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Chapter 599 The Opportunity to Become a Core Supplier of Military-Industrial Composites

Military-industrial complex.

Do you know what the word "complex" means?

It refers to Citibank.

The term "composite" signifies the deep integration and symbiotic relationship between financial capital and the military industry.

In the United States, Citibank is not an ordinary financial participant, but a core controller and rule-maker throughout its century-long history.

Through four dimensions—financial support, conglomerate control, market-driven pricing, and policy transmission and penetration—it has built a financial hegemony covering the entire military industry chain, becoming the capital hub of the military-industrial complex.

From the early 20th century to the present, Citibank has been active at every key stage of the U.S. military-industrial complex.

During World War I, the U.S. military industry experienced its first large-scale expansion, with many companies transforming into military production, and the research, development, production and delivery of weapons and equipment required huge amounts of capital turnover.

Citibank was the first to launch a special settlement service and credit support program for military orders, providing customized financial services to military enterprises at the time.

From short-term loans for raw material procurement to repayments and settlements after weapons delivery, Citibank leveraged its financial resources to bind almost all early military industrial enterprises.

During World War II, the United States, as the arsenal of a democratic nation, experienced exponential growth in its military production capacity. Citibank further upgraded its financial services, collaborating with the government to launch war bond underwriting business, while simultaneously providing long-term, low-interest loans to military enterprises to support their expansion of production lines and development of new weapons, thus forming an initial linkage mechanism among finance, military industry, and government. During the Cold War, the global geopolitical landscape was reshaped, and the US military industry faced a transformation from wartime expansion to normalized development, while simultaneously needing to overcome international market barriers.

Citibank also plays a dual role as an industry integrator and international expander. On the one hand, it leads the wave of mergers and acquisitions financing for military enterprises, and promotes the large-scale integration of scattered military enterprises by providing services such as merger and acquisition loans and equity financing, eliminating inefficient production capacity and cultivating industry giants.

For example, Citibank spearheaded Boeing's key acquisition in the 1960s, transforming it from a company primarily focused on civil aviation into a comprehensive military industrial giant that also deals with civil aviation and military aircraft. Subsequently, thanks to Citibank, Boeing undertook strategic projects such as the B-52 bomber and the Minuteman missile, becoming a core contractor for the U.S. Air Force and Navy.

On the other hand, Citibank leverages its global financial network to support the international operations of U.S. defense contractors.

By providing services such as cross-border settlement, foreign exchange hedging, and collaboration with overseas branches, we help companies like Lockheed Martin and Northrop Grumman open up the European and Asia-Pacific markets, promote the export of weapons and equipment, and form a closed loop of financial support, overseas sales, and profit repatriation.

In the post-Cold War era, the U.S. military-industrial complex has become an oligopoly, with five major military giants—Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and General Dynamics—dominating the market. The formation of this pattern is still heavily influenced by Citibank.

Whether it's the horizontal integration of the five giants, such as Northrop Grumman's acquisition of Grumman Aerospace.

Or, in vertical expansion, such as Raytheon's acquisition of electronic component companies, Citibank acted as the lead underwriter, financial advisor, and core lender.

From the upgrades and modifications of existing fighter jets such as the F-16 and F-18, to the development of new-generation equipment such as the F-35 Joint Strike Fighter and the B-21 Stealth Bomber, and then to the production and manufacturing of naval nuclear-powered aircraft carriers and army main battle tanks, the giant hand standing behind the entire US military industry is Citibank.

It can be said that every technological iteration, every capacity expansion, and every market expansion of the US military industry has been inseparable from the capital empowerment of Citibank.

Citibank's influence in this area extends beyond businesses to include government departments.

Which countries are approved to purchase the weapons and equipment exported abroad is not determined by the US government, but by the Citibank. If the Citibank is willing, it can even get the US government to sell the most advanced fighter jets to China and Russia.

If the later merger of JPMorgan Chase and Chase Manhattan was a result of financial control dominating the consolidation of the US energy industry, then...

Citibank is undoubtedly a financial behemoth in the military industry, having built an unbreakable military-financial empire.

"How did you find out?" Ernst asked curiously.

"Actually, it wasn't me." Upon hearing this, Sandy Weir slowly shook his head, then pointed to Jimmy Damon beside him. "It was Jimmy. He noticed that Next, the company you acquired, has been behaving somewhat abnormally over the past year or so, completely deviating from the typical development logic of technology companies."

Jimmy Dimon nodded at the opportune moment, adding, "Since you acquired Next, it has produced almost no marketable products, only a system for building IPs. But what's puzzling is the astonishing amount of investment you've made in this company."

"The total amount of money invested so far has exceeded $2.2 million."

Jimmy Dimon put it bluntly: "What struck me as most unusual was that the funds weren't being used to develop any new projects for the mass market, but rather to continuously invest in strengthening and upgrading the existing operating system."

Sandy Weir's gaze was fixed on Ernst's face. "More importantly, when Jimmy was checking on Raytheon, he unexpectedly discovered that Next had actually established a deep cooperative relationship with Raytheon."

"Although the cooperation project is kept strictly confidential, and even people at Raytheon do not know the specific details, given Raytheon's business attributes, this cooperation project must be closely related to the military industry."

Sandy Weir shrugged, his tone laced with a hint of rhetoric: "A technology company focused on operating system development, investing such a huge sum to strengthen its core technology while simultaneously partnering with a military giant—isn't that clear enough?"

Ernst's face remained largely unchanged after hearing these words. He picked up his wine glass, slowly raised his hand to gesture to those present, and then tilted his head back to drink the remaining red wine in one gulp.

After putting down his glass, he still didn't speak, but instead extended a hand, gesturing for him to continue.

Seeing this, Sandy Weir remained calm and continued, "The Department of Defense contracts that Microsoft has secured are definitely not your ultimate goal."

His tone was unusually certain: "Strictly speaking, the basic software licenses, general operating systems, and office software suites that Microsoft provides to the Department of Defense and the Pentagon can only be considered as routine technical service procurements, and cannot be considered true defense orders at all."

"Combined with the key clue of Next's collaboration with Thor, the answer becomes obvious."

Sandy Weir's eyes lit up, and his voice deepened, "Your target is the military."

"The most attention-grabbing and largest project for the US military recently, which is closely related to operational systems, is undoubtedly the tender for the construction of the IT system for the CVN-77 aircraft carrier."

CVN-77, also known as the USS George H.W. Bush, is the tenth Nimitz-class nuclear-powered aircraft carrier of the United States Navy.

This aircraft carrier is positioned as a transitional vessel, serving as a technological bridge between the Nimitz-class and the next-generation Ford-class carriers. Therefore, it has extremely high requirements in terms of information technology and intelligence.

Although the official tender notice for the contract has not yet been released, those in the industry know that the Navy and the Ministry of National Defense have already started the relevant preparatory work.

They are extensively contacting major technology and defense suppliers to integrate the most advanced technologies and weapon systems currently available in the United States. Once all the proposals have been integrated, evaluated, and perfected, the bidding and quotation process will be officially launched.

Once all parties reach a consensus on price and technical details, the relevant departments will quickly sign the purchase contract and officially issue the project order. Sandy Weir was very interested in Ernst's Next; the secrecy surrounding it told him that Ernst was definitely developing a new system that could change the industry.

Otherwise, the Navy would never have replaced its current system supplier, Microsoft.

In 1996, Microsoft won the bid for the Navy's Smart Ships program, which required the development of a non-core system adapted to command and control and navigation systems, through anti-interference, temperature and humidity resistance, and encryption modifications.

Last year, Microsoft delivered the first version of the ins nt 4.0 shipboard customized system to the Navy. After more than a year of actual use and testing, the Navy’s relevant departments have become somewhat dependent on the system’s operating logic and stability.

In this situation, unless the new system developed by Next achieves a generational technological breakthrough and surpasses Microsoft's existing solutions in terms of performance, security, and compatibility, the Navy has no reason to change suppliers.

After all, replacing a core information system involves a series of complex issues such as personnel training, equipment adaptation, and process restructuring, and the costs and risks are not to be underestimated.

Sandy Weir took two excellent cigars from the Cuban cigar box in the center of the table, skillfully cut off the butts with a special cigar cutter, and then handed one of them to Ernst.

He picked up a lighter, the blue flame licking the end of the cigar. Once the tobacco was fully lit, he took a deep breath and slowly exhaled a perfect smoke ring, which gradually spread and dissipated in the air, just like the hidden meaning in his words.

"I think there's no need for any secrets between us now." Sandy Weir's tone became more direct, carrying an undeniable force. "You need Citibank."

Ernst took the cigar but did not light it; he simply held it in his hand and gently twirled it.

He understood the meaning behind Sandy Weir's words: it was a gesture of goodwill, indicating that Citigroup was willing to use its resources and influence to help Next successfully enter the U.S. Navy's supply chain and win the IT systems project for the CVN-77 aircraft carrier.

But at the same time, this is also a blatant threat. It's telling him that no matter how good your product is, if you don't cooperate, Citibank will definitely be able to stop you if they try to obstruct you.

He wouldn't mind taking out this piece of the pie, but given his current influence within the military-industrial complex, pushing this forward would be impossible.

The U.S. military-industrial complex has always been deeply entrenched, with a complex web of interests. Even Microsoft, if it wants to join this family, has to cooperate with Lockheed Martin to make its systems the IT system supplier for the CVN-77 aircraft carrier.

"You're right, there's really no need for us to hide anything from each other." Ernst lit a cigar and continued, "Compared to the support of a single system provided by Microsoft, what Next is doing is platform integration and reconstruction, which is the core source of our confidence to challenge Microsoft."

"Platformization?" The moment Sandy Weir and Jimmy Damon heard those three words, their eyes lit up, and they leaned forward involuntarily.

As top practitioners in the finance and investment field, they have a profound understanding of the value of the platform concept.

When any industry reaches its peak, it will eventually become a platform.

Platformization means building an ecosystem that can integrate upstream and downstream resources, forming an irreplaceable competitive barrier, thereby achieving continuous and stable revenue.

This is similar to the profit model of the securities industry. Regardless of market fluctuations or investor profits and losses, securities firms can obtain stable income through transaction commissions, asset management fees, and other means, truly achieving guaranteed income regardless of market conditions.

The business logic of platformization can be traced back to the commission model in the gambling industry.

Regardless of the outcome of the bet, the house can take a commission at a fixed rate, which naturally gives it the ability to resist risks and generate continuous profits.

Later, this logic was introduced into the financial sector, forming diversified platform-based business models such as exchanges and market makers, and is now gradually extending to more fields such as technology and military industry. "What Next aims to build is an open-architecture integrated combat system. This system will deeply integrate the C4ISR system, tactical data chain, and ship integrated management system, with the core objective of supporting the full implementation of the network-centric warfare concept on aircraft carriers."

"We plan to deploy at least 16 high-performance communication nodes on the entire aircraft carrier to achieve high-speed data interconnection throughout the ship via fiber optic networks. This will meet the high-speed exchange requirements for various types of data, such as real-time combat data, high-definition monitoring images, and navigation and positioning information, and completely solve the problem of data silos between various systems on traditional ships."

"Through network reconstruction and system integration, we will achieve integrated management of all core systems on the CVN-77 aircraft carrier, including combat command, navigation and positioning, power control, and air traffic control."

Ernst said with a hint of pride, "The biggest advantage of this system is not only in improving combat efficiency and response speed, but also in its ability to significantly reduce personnel."

"According to our calculations, compared to the existing system, adopting Next's integrated combat system can reduce the personnel of the entire aircraft carrier by 400-500."

In the past, each system of an aircraft carrier operated independently, doing its own thing.

Each system is managed by a dedicated team.

But Ernst knew that the concept of system integration would be proposed within two years.

The USS George Bush aircraft carrier was one of those ships equipped with this system.

He wants to establish himself as a core supplier in the military-industrial complex. Weaponry and equipment are out of the question; those things require iterative technological accumulation and involve the cross-integration of multiple disciplines such as materials, machinery, and electronics, which cannot be achieved in the short term.

New weapons are possible, but the conditions for developing drones are simply not present at present.

Then it can only be the operating system. As long as the IT system project for the CVN-77 aircraft carrier can be successfully won, based on the technological advantages and practical application effects of this system, all aircraft carriers and main warships of the US Navy will be gradually upgraded to fully adopt Next's integrated system.

This series of renovation and upgrade orders alone amounts to no less than tens of billions of US dollars, not to mention subsequent maintenance, upgrade services, personnel training, etc. It can be said that they are making money hand over fist every year.

Sandy Weir and others looked surprised. For large ships like aircraft carriers, streamlining the staff means a significant reduction in operating costs.

The reduction of each crew member will reduce the corresponding costs of salaries, training, and logistical support, which will save the navy a huge amount of money in the long run.

More importantly, reducing personnel can improve the operational efficiency and flexibility of ships and reduce the risk of human error, which is of immeasurable value to modern navies that emphasize precision warfare.

The most crucial factor is the interests involved.

Cost reduction—that's the external explanation, the explanation given to the Ministry of National Defense.

The reality is that not a single penny can be saved.

The savings in personnel costs will ultimately be offset by high training expenses.

Training—that's another name for the word in the US military-industrial complex.

Get it for free.

Sandy Weir suddenly looked enlightened. He looked at Ernst and said with a hint of approval, "So when you let the Boston Consortium have all of iTech's Series A funding, it wasn't out of any compromise, but to pave the way for the collaboration between Next and Thor?" Ernst nodded frankly and admitted, "That was indeed a consideration."

Next was transferred from Ernst to Atech. Although they are two independent operating entities, Atech does hold absolute control of Next.

He initially tricked the Boston consortium under the guise of a food ordering machine project, and later reluctantly allowed them to exclusively enjoy Ivy Technology's Series A funding. In fact, this was to pave the way for the cooperation between Next and Raytheon.

Thinking that once the system was developed, he would realize that he was a nobody with no influence in the military industry, but Thor was different; he had a voice in the military.

When the Boston Consortium sees this system, they will have no reason not to push forward with the project and give up such huge profits.

Sandy Weir couldn't help but burst into laughter, his laughter tinged with admiration. "Brilliant layout, meticulous thinking—this is really not something you should have at your age."

He then stopped smiling, his eyes becoming serious and earnest. "Name your price. Citibank can provide you with comprehensive support, including funding, connections, government relations coordination, and all the resources you need. And we will never haggle."

"I can assure you that as long as your system is as you say, Next will undoubtedly become the final supplier for the CVN-77 aircraft carrier IT system project."

After saying that, he changed the subject, "But in return, Citigroup needs to acquire at least 20% of iTech's equity."