Who Could Be the Winners of the FCC Bans in the U.S. Drone Sector and the $5 Billion Opportunity? 👇

News: U.S. drone market faces shake-up after FCC ruling, Needham says

A new U.S. regulatory action restricting foreign-made drones and their components could reshape the domestic unmanned aircraft market and accelerate procurement activity starting next year, according to a report from Needham & Co.

This week, the Federal Communications Commission added foreign-produced uncrewed aircraft systems, along with critical foreign-sourced drone components, to its Covered List following a national security determination. This designation prevents affected drones and components from receiving FCC authorization, effectively barring their import, sale, and lawful operation in the United States unless a specific exemption is granted by the Department of Defense or the Department of Homeland Security.

Needham analysts led by Austin Bohlig said in a Dec. 23 report that including drone components represents a broader restriction than expected and significantly expands the scope of the ban beyond complete drone platforms. The FCC stated that affected components include communications equipment, flight controllers, navigation systems, batteries, and motors. Previously approved or legacy systems may continue operating for now, but new products will be subject to the restrictions.

The ruling is expected to limit future participation in the U.S. market by foreign drone manufacturers, including large Chinese suppliers that have historically dominated commercial and consumer drone sales. Over time, the report said, the policy could redirect demand toward U.S.-based drone and component manufacturers as new domestic sourcing requirements take effect.

Drone Dominance Program

Needham views the FCC action as part of a broader policy and funding shift supporting U.S. unmanned systems. The firm pointed to the Drone Dominance initiative, which allocates more than $1 billion to small drone programs, as well as the fiscal 2026 National Defense Authorization Act, which includes additional funding for unmanned systems. In total, the firm estimates that recent legislation and budget measures add more than $5 billion in incremental unmanned-related programs.

Together, these developments could lead to increased procurement activity beginning in 2026, particularly for defense-grade and attritable drone platforms. Needham said the combination of regulatory restrictions and funding support may also affect commercial and consumer drone markets as domestically sourced components become a requirement for new systems.

The report noted that while the policy shift creates opportunities for U.S.-based drone and component suppliers, implementation will take time as existing foreign-made systems gradually exit the market. Risks remain tied to defense procurement timing, regulatory execution, and supply-chain scaling as domestic manufacturers work to meet potential increases in demand.

Needham maintains coverage on several U.S.-focused drone and defense technology companies, which it said could benefit from the evolving regulatory environment if funding flows and contract activity accelerate as expected next year.

So who could be positively affected according to this news?

These companies could directly benefit from the 2026 NDAA budget and the emphasis on attritable drones mentioned in the report.

$KTOS:
Kratos is the leader in the U.S. military’s “low-cost unmanned combat aircraft” programs (for example, the XQ-58A Valkyrie). Massive U.S. military programs like Replicator aim to procure thousands of attritable drones. KTOS is the company closest to breaking the monopoly in this area.

$AVAV:
It is the largest drone player in the U.S. defense industry, especially known for the Switchblade series.
Why positive? The Drone Dominance program and the additional $5 billion in the 2026 defense budget mentioned in the report will flow directly into defense-grade drone procurement. AVAV is the market leader in this area.

$NOC & $LHX:
Why? Rather than small drones, these companies are giants in the “U.S.-made secure communications and guidance systems” market highlighted by the FCC decision. Banned Chinese-origin flight control and communication chips could be replaced by these companies’ secure, military-grade systems.

$UAVS:
Why? Especially in agriculture and mapping, it is one of the most serious domestic competitors to DJI. The ban on foreign drone components mentioned in the report could force American farmers and mapping companies to use NDAA-compliant (secure) products such as AgEagle’s eBee series.

$RCAT:
It is one of the strongest candidates to replace DJI not only for the military but also for U.S. border security and law enforcement agencies, through its Teal Drones brand.

$AMPX:
Why? The FCC decision also added foreign batteries to the banned list. Amprius produces high-performance silicon-anode batteries in the U.S. Since military drones need longer endurance, it is a leading domestic power-source candidate to replace Chinese batteries.

$AXON:
Why? Although Axon does not directly manufacture drones, it is the technology backbone of U.S. policing. When DJI is banned, police departments will shift to Skydio drones (not publicly traded, but indirectly impactful through Axon partnerships). Axon is the main platform managing the transition from Chinese drones to domestic systems for law enforcement.

$TDY:
Why? It owns the FLIR thermal camera division and produces the Black Hornet, the world’s smallest military reconnaissance drone. The banning of Chinese-origin thermal cameras and sensors makes Teledyne’s market position effectively unrivaled.

$UMAC:
Why? It is moving toward becoming the most critical domestic component manufacturer in the U.S. drone supply chain, owning iconic brands such as Fat Shark and Rotor Riot.

$ONDS:
Why? The FCC’s ban not only on finished drones but also on foreign components (motors, batteries, controllers) gives a major advantage to ONDS’s secure supply chain, strengthened by Israeli technology and compliant with U.S./NDAA standards. The domestic content requirement mentioned in the report positions ONDS as the single strongest autonomous solution provider in environments where Chinese DJI is eliminated from critical infrastructure inspections (oil, gas, rail). In addition, funding from the Drone Dominance program could directly boost demand for the company’s counter-UAS and attritable tactical systems.

I also think $KRKNF and $DPRO could be positively affected