Odd Lots - Why Laser Beams Are the Hottest New Tech in Defense

Episode Date: September 4, 2026

Our guest today is Colonel Sanders. More precisely, we speak with Wayne Sanders, a retired US army colonel who is currently senior defense research analyst for Bloomberg Intelligence. During his military career, Sanders specialized in cybersecurity and weapon systems research and his work for BI has recently focused on directed energy weapon systems — better known as lasers. Just a few decades ago, programs like Star Wars, the Reagan-era missile defense system, seemed like a pipedream; today lasers can shoot down missiles and much more. Sanders tells us about the physics problems researchers had to solve to make laser weapons a reality, why we still don't have laser guns, what makes a weapons system "exquisite," the economic costs that factor into battlefield decisions, and the unique supply chain constraints that affect laser development. Read more:Weary US Sailors Lay Bare War’s Strain During Thailand Shore LeaveGerman Navy Tests Ballistic Missile for the First Time at Sea Only http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

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listeners over in Los Angeles. That's right. So if you're in L.A., we're going to be recording a live show, some live recordings at the Vermont Theater in Hollywood on September 17th. We have some really exciting guests lined up, have some really great conversations planned. So go ahead and get your tickets. You can find those over at Bloomberg.com forward slash odd lots or click the link below in the show notes and come and say hi when you're there. Berg Audio Studios Podcasts. And welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway. And I'm Joe Wisenthal. Joe, I got to get something out of the way immediately up top of this episode. You know, normally you and I talk for a couple minutes and then I introduce the guest.

I'm just going to introduce the guest right away and say today we are speaking with Colonel Sanders. I actually have some sympathy for this issue of people with famous military names because my dad was in the Air Force and his first name is Tom. Can you guess what the highest rank was that he actually achieved in the Air Force?

Oh, Major. Yep, and he always claimed he was under-promoted because people found it funny to have Major Tom in the Air Force. Of course, you have to ask the question. of whether he was over-promoted to get to Major Tom. I bet he never thought that story, but it's just as plausible. That's right. Okay, so we'll have to ask our guest whether he was over-promoted to colonel or under-promoted

to a brigadier general. But we're going to be speaking with Wayne Sanders. He's the senior defense research analyst over at Bloomberg Intelligence, and we're going to be talking about laser beams and microwave weapons. Great. I don't know anything about laser beams or microwave weapons. This is all going to be new to me. I have seen in sci-fi movies that, you know, in theory, you can shoot a laser.

Pew, pew, pew. But, like, I don't know if that's a real thing or if that's just, like, a sort of cinematized version of what a visual weapon could be like. I have no idea. Evidently, it is real-ish, because there is research on laser weapons and energy weapons, but I don't know anything about how this works. So two things I learned in the course of preparing for this conversation. So, number one, both these things fall under the umbrella of directed.

energy weapons, which sounds directed energy sounds like something my yoga instructor would say, if I had a yoga instructor, which I don't. But at the same time, people have been talking about these forever. They've been in development for literally decades now. And I think the big question is whether or not we're hitting a moment when they might actually become reality. So we know, for instance, that Israel is getting ready to deploy its iron beam project. I think there's some discussion of whether it should be called laser dome instead of iron beam, which is kind of funny. But at the same time, we know that the U.S.'s ballistic missile supply has been dwindling because, you know, it doesn't really make a lot of sense to use, like,

weapons that cost millions of dollars to shoot down thousands of drones that are made out of styrofoam and plywood in some cases. Yeah, it's clearly a lot of anxiety about just the sheer number of munitions in any context, et cetera. We've been obviously, the world is exhausting a lot. You read a lot of stories. If we could replace a bunch of it with lasers, maybe that could be a solution. It's interesting to think, you know, I sort of put this in a category of certain, like, core science technologies that have been the next big thing for a long time.

You probably remember, what was it called? Like, nanotech. Remember when, like, nanotech was going to be? I don't know what's going on with nanotech robots. Another one is quantum computing. There does seem to be a lot of progress, but also when I talk to someone in quantum computer, it still seems like we got a ways to go, et cetera.

And so the way you describe this sort of high-energy weaponry, I'm curious whether it's one of these things that definitely works in theory and ambiguously works in practice. Yeah, so we're going to try to disentangle all of those themes. There's also a really interesting supply chain attached to some of these weapons, obviously. So I'm happy to say we do in fact have the perfect guest. We're going to be speaking with Wayne Sanders. As I said, he's the senior defense research analyst at Bloomberg Intelligence and formerly

a colonel in the U.S. Army. So, Wayne, thank you so much for coming on all thoughts. Thanks so much for having me. It's great to be here. Why don't you give us the, I guess, quick overview of your military career? Because you come to us not just with, you know, analytical bona fides, but with some actual operational expertise. No, thank you again.

So I graduated from West Point in 2002. I went military intelligence, so I had a background in tactical intelligence early on, and then obviously the war kicked off. I transitioned over to signals intelligence, where I spent a lot of time looking at computer network exploitation was the next best thing that was out there, right? So signals intelligence, where you're looking at cell phones and other pieces, quickly transitioned into the computer side of the house. I then ended up at the National Security Agency for quite a while. with U.S. Cyber Command, and I transitioned over to becoming an offensive cyberspace operations officer, what's known as a 17 Alpha, where I got to spend the rest of my career working on very hard problems for the U.S. military to gain and maintain access to adversary networks, and then when called upon, deliver those capabilities.

My last job in the Army was I was the chief of staff for the Undersecretary Defense for Research and Engineering, Honorable Heidi Shoe, where I got to spend a lot of time on critical technology areas, specifically being developed out. So that's really where I got a chance to geek out and look at what some of the next research and development areas are in these weapon systems. And that kind of translated right over into coming over to Bloomberg Intelligence, where I work on the defense industrial base, emerging technologies, weapons systems. And who are the companies and the trends that are out there for global funding as well? That was amazing. That was perfect. And I'm extremely riveted and excited about this conversation.

Talk to us a little bit about your remit here and like the main sort of general. of just of the work that you do at Bloomberg intelligence. Yeah, absolutely. One of the areas that we were really, that Bloomberg was really looking forward to moving forward with was going a step further in the aerospace and defense industry area, not just the primes, not just looking specifically at the companies, but looking at the ecosystem as a whole. So not just, okay, we're looking at Lockheed Martin and the PAC three interceptors and where some of those margins are, but also then looking at the air defense market as a whole, looking at, as you mentioned earlier, in terms of laser dome versus Golden Dome

or, you know, when you start looking at those pieces, it's, okay, there's something called integrated air and missile defense. There's an entire program. There is a big difference between an exquisite munition interceptor, like a PAC three, and there's much difference between that and a high-energy laser that's going to shoot a potential drone or a ballistic missile out of the sky. So when you put all those pieces together, what does the air defense market look like? What does hypersonics look like?

What does semiconductors as part of a supply chain concern for the defense industrial base, shipbuilding, you name it. These are some of the areas that we cover down on and be able to focus on everything from budgets, components supply chain, regional components. Really, you look at the U.S. allies, if you will, adversary considerations that are driving where those markets may be going. and then what's next in the queue. So when you look at air defense, a lot of the stuff up until now, a lot of the direct energy stuff we're going to talk about today, is some of those futures piece. Where is it in the R&D line for research and development?

And then where is it going and when are we transitioning into procurement? All right. So before we talk about the role of directed energy in, I guess, the military industrial complex and defensive strategy more broadly, let's start really, really simply. And let's just, can you define what this actually is when we talk about directed energy weapons like laser beams or microwave systems. What exactly are we talking about here? Absolutely. Absolutely. You know, a lot of people call it electronic warfare. That's a name that a lot of times

ends up being synonymous as well, because you look at electronic attack platforms. You are trying to take specific harness energy and you are trying to use it in an offensive way to cause some type of degradation or destruction to something else. And so when you look at a laser, a laser is essentially a precision weapon. It concentrates energy into a narrow beam and typically attacks one target at a time. But when you look at high-powered microwaves, those weapons attack electronics. It's a larger beam that can potentially affect multiple systems simultaneously. So the government accountability office notes that high-powered microwave weapons can generate peak

powers up to like 100 megawatts. But comparing that number directly to continuous wave laser kilowatt ratings is misleading because of the characteristics they're fundamentally different. What I mean by that is a laser is a sniper rifle

and a microwave is the electronic shotgun. Think about shooting something with bird shots because a laser you're trying to scale that power and the microwave is trying to scale the effect. So that's why you're looking at drone swarms and what can you potentially do for that. Right. So the microwave

fire the weapon or whatever, maybe we'll get in the turn. And then suddenly all the drones don't work where because their electronics have been fried or something like that. And then a laser is something that could theoretically be pointed at, I don't know, a tank or something like that and then disable it? Like is it sort of, let's just say we're talking about the lasers. Is it what I have in mind only from having watching a movie where it's like there was a beam and then it's bad to be on the other side of the beam. That's pretty accurate. You know, when you start looking at how strong those lasers are,

you are trying to direct that energy into a single point that is going to burn a hole. It's trying to degrade, right? And not so much on the tank. And it's heat. Sorry. Yeah. Just to be clear, it's that heat that's the destructive force there in the laser. Correct.

It's the heat and it's the energy that's being pushed through, right? So if you get that hot enough, you actually can burn through that material specifically for that. when you look at it, normally you're looking at the difference between a drone swarm and potentially like a ballistic missile. Because a drone swarm perspective, you're going to want a high-powered microwave. You want something that is a wider range. You want something that's going to be able to hit multiple targets at the same time and cause them to degrade. And it may not, they're not going to blow up, but they might fall out of the sky. Something's not going to work on those.

But if you're pointing a laser directly at a single ballistic missile that's coming at you, you want to be able to destroy that thing. You want to be able to knock that out of the sky at that point in time. Where does the energy for these things actually come from? Because when we talk about laser beams, by definition, that's a densely concentrated beam of energy. And I can't imagine that militaries are plugging these things into the grid, although maybe they are,

or maybe they're rolling around with like giant battery packs or something like that. But where does the energy actually come from? So the answer is yes to both of your questions, actually. And it kind of goes into some of the history of, how lasers came to be and to work those out is you normally call that shore power. A lot of the technology behind lasers and all that requires a huge amount of power that's going to create that specific spot beam that you're actually trying to create.

That directed beam of energy starts in these diodes, but you have to be able to then power those. There is an awful lot of power in the past that was required in order to create that level of beam that you're trying to be able to push out. You want to keep it refined small enough so that it. it is directed in the area that you want, so it's not going out and refracting off and hitting other targets, right? But you start looking at that is it's one of the reasons why back in the day, some of these lasers were the size of buildings because you required that much energy to be able

to create that beam, to be able to create that pulse. And so you're seeing actually the difference really in size, weight, and power. You'll hear that quite a bit when you're dealing in this type of environment is the swap characteristics, right? Size weight and power. Because obviously, obviously, if you're trying to create something that's deployable, you can't just plug it into a grid and say, okay, all right, well, because now you're static. Yeah. And so it's great if you're using something for a base defense, okay, and you have, you have clean enough power and everything else to be able to plug that in to be able to use. But the deployability aspect of where a lot of the militaries are going right now is I need to be able to throw something onto a truck. I need to be able to throw something onto a ship and I need to be able to plug that thing into some type of shore power so that I have.

the ability to have regenerative electronic capabilities to create those beams and increase what we normally call is the difference between mass versus magazine because at that point in time you want to have additional shots and you want to bring down the cost per shot and this is one of those areas where you can do that you've heard the chaos now you can see it my gosh watch all your favorite podcasts from start to Finish, right inside the free IHare Radio app. Gets the blood going up. Catch every laugh and eye roll on shows like the Tom Green Farmcast

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talk about laser beams as, you know, a potential reality on the field. Is that all due to energy advancement? What has gotten us to this point? Yeah, no, absolutely. I think, so first off, it really started with the physics problem. If you go back even to the 60s, right, when the laser arrived, the military immediately recognized that it had potential and the early work seemingly, you know, is a revolutionary idea that you could put energy onto a target and essentially do it at the speed of light. Then you had the Star Wars era where identifies specifically where they're trying to produce extremely powerful chemical lasers. And this is where you start looking at a difference between the chemical laser problem back then

required a lot of energy. It also required a very large facility because of how big these things were. So if you go back to like the 1990s and the 2000s, U.S. Israel had something called the tactical high energy laser, the fell. it demonstrated that a laser could actually destroy rockets and artillery rounds in flight. There was also something from DARPA called Miracle, the mid-infrared advanced chemical laser. I had to write it down because I didn't remember what it actually stood. But it destroyed live short-range rockets as well.

But the chemical laser architecture remained really large and logistically intensive. So the program ended in 2006. I looked this up as soon as you said chemical laser, because I went, what the heck is that? It says it gets its light energy directly from a chemical reaction instead of using electricity. Yes. Is that right? Yep. What kind of chemical reaction?

Now I'm like imagining soldiers with a big like vat of chemicals and like, yeah, mixing them together and then suddenly it goes boom and shoots into the sky. No, not so much like that, but it normally is something in a containerized area. There's real science. If you remember that movie with Val Kilmer back in the day, being able to kind of create, there's some oxygen, iodine, laser, you know, type reaction where it's something that you you can actually control. It's something that you can put inside of a mechanism and you can control it from there.

Yeah. So you don't have to actually, it's not like us in chemistry class, you know, putting stuff into a beaker and then pouring it in. So it is something that oxygen iodine laser has been used in the past. Also, they put this thing onto a Boeing 747 at one point in time called the Yao I. But the problem there is, once again, you're dealing with now you have a chemical reaction that's taking place on board of a ship. And, oh, they were also, by the way, trying to do this to fly near where you think a ballistic missile launch is going to go so that you can now chase the missile and shoot this thing out of the sky. So you can fire it down from a plan. Absolutely.

You know, and, well, it's risky. Yeah. I'm going to ask, like, a sort of dumb question, but that maybe it could lead us to an interesting question. Like, do we have a gun in existence that looks like something where you hold it? Like it resembles outside of normal gun and fires a laser beam in a military capacity? Not in the way that you're thinking. I mean, we have some areas like, you know, there's the Helios platform that's on the USS Preble. So if you want to think of a very large ship gun that has the capability of doing that, you know, the Navy does have that.

If you're looking for a handheld rifle, you know, something like a laser or phaser kind of thing that you've seen in science fiction and all that, not so much where you would actually see the directed beam. Yeah. We do have drone guns that can be used for RF and be able to push out to knock drones out of the sky, though. Well, so I figure that that laser gun that I'm imagining in my head doesn't exist. But what would be the constraints to its existing? So, okay, we can, at least currently as of 2026, what would be the main bottleneck or thing we would need to solve? I imagine the thing we would need to solve

would be building an insanely dense battery or something like that, but what would be the thing we would need to solve to have the laser weapons that we see on screen? Yeah, I would say it's power generation and compression when you start looking at what you have to be able to do. The reason why it's still existing really striker vehicles right now have there are a couple of platforms that are out there

specifically for this with a high energy laser on there, but you're talking about 50 kilowatts of power. And so, and that's something that's being generated based off of the generator power that's already put on a striker vehicle. That's part of that, that sure power that's in there. So that, like you're talking about, whether it's batteries or whether or not it is some type of power generation mechanism is going to be required in order to create the level of beam that's necessary. If you only have a five kilowatt laser beam at that point in time,

but it requires 15 or 25 kilowatts of energy in that beam to be able to knock a drone down, then at that point in time, it's not going to be effective. So you have to make sure that you are pairing the type of capabilities, the power generation that you can push out, versus the threat that you're actually trying to mitigate. You know, Tracy, whenever we talk defense tech in any capacity, there's always this weird thing where we're talking about machines that kill people, right? I'm reading.

I'm on the Lockheed Martin looking at their Helios integrated weapon system and it's going through the specs and it's like Deep Magazine, low cost per kill, speed of light delivery. It's like, it's gear, but, you know,

these are the metrics. Yes. Yeah, it's creepy for sure. So actually, one thing I wanted to ask Joe just touched on this deep magazine idea. And sometimes when you read about the potential for directed energy weapons. People talk about, like, oh, they're a more cost-effective tactic against things like cheap drones. So instead of firing off a PAC three that costs millions of

dollars, you fire off a laser beam that is, you know, renewable. You can keep firing or you send off microwave beams and keep doing that. But is comparing directed energy weapons to something like ballistic missiles, is that the right comparison? Because I also hear about things like coyote or there's something called vampire, which I would love to learn more about, or Skynecks, like systems that can do a similar thing, but are also cheaper than ballistic missiles. Absolutely. So one of the reasons that you look for high-powered microwaves, high-energy laser solutions, this directed energy platform, is because the cost per shot is very low. As long as you have the stream of energy necessary to be able to use it. It's great. The problem is that you're waiting

for something that is trying to kill you to get close enough to the target so that you can hit this thing with high-powered microwaves or a high-energy laser to be able to knock that out. And, oh, by the way, when you have adversary capabilities that are traveling at Mach 5, you're traveling at 4,000 miles an hour, you probably don't want to hope that you can put this laser beam exactly where you want it to be in order to do that. So what you're going to do that. So what you're going to be in a while you you're really looking for is there's layered air defense, right? I referred to it earlier as integrated air and missile defense. And this is where it's really important because it's, it's, super relevant to what we're talking about right now, especially when you look at investment as

well. You have to remain, you have to have exquisite missiles. You have to have your Lockheed PAC three interceptors. You have to have your RTX, SM3s, and SM6s. You cannot get rid of those because you have adversaries who have hypersonic weapons. If a hypersonic weapon is launched, you are going to want to use one of your more exquisite capabilities to make sure that you can knock that thing out of the sky and it doesn't kill your soldiers,

your airmen, sailors, and Marines, and your guardians. You want to make sure that that doesn't take place. So the exquisite missiles are part of this conversation. But the biggest piece, like you're saying right now, is you're identifying that you can win every engagement. You can win every engagement defensively and still lose economically. And that's what we're seeing a lot in Iran right now, is they're just starting to just run us out of some of these exquisite interceptors and munitions.

And so, as you mentioned with coyote and you mentioned with Vampire and BAA has a system called APKWS, which is the advanced precision kill weapon system. Ryan Tal has Skynex and Sky Ranger. These are cheaper interceptors in guns. So think of these as almost a mid-range solution for those to say, okay, I don't want to use a $4 million. Because you can see the radar systems themselves, if something is launched and coming at you, it'll put together a signature.

It will say this is this type of system. It's being shot at us at this type of speed. It's going to have a boost phase, glide phase, you know, terminal phase on some of these capabilities, right? Depending on what those things are, it's important to be able to say, okay, well, based off of the threat, I want to pair it with a specific type of capability that makes sense.

And so if you're being shot at, if a drone swarm is coming at you and it's the, the Shaheed 136 is out of Iran, you don't need to shoot it down with the PAC 3 interceptor. You may be looking for that vampire APKWS partnership. You may want to use some of these coyote block twos. You want to go and look at some of these systems and say, that's what I want to use. if it's going slow enough or you have enough of them, you may want to then partner that with a high-powered microwave to knock them down. So you don't want to give up any ground at all in terms of creation of these different

capabilities. So these end up being additive. And Israel does it better than anyone. When you look at Israel, if you have an intercontinental ballistic missile threat that's coming your way, they're going to use their arrow two, arrow three systems, which are exo-atmospheric. They are going to try and shoot this thing down as far away from you as possible based off of how serious the threat is. If it's something else that's a little bit shorter than that, they have a system called David's Sling. And David's Sling goes farther than Iron Dome.

Iron Dome is that next layer that you use, and you hear about it all the time between Iran and Israel the 12-day War, as well as during Epic Fury and into the systems now, is they continue to use Iron Dome, and now they're adding in iron beam as well. So what it's done is it gives the commander options so that you don't always have to use your exquisite munitions. You don't have to bankrupt yourself to do it. If you have this integrated architecture that goes across all these different weapons systems for the reasons you just laid out, who actually makes or owns, I guess, the kill decision? Like, who decides what deployment of all those different things actually looks like against which targets.

And I imagine most of the time you're operating under like highly pressurized time environments, right? Yes, absolutely. And so normally it's known as the target execution authority, the TEA. And that is the military does a phenomenal job at identifying this well before a conflict when you go forward. And then so depending on what type of threat that is, it's going to say you have the authorities at your level to accomplish the following things. So if you are an infantry battalion commander, you're a lieutenant colonel, and you have your soldiers out there on the battlefield, you're only going to have a certain amount of authorities.

Your rules of engagement are going to stop at a specific level. But then as it goes further and further up, what they call the operational command, the operational command. So if you're looking at the Iran scenario, a lot of those have been delegated down to U.S.C.com, U.S. Centcom, U.S. Central Command, delegates quite a bit to Fifth Fleet so that the U.S. Navy can answer those questions. So if you have a laser on board a U.S. Navy vessel as part of the George Washington or the Abraham Lincoln Carrier Strike Group, then they will know at their level what they're allowed to do and what they're not. And that's going to be determined based off of that. So it changes. I don't want to say that it's always going to be the following. But the military knows at that point in time. They also know that they have the right to self-defense. So that that is always

priority number one, no matter how you're looking at it. But normally there will be a ship captain, there will be a carrier strike group, you know, admiral that will have that specific authority. And so when he sees it, right, so part of what they end up doing is they put all this stuff into the Aege's system and they can see all of those. There will be a common operational picture and based off of that, that admiral can make that decision. What makes a weapon system exquisite? I hear this term from time to time in these comfort. And I realize I actually don't know the answer to that. So normally it really just comes down to the sophistication and technology that is included in it.

So if you're looking at an interceptor, if it is an exquisite interceptor, it means you have the top of the line secret technology that is inside the payload, inside the front of that interceptor, because you're trying to shoot a bullet down with a bullet at that point in time, right? The science that's behind that is phenomenal because you have to be able to see exactly where that threat is. coming from and whether or not now you're getting into maneuverable systems as well, right? It's not just always a 100% path. I'm flying directly at you, never going to switch path. So these seekers have to be able to then not only do it. They have to identify and track, but then they also have to then do adjust to whatever changes in those paths also come.

So that is an exquisite interceptor type of munition. If you have long-range precision munitions that we are firing offensive, Same thing kind of applies. It has to do with how fast it goes, whether or not the tail fins maneuver these and cause it to change course as well, because now we're trying to also then avoid enemy air defense systems as well so that we can make sure that we hit the target as well. So the payload that's on it, how fast, how big of an explosion are you trying to achieve, all of those things playing into that exquisite munitions perspective. Got it. The other side is the gravity bombs. Gravity bombs are just standard GPS guided munitions

where as long as you can get over the target and you drop that, it's very, very simple maneuvering and all that. It's a lot less because you're not worried so much about the energetics behind it and you're really just letting it hit the targets. Aren't all bombs gravity in the end? I mean, they all have to like fall back to Earth eventually.

Okay, anyway, to what extent do military commanders take into account economic costs when they're making these operational decisions. Like, would someone hesitate to press the button on launching a bunch of ballistic missiles because they're thinking about how much it might cost the U.S. government? And I'm thinking back to, I'm sure we've all seen Top Gun when Maverick crashes the airplane or whatever, and his commander is, like, chewing him out and saying, that's not your plane, it's not your money, it's the taxpayer's plane and the taxpayer's money.

Does that factor into actual operational decisions at all? So I think the best way, you described it perfectly, and I think that that actually shows how great the military system is, is because if you are a tactical commander and you have, if you're in that situation, all that, you are going to use whatever is necessary to protect your force. It doesn't matter. You have the operational command and you have those abilities. As you get farther up the food chain, as you become those flag officers, those general officers, right, the admirals and the generals, when you're start getting to those operational higher level of command decisions, they're the ones who are tied more into than national. So you have tactical, operational, strategic, and national authorities. And so as you get closer into those strategic and national authorities, that's when those

leaders are the ones you start looking at that and saying, I need systems where I'm not spending $4.1 million to shoot down a $30,000 drone. But that is not something that your standard lieutenant or captain or major is dealing with at their level. Right. I would imagine, though, that they're not thinking about, oh, what is this going to cost the taxpayer, but they are still fundamentally having to think about economizing. They have a certain amount of capacity with them at any given moment, and they have to think when are they going to use their more scarce weapons, that probably does cost more, but scarce weapons.

So we have this problem. Everyone's talked about it. the war on Iran, this rapid depletion of very expensive stocks, where would we have to get to with some of the weapon systems you're talking about such that, or where are we on the path, such that these technologies could meaningfully change some of the economics so that we could accomplish some of the same goals that we want while on the very abstract level saving money, but just generally speaking, solve this problem of ours of munitions depletment. Yeah, no, I think we're in the middle of it right now,

because when you look at how the military is structured and how the Department of War, Department of Defense, is right now pushing some of these additional, what they call the multi-year framework agreements for these munitions platforms, they're doing that because they're trying to, they're recognizing right now that it has been, I don't want to call it a failure of economies of force, but, you know, the U.S. military has focused so long on looking at the peer-type fight. So this has been a lesson learned for the military to say, hey, look, I right now, as you even mentioned, here is my arsenal. This is what I have available to me right now.

And I'm getting shot at right now. I'm getting attacked by Fatah 110 ballistic missiles. I'm getting shot. I'm getting attacked by Shaheed 136 drones. And, hey, what I have at my fingertips right now are PAC-3 intercepting. from the Patriot system. That's what I have. And so therefore, that's what I'm going to use. The Navy's looking at it. And they're like, well, I've got SM3s.

I've got SM6s. And so that's what I am using. And so what you're seeing right now is, hey, we don't want to do that. That's been the demand signal to industry right now is that low-cost containerized munitions, those low-cost interceptors, the high-powered microwave, high-energy laser, the urgency and demand for some of these systems is because exactly what you're saying is, I want at my level, if I was sitting right now and I was still Colonel Sanders, KFC, you know, sitting at, you know, and I'm working with my force, I want to have all of the solutions so that I have more options at my fingertips. I want to have more arrows in my quiver so that I can make the decision between electronic warfare, high-powered microwave, high-energy laser, guns, cheap interceptors, as well as exquisite missiles.

I want to have all of those things at my fingertips, and that's what we're at right now. Canadian women are looking for more. More into themselves, their businesses, their elected leaders, and the world around them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark. And in this podcast, we interview Canada's most inspiring women. Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey.

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Exclusively for Bloomberg.com subscribers. Get answers on today's. headlines breaking earnings news and big market moves visit bloomberg.com slash ask radio to join the conversation right here on bloomberg radio how easy or difficult is it to actually produce these things at scale because a couple of familiar names kept coming up when I was researching this rare earths including gallium and this one this one is unfamiliar to me joe do you know what itturbium itturbium itterbium why turbium I think it's iturbium. No, keep going.

All right. Well, both of them, as is tradition, are, you know, mostly produced by China. Oh, yeah. So it seems like if you want to ramp up production of these things, there are still, even if you agree that these are effective weapons and they're going to do a lot for defensive capabilities, scaling up production could still be a challenge. No, it absolutely is. When you look at critical minerals across, there's terbium, like you mentioned, there's

dysprosium. Dysm is another one that a lot of people use. military uses a lot of neodynium boron iron magnets. And the fact that I know that I'm on my head, it just shows how many times we've had to go over this. But yeah, so critical minerals becomes very, very key. And so when you start looking at some of the deals that are being made by the Department of War right now is a great example of that, right? The deal with MP materials to actually, you know, gain a piece of ground, specifically inside the U.S. domestic onshoreing of these capabilities. But you're absolutely right. There are quite a few of

these critical minerals that China has a predominous in the world. They have, you know, sometimes 85, even 90 percent of the supply chain. So how important it is that we're using the ones that we have correctly when China last year added 12 critical minerals that they were not going to share with the United States. You know, these are some of the key ones, like you said. And so the nice thing is that a lot of the defense primes have recognized this as a risk for quite a while. And so they've already been working towards some of these. But the bigger problem now is, is it's not, these are not just critical minerals that are used for defense platforms. These are a lot of dual use capabilities with a lot of civilian and commercial needs as well. And so if you're

looking at a brushless motor for a drone, that could be used for a civilian drone or it could be used for a military Reaper drone or a global hawk. And so when you start looking at those, it is a lot of decisions that have been made by industry. By the way, I have to let listeners know who've been listening for a while. I found my tungsten cube thanks to Tracy. I had been missing it. And she suggested a drawer that we store stuff in that it might be in and it was there. So thank you.

Trent out you can buy a turbium cube. Oh, no. No, no, it's $40 for a little 10, 10 millimeter cube. I don't know. It's just silver. Yeah, it's just a, it's just a, it's just a silvery. I'm curious when like maybe a big picture when like a sort of new type of like weapons regime sort of maybe disruptive weapons tech emerges in your seat as an analyst how much of this is coming from the primes and how much of this is coming from defense startups etc. There's like some defense startup is like you know we don't have an exquisite missile system that we would.

want to keep selling and therefore we're not going to fall captive to the innovator's dilemma unlike a defense prime that may not be as motivated to push on a technology that could render their existing workhorse sales to be less market competitive. What do you see in terms of market dynamics here? No, it's a great point because you're hitting on something that the DOW has actually identified now and it started to push towards as well. The defense primes right now are scaling. We've already talked about the exquisite munitions, right? And so a lot of the multi-year framework agreements that have come to them has been to increase the stockpiles of things that we already have. So PAC three interceptors going from 620 a year to 2,000 per year, right? That is what

they're pushing for. That's a 3.3x increase on what they're doing. The THAAD system, the terminal high altitude air defense system. These are like $12 to $15 million per interceptor. They're trying to increase that 4X. And then you've got the precision strike munition, which is a long range offensive system that we've used in Iran successfully. That's very strategic to a, you know, to like a China fight. That is one that's, they're trying to increase by up to 4x as well. So you start putting those together. That's your exquisite munitions piece. But that middle ground that I was talking about, right, where you're looking for these low cost containerized munitions, you're looking for, okay, I don't have, I'm not ready to just do a high power microwave,

but I don't want to use a $4 million interceptor. There are contracts that are out right now, specifically five companies, co-espire, Lidos, Anderol, Zone 5, and Castilian are the five contracting companies right now that the DoD has contracted with and say, I need this middle ground solution. I need tens of thousands of these, not trying to jump, like I said, from 620 to 2000

or 96 to 400 for the THAAD system. We're talking about I need thousands, tens of thousands. That's my demand signal. Let's make this happen. And so the market, these disruptors are the ones who are picking up those contracts. So the short term, the primes are winning because they already have the production lines. They are able to put these contracts directly into place and they're pushing for it. But that mid-grade, you know, think about three to five years, the scalability for the Anderals and the Castilians of the world to come in and grab that middle market as well is,

an area that the primes aren't looking to grab into too much, and they're allowing some of these tech disruptors to do it, but you're also seeing a lot of joint ventures as well across the board, not only internally to the U.S., but also our partnerships around the world. Lockheed does a great job, so does RTX, partnering with some Europeans companies as well, Ryan Mital being one of them, so that they can start to increase capacity overseas as well. Can you talk a little bit more about, I guess, AI and safety issues when it comes to this kind of weaponry? Because Joe and I, we've been having a lot of conversations recently about LLMs and some recent safety incidents, including an open AI model escaping its sandbox during a test and hacking into hugging face, which is like bad enough.

But then when you think about AI potentially in a military environment, and maybe having access to a bunch of ballistic missiles or now laser beam, that seems kind of terrifying. No, absolutely. And funny enough, when I was at War College, my group did an entire thing about AI and levels of trust because you really are looking at a lot of the stuff that you originally seeing partnered into the Pentagon right now

is things that are going to help us do our staff jobs better. Let's look at how to be able to optimize processes. How do we do a better job of tagging our capabilities so that we can track them better and so on and so forth? what it hasn't entered into very much is really when you look at identifying friend and foe leading to a command decision for a tactical strike. Those are things that are still maintained. Those are human in the loop AI problems. And so that's really where you're seeing a lot from the military side right now is I want you to help me clean up the noise.

You see a lot of that on the imagery intelligence side of the house and saying, okay, I want AI to be able to look through a lot of my platforms. I want to take all this satellite imagery, I want you to help me normalize this and help me see where the change detections may be. Pickax Mountain would be a good example of that, right? I'm using it as a theoretical. But let's say we wanted to focus on everything and anything that's going around Pickax Mountain for the nuclear Iran discussion. So AI could potentially do that from an imagery perspective to say, all right, I've watched the videos for 12 to 16 hours. And based off of it, this is what we have. and you can flag an alert, but that alert for something that's going to happen. Maybe it's a dump truck driving away, and that's what you told it to look for.

Great, but there's still going to be a human that's looking at that then. When that alert comes on, there's an analyst that's sitting there. There's a commander that would make a decision behind that that says, this is what I want to do about that truck that is driving away, where we are not at right now and where we are quite a ways away based off of, you know, trust models and all that. I think exactly where we should be is we are not at the, point where AI is going to go, I see that truck, I've been given in order to destroy it, and I am going

to take that target execution authority that I mentioned earlier and just drop the bomb. So, Wayne, I'm looking at one of your most recent research notes on the Bloomberg Terminal, and you talk about the directed energy market growing two to three times from where it's at currently, which is $6 to $8 billion, and that's over the next decade. And I just want to be clear, is that a forecast for, like, actual procurement? or is that including R&D on the whole? Because it seems like so far most of the money that's been spent has been on development. Absolutely.

I mean, we have spent over $15 billion on the R&D up until this point, specifically to get to where we're at right now. And it is a good news story because it is transitioning to procurement. You are starting to see that as different portions. You know, the Army, like I mentioned earlier, about like the striker vehicles, the 50 kilowatt laser platforms and all that. you're starting to see that start showing up inside of the multi-domain task forces. You're seeing the Navy continue to push for additional high-energy laser solutions.

Contracts with Epirus, one of the companies that does some high-powered microwave stuff, is tied directly into both the Army and to the Marine Corps because of their capabilities to protect against drone swarms. And they've even developed something called the Leonidas H-2O system, which helps, you know, disable boat motors. So when you start looking at some of the tactical problems that you run into and the Black Sea and the Red Sea and all that for just even remote-controlled fastboats, you know, trying to go after Blue Water Navy assets that cost, you know, hundreds of millions, if not billions of dollars, having these types of capabilities are exactly what you're looking for. So right now is some of the transition from the R&D side into the procurement market. But you are correct.

there still is a lot more R&D because if you look at the research and engineering department from the Pentagon, they're looking for a one megawatt laser by 2030. The science continues to go, right? It's really a question as to whether or not the physics and the science behind can continue to support and bring down those size weight and power requirements necessary to be able to produce it. I have to say, and I've said this on many episodes, I do not have great intuitions for any time we're talking about units of electricity, whether it's megawatt or megawatt hours in the context of a grid. Can you give me an, when you say they're looking for a one megawatt laser? What is that?

How should I conceptualize this? What's a metaphor that I could use to understand what that would mean? Yeah. So right now the 50 kilowatt laser is capable of if a drone is flying at you, you should be able to knock that drone down at one time, right, from a kilowatt perspective. When you start looking at one megawatt, you're trying to create a beam that is so strong that you can shoot down something that is flying at you at, you know, a thousand miles an hour, potentially up to four to five thousand miles an hour, as is in Mach 5 hypersonic weapon wood.

And the gap between getting from 50 kilowatt to one megawatt, is that on the sort of energy side that's on the site of the laser? Is it a technology that exploits that much energy? Like, what needs to be solved to make that jump? Yeah, I would say it's almost an iterative thing right now. DARPA is looking for, you know, higher level of solutions. They're looking for almost a revolution in military affairs because they want to jump iterations or increments. in terms of what that development is. But I think it's a little bit of all of those, right?

Part of it is on the physics side of the house to be able to generate one megawatt and keep the beam where you want it to be. But then also, it's also deployability discussion. Having a one megawatt laser that is static because you need to plug it into shore power is limited in a certain aspect. It is great for self-defense and force protection.

So think about it in terms of putting it on a military base in Kuwait. you know, that would be a great opportunity to be able to do it because that is a shore power solution with a fairly unlimited magazine that's attached to it. But when you start looking at a potential peer adversary threat where you want to be able to move your forces forward and you have to, you know, have to contend with these types of missiles being shot at you, you're not, it's very difficult to carry around a generator that can produce a one megawatt. capability that you then use to create these impulse beams. Just going back to Israel's iron beam or laser dome for a second, is that basically a test case for a lot of this technology and how it might be useful in a real world environment? And then if so, what are you actually looking out for in terms of its operations to prove that

it's economically scalable or actually useful? Yeah, iron beam. Iron beam is kind of leading the way, right? it's about, I think, if I'm not mistaken, it's about 150 kilowatts compared to our 50 kilowatts. So when you start looking at how they deploy it, how they use it, some lessons learn that come from them, I think it is an operational test bed as they are being shot at in the use operationally to say, okay, I successfully hit a Shahid 136 drone from this distance. How far away did I shoot it?

How long did it take for me to actually get that thing to stop coming at me? these are all things that a lot of partners with Israel are looking at specifically so that they can identify, all right, I need to make the following changes in my research and development side of the house. One of the things on lasers, we didn't even talk about a little bit, is some of the shortcomings of it. Because one of the key, yeah, one of the key things that's there is atmospherics does affect how that system actually works. You know, you can't, a missile doesn't care if you're shooting through fog or through rain. But it does have a change to the components, if you will, of how a laser beam is actually going to go out there. All right, Wayne Sanders, we're going to get kicked out of the studio soon. So we're going to have to leave it there.

But thank you so much for coming on all thoughts. Thank you for having me. It was great. So, Joe, very interesting conversation. One thing that stands out to me is just that pure adversary miscalculation. Yeah. Like, it is crazy to think how much the U.S. optimized its military for similar militaries, right? We're going to stock up on, like, the best technology, the most exquisite missiles and all of that.

And then they find themselves fighting an adversary that is using cheap drones. And suddenly the whole balance is thrown off. This came up, I mean, just this general idea of military planning for types of warfare. It seems very difficult. this came up in the recent episode we did with David Fickling about tungsten. And the military concluded, well, future wars, it doesn't look like tungsten. It's going to be a bigger thing. And then suddenly you get wars like the war in Ukraine, which more resemble wars in which you just needed a big heavy metal.

I have an important question. Yeah. Will you donate your tungsten cube to the military after? We're deleting. We're deleting this. That's a critical mineral. If their drive truly comes and they're like, everyone bring your tungsten or something like that, you know, I don't want to be like, sure. Imagineing all these mostly bros walking down the streets of Manhattan, looking their tungsten cube.

But no, I found that to be really interesting just in general because laser weapons does seem like one of these things that, again, we've been seeing in movies forever. or just shoot the laser beam. But thinking about the actual constraints, he mentioned, you know, these shore power systems, et cetera. Thinking about the actual constraints of firing this, like, incredibly amount of directed energy

in certain environments, then thinking about weather constraints, et cetera. It gets super interesting. Also, I'm just very jealous of the guys that can rattle off all of these. You're very good at it as well. At what? Rattling off the names of weapon systems

and so forth. Oh, no. I'm cheating because I have them all written down on my screen. Yeah, but still like, no, that's like a very impressive. Trust me, I don't think about like coyote and vampire systems on a daily basis. Well, to even know that those were the comps that we should be asking about. I'm very impressed. Well, the one thing, the one thing I'm thinking is the cost effectiveness of all of this.

So one way you often see it framed is the laser beams, the microwaves are sort of like the renewable energy of the weapons world in that once you create. them, you can continue firing off. It's that deep munition idea versus the sort of fossil fuel ballistic missiles stockpiles that are finite, right. But as we all know, sometimes installing renewable energy

systems is extremely expensive to the point where a lot of countries and cities decide not to do it. So I think we still have to we'll see on that front. That's totally. The scarcity moves somewhere else. It may be optimal in some conditions. It may not.

But there is still this fundamental scarcity tradeoff of, okay, like, you might have lots of ability to not deplete, but then it might be much harder to install the system. Absolutely. It does not seem like there is a silver bullet, a magic bullet out there for these questions. That's a good pun, Joe. Thank you. All right. Shall we leave it there? Let's leave it there.

This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthal. You can follow me at the stalwart. Follow our producers, Carmen Roderiggis, at Kermann, Dashel Bennett at Dashbot, Kale Brooks at Kail Brooks, and Kevin Lazzano at Kevin Lloyd-Lisano. And for more OddLod's content, go to Bloomberg.com slash oddlots, we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord. Discord.G slash Oddlots.

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