The report said that Taiwan signed a "letter of offer and acceptance" in September, a step that comes before contracts are signed and the numbers and costs of the arms deal are figured out. The contracts are expected to be signed soon.

In June, the State Department approved a similar deal worth $360 million for about 1,000 attack drones produced by AeroVironment and Anduril. The sale included 291 Altius-600M systems, which are produced by Anduril, and 720 Switchblade drones, produced by AeroVironment.

China responded to the sale by issuing sanctions on some of the weapons makers and executives involved. Chinese Foreign Ministry spokesman Lin Jian pointed out the sanctions on Tuesday when asked about the new potential sale.

"Taiwan is a province of China and there is no such thing as 'Taiwan's ministry of defense.' China's firm opposition to the military contact between the US and Taiwan is consistent and clear. The two US companies you mentioned and relevant senior executives in charge are under sanctions by China," Lin said.

Both the Altius-600M and the Switchblade are kamikaze drones, meaning they crash into their target to explode. Small kamikaze drones have been used extensively in the war in Ukraine, and the US military has big plans for the weapons as part of its preparations for a future war with China.

Adm. Samuel Paparo, the head of US Indo-Pacific Command, said the US is planning to create a "hellscape" of aerial drones, drone boats, and unmanned submarines in the Taiwan Strait if China attacks Taiwan. "I want to turn the Taiwan Strait into an unmanned hellscape using a number of classified capabilities," Paparo said. "So that I can make their lives utterly miserable for a month, which buys me the time for the rest of everything."