title: @zachglabman: there's no better time than now to be a tier 2, 3 or 4...
author: zachglabman
content_type: twitter_article
published: 2026-01-29T18:39:58+00:00
source_url: https://x.com/zachglabman/status/2016944422852964398
word_count: 1347
there's no better time than now to be a tier 2, 3 or 4
2026 is underway and the factory tours haven’t stopped. My prediction for this year is that tier 2, 3 and 4 component manufacturers are going to be thrown into the spotlight pretty soon (whether they like it or not).
Recent visit to a vertically-integrated ski lift manufacturer in Utah
Our adversaries, particularly China, directly control or influence many critical high-volume components across industries. Especially in digital or electronic subsystems, manufacturers could introduce subtle manipulations like false readings or firmware backdoors with outsized downstream effects in defense, infrastructure, medical equipment or autonomous systems.
2025 exposed material supply constraints, 2026 will be about components and hidden parts critical to major upstream OEM assemblies and subassemblies. This awareness coupled with intentional investment into retooling US-based supply chains will fuel massive growth in the manufacturing sector in 2026.
Sensing
There is asymmetric risk in adversarial dominance of sensor supply chains. Sensors determine ground truth, i.e. whether a system believes a battery is overheating, a door is closed, a person is present, or a target exists at all. And many are hidden tier 3 or 4s. A single-source supplier in China might make a commodity MEMS sensor that a defense company needs for a missile subsystem, and we could be totally blind to that.
Many defense/industrial and consumer tech products rely on Chinese suppliers. Red = Chinese supplier
Recent incidents exposed how little visibility we have into these layers. F-35 production halted after Chinese magnets surfaced deep in the supply chain. Encryption chips from entity-listed suppliers have appeared in systems used by NASA, NATO, and the U.S. military.
In sensing, final assembly, firmware integration, calibration and updates often happen where the sensors are manufactured. That creates opportunities for false data injection, covert firmware or backdoors that are impossible to detect downstream. And a compromised sensor doesn’t need to fail if it can lie.
Nowhere is this clearer than in automotive and robotic perception. Chinese suppliers dominate high-volume sensor supply chains used in vehicles, traffic systems, and autonomous platforms. Even when critical subcomponents (lasers, detectors, MCUs) originate in the US, Europe, or Japan, system integration and firmware control frequently reside in China. Any networked system relying on sensors passing through China inherit all of that risk.
Chinese industrial policy strategically subsidized domestic production and drove small sensors down to abysmal margins, wiping out Western low-cost competition. With control of a key component across supply chains, we are left exposed. High-end, ITAR-controlled sensors remain protected, but automotive-grade and “good enough” parts now dominate most real-world deployments.
The same pattern exists across LiDAR, MEMS microphones, environmental and battery sensors and low-cost connectivity modules. These parts are usually sourced on price if they’re not DFARS restricted, and translate relatively easily from consumer electronics applications into industrial, medical and defense-adjacent systems. When a buyer finds a $2 temperature sensor, it might look like a steal, until it reports false readings at the wrong time.. then it’s expensive. Sensors like these are used in so many downstream industries that it’s difficult to imagine all the things that a mass-manipulation by adversaries would even look like. If kitchen appliances start wigging out and the car stops detecting pedestrians, we’re in big trouble.
Hostage OEMs
Drones and robots. Very hot right now. Post-Russia/Ukraine war, and in response to China, the US government is investing heavily in these areas. Replicator and related programs promise thousands of small autonomous systems in exactly this domain. Rare to see both capital and political institutions motivated behind the same cause, however not so surprising when you think about their relevance for military and defense applications. So how do we actually build these?
Today, America has no dominant OEMs in either category. To me, this is an opportunity, as the component supply chains don’t exist here yet.
Examples showing adversarially-controlled drone components (red), while some are possible to be domestic or ally-sourced (green)
ARK Electronics is making electronic components in the US specifically for drones and robots. A tactical drone needs flight controllers, brushless motors, ESCs, LiPo batteries, IMUs, GPS modules, camera gimbals and radio transceivers, among other things. Today, the vast majority of that comes from China, with some Japanese alternatives for higher-end components. That creates the same lead times, geopolitical risk and firmware vulnerabilities we see with sensors. Neros and AG3 are making vertically-integrated drones in the US. Companies like Orb Aerospace and Rainmaker have made an effort to similarly onshore their supply chains as much as possible to make drones for non-defense applications, like infrastructure and cloud seeding respectively.
Orb Aerospace’s Nomad Drone
Robotics faces nearly identical constraints and opportunity. Harmonic drives, servo motors and precision gearboxes are not really made in America today at scale. Similarly, control boards and motor drivers are designed here, manufactured elsewhere. High-flex industrial cabling and battery systems too.
The response I hear to this is “we do have suppliers but they are too expensive”, so sourcing overseas is natural. My counter is that the valley of death for robotics and drone startups is entirely a scale problem in the US. We have great prototyping, but no direct path to scaling with partners here in the US in an economically feasible way. I imagine this is partially why Boston Dynamics sold to Hyundai, and why we have pretty weak competition to the slew of Chinese consumer humanoids. You can’t build a robotics OEM on top of a supply chain you don’t control, with 16-20 week lead times and components that you can’t really trust (or use at all because of regulations).
There are 40 actuators in one Tesla Optimus alone, and thousands of other parts that make up the BOM. There’s no law that says these actuators must come from Shenzhen, in fact there probably will be one that says they can’t. We’ve already blocked semiconductors and recently DJI drones . China, Japan, Korea and Germany all did one thing very well, and that was understanding the relative importance of component supply chains (Tiers 2, 3, 4) to building great end products. Certainly it’s a product of good industrial policy - but there’s also an awareness problem for what is missing.
Manufacturing Rollups
Easier to attack this problem head-on when you’ve got some cash to throw at it. Private equity manufacturing rollups are becoming more and more common. Anecdotally, I’ve met a handful focused expressly on precision machine shops - mainly for med devices, aerospace, defense, nuclear and data centers. The hypothesis is that fragmented capacity, when consolidated, can meet scale demands that OEMs require. Good way to build a solid business, but there are diminishing operational returns to additional acquisitions.
Consolidation of capacity isn't the same as consolidation of capability. Manufacturing is not zero sum, so creating scarcity and economies of scale through consolidation can actually have an adverse effect on the greater ecosystem—killing competition for example. If one rollup controls 30% of aerospace fastener capacity, a single quality issue or cybersecurity breach can affect multiple critical programs. Centralization might provide some efficiency, but it also concentrates points of failure.
Integration at the component (and value-added) level is a better model. AMCA, for example, is acquiring integrated manufacturing capabilities for specific product categories in the complex aerospace supply chain. China's playbook is different: heavily-subsidized clusters that compete internally on capability while collectively dominating global supply. It's not efficient in a financial sense, but it's resilient and responsive in ways consolidated PE portfolios aren't. Manufacturing abundance requires an ecosystem where more suppliers can expand their production possibilities frontiers and create more capability.
Big industrial companies in 2026 and beyond will be platform plays. Consolidated capability and verticalization on top of which to build product(s). One stack to build many OEMs, component supply chains making parts for drones, robots, and defense systems without 20-week lead times.
True manufacturing sovereignty (and security) will require invisible parts to be made in America. Start a company making components for any industry with high OEM-level demand (or buy one), scale production, then expand into other industries.
Posted: 2026-01-29T18:39:58.000Z
Engagement: 767 likes, 59 retweets, 20 replies