Racing for Tomorrow's Technology
19 November 2025 - A Weekly Publication by New North Ventures
A new Council on Foreign Relations task force just revealed something unsettling: China has outspent the U.S. 3-to-1 over the past decade on the technologies that will define the next century. While we’ve been debating industrial policy in conference rooms, Beijing has been building quantum satellites, dominating rare earth refining, and quietly becoming the contract manufacturer for 80% of U.S. biotech companies. The gap isn’t just closing—in some areas, it’s already closed.
The Task Force’s November 2025 report identifies a critical vulnerability pattern across AI, quantum computing, and biotechnology. Consider the bottleneck cascade: the U.S. depends on China for 70% of rare earths and 99% of heavy rare earths needed for semiconductor manufacturing. Those semiconductors power AI data centers, which require printed circuit boards—30% of which come from China. Chinese firms have captured 33% of global active pharmaceutical ingredient capacity, and 80% of U.S. biotech firms have at least one Chinese contract.
This isn’t just about supply chain risk—it’s about compounding dependencies in foundational technologies worth an estimated $29 trillion by 2040. When one Chinese firm (WuXi AppTech) has been involved in developing a quarter of drugs used in the United States, we’re not discussing contingency planning anymore. We’re discussing technological sovereignty and risk to economic resilience.
The most striking data point: China closed the AI model performance gap by 80% in 2024 alone across four key benchmarks. Meanwhile, U.S. biotech startup financing dropped 65% in early 2025, and China is spending twice what the U.S. spends on quantum research. The investment arbitrage is real, and it’s accelerating.
For dual-use investors, three sectors warrant immediate attention:
Onshore semiconductor inputs: The report recommends $3B in incentives to domesticate chemical production for chips (wet chemicals, photoresists, dry etchants). Look for companies building these capabilities in partnership with Japanese firms, particularly those that can capture the 25% initial investment subsidy for U.S. facilities.
Quantum computing infrastructure: DOD procurement of utility-scale quantum computers (recommended $1.3B initial funding) will create downstream opportunities. Track companies developing specialized components currently single-sourced from Finland (dilution refrigerators) or Germany (ultra-high vacuum chambers). The supply chain diversification play is early but essential.
Biomanufacturing hubs: The recommended network of advanced biomanufacturing facilities with private co-investment addresses a critical gap. Companies positioned to build six-month stockpiles of key starting materials and APIs from trusted markets will benefit from both strategic importance and probable government funding.
The report’s recommendation to establish an Economic Security Center at Commerce signals a more coordinated, sustained approach to industrial policy. This isn’t a political cycle phenomenon—it’s a generational reorientation of how economic and national security intersect. For investors in dual-use technologies, the message is clear: supply chain provenance and domestic manufacturing capacity are becoming as important as technical capability. The companies that solve for both and the investors who back them will capture disproportionate value in the decade ahead.
Andreessen Horowitz published a piece last week arguing that successful organizations must evolve from pirates to navies. Pirates move fast and win battles through audacity. Navies build systems, codify doctrine, and project power at scale. The essay uses SpaceX as the exemplar of this transition done well. Structure, properly designed, enables rather than inhibits speed.
The timing is notable because we are watching this exact tension play out in defense procurement. The Pentagon’s recent reforms emphasize wartime speed. The CFR task force report documents supply chain dependencies that cannot be solved through acquisition velocity alone. You need both the pirate’s decisiveness and risk tolerance and the navy’s infrastructure.
The companies that succeed in dual-use markets will be those that can move with pirate speed while projecting navy reliability. That combination is rare and difficult to build, which is precisely why it creates defensible advantage.
More links to explore:
HavocAI has won the U.S. Army’s xTechPacific 2025 competition with its Rampage Autonomous Maritime Protection Platform for vessel escort. The company took first place among twelve finalists competing across three challenge areas focused on Indo-Pacific operational requirements. Havoc now receives $55,000 in non-dilutive prize money and eligibility to submit a Direct to Phase II Army SBIR proposal worth up to $2 million for prototype development.
The win validates Havoc’s software-first approach to autonomous maritime defense at a moment when the Pentagon is actively seeking advanced capabilities for watercraft protection. The company demonstrated sufficient technical maturity to move directly into prototype development, bypassing traditional Phase I requirements. Congratulations to the Havoc team.
In this episode, host Jeremy sits down with Paul Lwin, the pioneer behind HavocAI, a maritime technology company that’s just 21 months old. Paul shares their incredible journey of raising $85 million, growing a team of 80, and generating $3 million in revenue through advanced autonomous maritime vessels. Learn about Havoc’AIs mission to create a ‘Hellscape’ in the Pacific with thousands of intelligent vessels, overcoming challenges in maritime environments, and utilizing cutting-edge AI and ML technologies. With real-world applications and insights into dual-use innovation, this episode sheds light on the future of maritime domain awareness and autonomous systems.
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