The US protection trade is going through growing demand and a bottleneck within the provide chain

The war in Ukraine and rising tensions over Taiwan have boosted demand for high-tech American-made weapons. And with the ongoing crisis in the supply chain and rising inflation, military industry observers are skeptical the US defense sector can keep up.

“We cannot rely on China to build components for our weapons, which to some extent we may have done – whether knowingly or not,” said Elbridge Colby, co-founder and director of the Marathon Initiative.

Even with the largest defense budget in the world, the US military is not immune to supply chain challenges. But with an already massive budget and questions about Pentagon spending, some critics think more funding may not be the answer.

“Next year’s national security budget is likely to be close to $1.5 trillion,” said Julia Gledhill, an analyst at the Center for Defense Information at the Project On Government Oversight. “And Congress wants to add tens of billions of dollars to that number, even though the Department of Defense has shown time and time again that it is not managing its finances effectively.”

Recognizing inefficiencies and pushing ahead with programs that work while sidelining those that don’t may be one way to address the problems that have plagued previous big-budget Pentagon initiatives. The Department of Defense did not respond to CNBC’s request for comment on this story.

“I don’t think that necessarily means we’re going to break the peak of the defense budget,” said Chris Dougherty, senior fellow at the Center for a New American Security. “It’s probably more about developing the ability to scale and ramp up production when and where it’s needed.”

Watch the video above to learn more about the challenges facing the US defense industry and the potential solutions to overcome supply chain bottlenecks and budget constraints.