Lockheed Martin: Sega Graphics Chips, 800 F-35 Bugs and a $1.6B Mystery

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Lockheed Martin formed in 1995 from a $10 billion merger of the Lockheed Corporation, maker of the U-2 and SR-71, and Martin Marietta, builder of Titan rockets and manager of Sandia National Laboratories. The post-Cold War Pentagon encouraged defense consolidation and covered merger costs, including an $8.2 million bonus for Martin Marietta CEO Norman Augustine. By 2024, 73 percent of revenue came from the US federal government and 65 percent from the Department of Defense, across aeronautics, missiles and fire control, rotary and mission systems, and space, with work for agencies from the CIA and FBI to the IRS, Census Bureau and Postal Service. In the 1990s the company supplied texture-mapping graphics for Sega's Model 2 and Model 3 arcade boards, drawing on its flight simulator work.

In 1999 NASA's Mars Climate Orbiter was lost when Lockheed Martin software calculated thruster data in pound-seconds while NASA's navigation software expected newton-seconds. The F-35, won in 2001, made up 26 percent of 2024 revenue, while a 2020 Pentagon review counted more than 800 software defects. Lockheed bought Sikorsky for $7.1 billion in 2015 and in May 2026 announced an $8 to $9 billion Alabama plant for THAAD and PAC-3 interceptors. The Project on Government Oversight ranks it first for contractor misconduct, with over $676 million paid in 88 settlements since 1995. In the second quarter of 2025 it lost $1.6 billion on a classified program that its CEO described as magical and said the public would not learn about for years.

• The company bought the first commercial quantum computer from D-Wave in 2011 and builds the Orion capsule for the Artemis program.
• Engineering runs on a four-tier structure, a concurrent double helix method and Six Sigma discipline across about 123,000 employees.
• A 2015 settlement of $4.7 million resolved charges that Sandia operating funds paid a former congressman to lobby for the lab contract.
• China sanctioned the company in 2020 and 2023 over arms sales to Taiwan.
• Arms makers including Lockheed Martin reported higher sales and profits during the Russo-Ukrainian War in 2022 and 2023.