Flourishing US tech firms, burgeoning Chinese military artificial intelligence technologies, and sophisticated Russian/Chinese air-to-air missile defense systems coupled with low R&D spending from the US defense industry has put the US Aerospace and Defense (A&D) at risk of losing its advantage, according to a new industry report from PwC.

Tech startups, like SpaceX, who has already disrupted the defense industry with a breakthrough that allows it to recover and reuse booster sections, spend over 14 percent of their sale revenue on R&D, compared to the lacking 4.1 percent R&D spending from the A&D industry.

Source: PwC

“No A&D company can avoid the need to be much more nimble and forward-thinking than they’ve been in the past,” the report stated. “In those areas where commercial industries — particularly technology companies — may be several years ahead, defense contractors shouldn’t try to catch up on their own. o address this, defense contractors should partner with startups to adopt new technologies the A&D companies need.”

Read the full report here.