Feb 11 (Reuters) - Palmer Luckey-founded defense tech startup Anduril will take over the

development and production of Microsoft's ( MSFT ) mixed-reality headset program for the U.S.

Army, the companies said on Tuesday.

Anduril will assume control over production, as well as future hardware and software

development and delivery timelines for the Integrated Visual Augmentation System (IVAS) project,

the companies said.

The IVAS program aims to equip soldiers with a wearable system that integrates augmented

reality (AR) and virtual reality (VR) to improve situational awareness and support mission

command of unmanned systems.

This agreement also establishes Microsoft Azure as Anduril's preferred hyperscale cloud for

all workloads related to IVAS and Anduril AI technologies.

In 2021, Microsoft ( MSFT ) said it would develop its HoloLens technology to be used in high-tech

headsets for the U.S. Army.

Governments and defense firms worldwide are ramping up AI-powered and smart-peripheral

technologies to gain an edge on the battlefield.

Luckey, who previously founded virtual reality company Oculus VR, acquired by Facebook in

2014 for $2.3 billion, is no stranger to the space.

The agreement, however, is still pending approval from the U.S. Department of Defense, the

companies said.

Anduril has also announced partnerships with ChatGPT-maker OpenAI and Palantir ( PLTR ) to

increase the use of defense data for artificial intelligence training.

The news also comes days after Reuters reported that the defense startup was in talks for a

new funding round that could hike the valuation of the company to $28 billion.