The National Security Research of the DSET has released its latest policy report, “Drones for Democracy: U.S.-Taiwan Cooperation in Building a Resilient and China-Free UAV Supply Chain“. The report analyzes the development of Taiwan’s national drone team and current cooperation between Taiwan and the United States in unmanned aerial systems (UAS), offering fourteen policy recommendations to deepen bilateral strategic collaboration in support of Taiwan’s defense autonomy and drone industry development.

To ensure the accuracy of the report, DSET conducted over thirty interviews across one year with Taiwan’s leading drone manufacturers, current and former government officials, and industry associations in both the U.S. and Taiwan. These interviews were supplemented by trade data and bilateral policy documents.

📌 Target Audience: International media, and U.S. policymakers, industry, and academic stakeholders

Key findings have already been shared with leading Washington-based think tanks such as the Center for a New American Security (CNAS), the Harvard Kennedy School’s Belfer Center, the American Enterprise Institute (AEI), and the Special Competitive Studies Project (SCSP).

The report has been cited by global media including The Wall Street Journal, Bloomberg, Nikkei Asia, The Wire, and the Financial Times. It was also officially presented at the DSET 2025 Annual Forum in June, where it was discussed by the report author alongside U.S. drone maker Skydio, Taiwan’s National UAV Excellence Alliance, Ukrainian scholars, and representatives from the Jamestown Foundation.

📌 Key Conclusions and Recommendations:

Taiwan’s drone industry has experienced significant growth in recent years, with production value increasing by over NT$2 billion and exports rising nearly tenfold. However, it still faces structural challenges: high costs, limited market access, and lack of procurement and technological autonomy.

While some progress has been made in subsystem cooperation, overall Taiwan-U.S. co-production, joint design, and maintenance efforts remain limited. Taiwan’s drone exports to the U.S. also remain relatively small.

The report recommends:

👉 To the Taiwanese Government: Establish an integrated procurement roadmap mirroring U.S. practices; increase defense procurement budgets and offer targeted technical subsidies; support companies in obtaining U.S. drone certifications; push for tariff exemptions in bilateral negotiations; and expand lobbying efforts in the U.S. to promote Taiwanese drone purchases, referencing Ukraine, Germany, and France as precedents.

👉 To the U.S. Government: Institutionalize Taiwan’s inclusion in existing drone cooperation frameworks such as the “Partners in the Indo-Pacific for Industrial Resilience” (PIPIR) within the NDAA; share public safety drone application experience under GCTF; designate Taiwan as a maintenance and assembly hub for U.S.-made military drones; and promote joint Taiwan-U.S. drone R&D, manufacturing, and repair.

📌 Key Finding 1: Rapid Growth, Structural Constraints

🔹 In the past two years, Taiwan’s drone export volume increased from 290 units in 2H 2023 to 3,473 units in 2024, and 3,426 units in just the first four months of 2025.

🔹 Export destinations have expanded from the U.S. alone in 2023 to Poland, Germany, Czech Republic, and the U.S. by April 2025.

🔹 Taiwan’s Ministry of National Defense procured 3,422 drones and announced plans to purchase 47,000 more over the next three years.

🔹 However, Taiwan’s current production capacity remains limited (estimated 8,000–10,000 units annually) compared to its 2028 target of 180,000 units.

🔹 Structural challenges include:

• High costs due to non-Chinese components
• Limited domestic and foreign procurement
• Dependence on high-priced allied technologies (e.g., “three chips, two software”)
• Reliance on Chinese rare earths and components for batteries and motors

📌 Key Finding 2: Bilateral Cooperation Underdeveloped

🔹 While U.S. strategy supports Taiwan drone cooperation (e.g., “Replicator” and “Hellscape” programs, PIPIR inclusion), the June 2025 Trump administration executive order prioritizing U.S.-made drones complicates Taiwan’s access to U.S. procurement opportunities.

🔹 Taiwan’s exports to the U.S. increased modestly from 278 units (US$613,000) in 2H 2023 to 874 units (US$823,000) in 2024 and 437 units (US$356,000) in Q1 2025. Most known sales are to U.S. state-level law enforcement.

🔹 No Taiwanese products are currently listed on the DoD’s Blue UAS or the AUVSI’s Green UAS procurement lists.

🔹 Co-production remains limited to subsystem discussions, with no confirmed cases of Taiwan-U.S. joint repair, manufacturing, or design.

📈 Future Work

DSET will continue regular interviews with Taiwanese drone companies to track cooperation progress and industry trends. An upcoming report on Taiwan-EU drone cooperation is scheduled for release in August 2025.

DSET reaffirms that all findings and policy recommendations in this report reflect the think tank’s independent analysis and not the positions of any government agency or interviewee.