Archer partners with Karem Aircraft to boost defense strategy
Archer Aviation (ACHR) announced on Tuesday that it has entered into an exclusive collaboration with Karem Aircraft that will give it access to Karem's military-grade rotor and tiltrotor technologies.
The company plans to integrate the rotor technology into its next-generation, autonomous, hybrid-propulsion vertical takeoff and landing (VTOL) aircraft.
Archer said that the collaboration is a "significant addition" to its strategy aimed at the development of its dual-use vertical lift platform for US and allied militaries. The company is looking "to deliver a multi-mission aircraft" that will address the demands of both commercial and military operations through advanced aeromechanics and long-range hybrid-electric propulsion.
In addition to gaining access to Karem's tiltrotor technology, Archer also acquired the patent portfolios from Lilium GmbH and Overair this year, giving the company what it calls “one of the most advanced technology stacks in next-generation VTOL aviation.”
Overair was a spin-off of Karem Aircraft, and along with acquiring its patent portfolio in August, Archer also hired some of its key employees.
In a separate deal, Archer acquired key composite manufacturing assets and a 60,000-square-foot facility from Mission Critical Composites, a specialized defense manufacturer in Southern California.
The company said that bringing core composite fabrication capabilities in-house will allow faster prototyping and iteration for defense programs.
Archer noted that the the Karem partnership and the Lilium GmBH and Overair assets will allow it to build its aircraft with the speed, payload, range and low-thermal and acoustic signatures that are needed for flying on missions across contested airspace.
“As we build the next generation of dual-use vertical lift aircraft, partnering with the pioneers who have shaped modern rotorcraft is essential,” Archer founder and CEO Adam Goldstein said in a statement. “Karem’s military-grade rotor systems are among the most advanced Army-validated technologies in the world. Integrating them into our next-gen hybrid VTOL platform positions Archer to move faster and deliver capabilities that legacy systems simply can’t match."
Goldman is bullish on Archer's defense strategy
Archer has been aggressively expanding into defense, raising $430 million in December to launch its Archer Defense division.
The company also announced an exclusive partnership with weapons manufacturer Anduril to develop a hybrid gas-and-electric VTOL aircraft for military use.
Two months later, it raised another $300 million to accelerate hybrid aircraft development.
Goldstein said at the time that "the opportunity for advanced vertical lift aircraft across defense appears to be substantially larger than I originally expected."
The US Pentagon earlier this year allocated $13.4 billion in its budget for autonomy and autonomous systems, as the Trump administration ramps up efforts to modernize America's military.
Archer rival Joby Aviation (JOBY) is also making inroads into the defense sector, partnering with L3 Harris Technologies (LHX) to co-develop a gas turbine hybrid VTOL designed for low-altitude defense missions. The aircraft can operate fully crewed or autonomously, with flight testing slated for this fall and demonstrations planned for 2026.
Goldman Sachs analyst Anthony Valentini initiated coverage of Archer on Monday with a Neutral rating and a price target of $11. Valentini said in his client note that Archer's commercial business "has quickly closed the gap with JOBY in its attempt to certify its Midnight aircraft by outsourcing 80% of the parts to aerospace suppliers with certification heritage."
But it's the company's Archer Defense division that could really accelerate it its growth, according to Valentini.
"We see ACHR's defense business as having the most upside given its partnership with Anduril, but it is in its infancy, there are currently no programs of record from the DoD, and it is difficult to underwrite," he said. "We believe the stock is undervalued relative to competitors, but prefer more aftermarket rich business models."
Archer's stock rose 2.6% on Tuesday.