The Trump administration is in advanced talks to provide direct federal funding to a select group of American drone manufacturers, The Wall Street Journal reported on Wednesday. 

According to the report, the deals, which are still being negotiated, come after months of discussions between a wide array of private drone companies and the Office of Strategic Capital.

While the deals are still in the negotiation stage, the report noted that some could involve both debt and equity stakes and could result in the US government taking a stake in private companies. 

People familiar with the deal said it would allow drone makers to scale up production while simultaneously bringing down prices. The funding the US would supply would not be for buying drones, sources added.

The two companies identified in the report are Performance Drone Works and Nero Technologies. Notably, Performance Drone Works counts the president's son, Donald Trump Jr., as a shareholder and an advisory board member.

Notably, the report comes after the Pentagon revealed a $1.1 billion plan to mass-produce 300,000 low-cost attack drones by the end of 2027.

Before Trump's second term, the Pentagon accounted for less than 2% of all drone sales in the US, a branch of the Defense Department reported. The reported plan is likely to change this, and would be its strongest signal to date of support for drone start ups. 

According to a 2025 estimate, the US can manufacture about 100,000 drones per year. Ukraine, on the other hand, has manufactured four million just last year, according to the WSJ.

To reach its goal of amassing an arsenal of 300,000 drones by 2027, the US needs to significantly reduce manufacturing costs and increase production. This requires sourcing enough batteries, motors, and other components without relying on domestic markets, such as China, which dominates the field.