of the AI chip market. Conversely, if loopholes are identified and closed, it may further constrain Chinese AI development efforts, potentially slowing their progress relative to US-based counterparts.

What the Numbers Show

While specific financial figures regarding Nvidia's sales to China were not detailed in the Bloomberg report, the strategic importance of the Chinese market for semiconductor companies remains significant. The review indicates that despite previous restrictions, sufficient access has remained to enable notable AI advancements. This suggests that either the volume of chips accessed offshore is substantial enough to drive innovation, or that alternative methods of acquiring computational power are being utilized effectively by Chinese firms. The lack of disclosed monetary values prevents a quantitative analysis of the trade flow, but the qualitative impact on AI capability development is evident.