This is a topic the three of us have discussed several times now. The jet engine we are currently scaling Viper with is produced in Taiwan. They are the only legitimate manufacturer of jet’s with decent performance and cost, and supply much of the US micr-turbine market, including Anduril. That said, they have several key deficiencies.
Taiwan - this is a clear problem.
Performance - their performance is very sub optimal. It’s based on a several decades old design and was never optimized through modern CFD, does not integrate new combustion techniques and is optimized for RC planes, not high performance aircraft at 30,000ft.
Scale - This is the most significant. Their current free production rate is 30/mo. This is unacceptable.
It has come time to burn the boats and in-house this engineer. I wanted to wait until we had significant interest on Viper and were clearly executing on development of Viper beyond the engine, and I think the bar has been met on both of these. I wasn’t originally expecting to in-house this capability, and it will certainly impose some cost constraints on the business in the next 24 months, but I think it is a clear de-risk for the business, will give us upside and defensibility if we need to scale for conflict as a country, and plays perfectly into Mach’s long-term mission. There’s also significant potential to get some of these efforts paid for by DoD, which is something our BD team is beginning to scope heavily. We are sending a team to Taiwan to tour their factory this weekend to assess the difficulty of in housing this capability, and this will also play heavily on our decision. Overall, there are several feasible approaches. For the record, even “in-housing” manufacture would likely still rely on outsourcing specific components, mostly the inconel castings which would take several months or years to get licensed.
Pay Kingtech to setup US manufacture - If we pre-bought engines, there’s a chance we could get them to standup a US operation. This would likely be the fastest and lower risk, but longterm will become more expensive, and does not create defensibility, performance nor solve the single source supplier problem.
Design our own engine and have Kingtech manufacture it in the US - This would be more expensive, but would give us better chances if Kingtech messed with us. It would also increase performance and align us better towards our future goals. That said, it combines the biggest risk (engine design), with the biggest cost (outsourced manufacture).
License a Kingtech design and produce it ourselves - This would be the easiest lowest cost method. By paying a royalty fee (likely similar to their margins - which can’t be great), we could license their design and stand up our own production. This would be the fastest, and if our production were flexible, when our own design switched over, we could make a clean handoff and regain the margin while increasing performance. The IP here if we do plan on doing our own engine will be extremely complex to navigate, and Kingtech will likely be hesitant, but I see this option as the best ROI.
Do the whole thing. This would be the most costly and most difficult, but if we pull it off, it would deliver the best outcome for the company on a 2 year timeline.
I find option C as the most desirable, but it will largely depend on how initial costs shake up as we get more clarity on designs and supply chain as well as heavily rely on a positive relationship with Kingtech built though this trip. I don’t need support here, I’m mostly just highlighting the dynamics and the absolute need to in-house propulsion.
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