By Joe Brock

FARNBOROUGH, England, July 20 (Reuters) – Lockheed Martin announced a lower-cost Patriot interceptor on Monday as militaries seek cheaper ways to ‌counter drones and missiles, while defense contractors face competition from startups ‌making low-cost weapons that can be produced at scale.

Lockheed said its new PAC-3 Adapted Capability ​Effector, or ACE, missile would cost less than half as much as its PAC-3 MSE interceptors, which cost roughly $4 million per missile, according to U.S. Army budget documents.

Initial production could start within 36 months, the company said, adding that it ‌plans to develop and ⁠manufacture the weapon with U.S. and European industry partners.

“American and allied warfighters need a solution that is battle-tested and budget-smart,” ⁠Tim Cahill, president of Lockheed Martin Missiles and Fire Control, said in a statement at Britain’s Farnborough Airshow.

The location of the announcement underscores efforts by U.S. defense companies ​to tap ​a European rearmament boom fueled by ​Russia’s war in Ukraine, even as ‌European governments seek to reduce dependence on American suppliers and expand local defense manufacturing.

The Patriot system has become one of the world’s most sought-after air-defense weapons since Russia’s 2022 full-scale invasion of Ukraine. Kyiv credits Patriot batteries with helping defend cities against Russian ballistic missile attacks, while President Volodymyr Zelenskiy ‌has repeatedly appealed for more launchers and interceptors ​as Moscow intensifies air strikes.

Demand has also ​been driven by missile exchanges ​between Iran, the United States and Israel and wider instability ‌in the Gulf, stretching supplies of ​advanced air-defense weapons and ​exposing production bottlenecks throughout the Western defense industry.

The launch of a cheaper interceptor by Lockheed underscores how established defense contractors are responding to ​mounting competition from Silicon ‌Valley-backed startups that promise to deliver weapons faster, in greater numbers ​and at a fraction of the cost of traditional systems.

(Reporting by ​Joe Brock; Editing by Sharon Singleton)