President Donald Trump announced on Tuesday, Oct. 6, 2026, that the federal government will take a 40% stake in a new submarine shipyard to be built in Sparrows Point, Maryland. The facility, named Arsenal-2, will be operated by defense technology firm Anduril to manufacture components for Virginia-class nuclear-powered attack submarines. Trump stated that the arrangement serves as proof of the administration's commitment to the shipyard's success, though he did not specify the ownership mechanism for the 40% stake.
The deal involves a $3.7 billion investment by Anduril to build the 2 million-square-foot facility on the site of a former steel mill that closed in 2012. The U.S. Navy also awarded Anduril a contract valued at up to $2.9 billion to assist in establishing the facility. The project received support from Maryland Governor Wes Moore (D). Maryland and Baltimore County have committed to matching up to 13% of the total investment, approximately $481 million, pending approval from local legislative bodies.
The new shipyard is intended to address production delays in the Virginia-class submarine program. A July report from the Government Accountability Office (GAO) found that the program has been hindered by labor shortages and late material deliveries. Once operational, the Sparrows Point site will produce torpedo tubes and other critical components. Anduril plans to eventually expand the facility to manufacture larger submarine modules and hull sections. The company is currently building another facility in California for similar components.
Small-business owners and contractors in the Baltimore area may see effects from the $3.7 billion construction project and the revival of the industrial grounds at Sparrows Point. The facility is designed to bolster the production of Virginia-class submarines, which are the Navy's nuclear-powered attack vessels capable of speeds over 25 knots. By introducing a new manufacturer into a market currently dominated by General Dynamics' Electric Boat and Huntington Ingalls Industries, the government seeks to resolve supply chain bottlenecks.
The project is scheduled to become operational by the end of the 2020s. Before construction and funding are finalized, local legislative bodies in Maryland and Baltimore County must vote to approve the $481 million in matching funds. The agreement differs from the four existing government-owned shipyards in Virginia, Maine, Hawaii, and Washington, which primarily handle repairs rather than new construction. The next steps include the commencement of facility development and the oversight of Anduril's $2.9 billion Navy contract.