Terra Drone Shares Soar on Japan Defense Deal — Update

By Kosaku Narioka and Yang Jie

Terra Drone's shares surged after the drone maker secured a deal to mass produce interceptor drones for a Japanese defense agency, reflecting Tokyo's push to bolster domestic drone capabilities amid growing security concerns.

Shares rose 21% to their daily limit of 17,050 yen, equivalent to $107.09, on Wednesday in Tokyo.

The Japanese drone maker said after Tuesday's market close that its interceptor drone Terra B1 passed a demonstration test under a program conducted by Japan's Acquisition, Technology & Logistics Agency and advanced to the next phase of mass production.

The agency said it signed a mass procurement contract with Terra Drone, but didn't disclose details of the agreement.

Japan has increasingly prioritized drones as part of its national security and economic security policies, seeking to expand domestic production and reduce reliance on foreign suppliers.

The government aims to establish an annual domestic production capacity of 80,000 drones by 2030, though the sector still faces challenges, including limited large-scale manufacturing capability and dependence on parts from overseas suppliers.

The push comes as lessons from the war in Ukraine underscore the growing military importance of drones and as governments seek alternatives to supply chains dominated by Chinese manufacturers.

The Terra B1 was the only drone to pass the demonstration test and the result marked a major milestone for Terra Drone's defense business, the company said.

Initial deployment is expected to begin with the Japan Maritime Self-Defense Force, with potential for expansion to the Japan Air Self-Defense Force and Japan Ground Self-Defense Force, the company said, without providing a time frame.

"This achievement is only one milestone for us. Terra Drone has much more to demonstrate," said founder and Chief Executive Toru Tokushige.

He added that the company would keep expanding globally, citing recent trips to Ukraine and other parts of Europe.

"We will continue to deliver tangible results and translate them into sustainable growth in corporate value," he said.

Write to Kosaku Narioka at kosaku.narioka@wsj.com and Yang Jie at jie.yang@wsj.com

(END) Dow Jones Newswires

August 26, 2026 03:34 ET (07:34 GMT)