Lockheed Martin has reached an initial production and sustainment agreement with the US Department of Defence for the production of 850 F-35 Lightning II fighter jets over the next decade, the defence contractor said on Thursday.

The F-35 uses stealth technology to evade enemy detection and is considered one of the world’s most advanced fighter jets. The aircraft is central to Lockheed Martin’s aeronautics division, which accounts for nearly 40% of the company’s quarterly revenue.

Under the agreement, Lockheed Martin aims to maintain annual production at 156 aircraft. US President Donald Trump refers to the Department of Defence as the Department of War.

The agreement does not constitute a formal order but serves as a prearranged long-term contract.

"If granted multi-year authority in the coming months, the F-35 Joint Program Office and Lockheed Martin will work to finalise contract terms, pricing and schedules through a formal contract award," the company said.

The agreement also covers international F-35 orders, initial spare parts and modification kits, the Arlington-based company said in a statement.

Lockheed Martin and other US defence contractors have benefited from rising global military spending amid continuing geopolitical conflicts.

The company estimates that the agreement will support 317,000 jobs in the United States and generate nearly $79 billion in annual economic activity over the next decade.

Lockheed Martin also expects the arrangement to reduce production costs and ease supply chain constraints, from raw materials to finished components.