On May 6, DSET and Special Competitive Studies Project co-hosted a forum titled “The China Challenge: A Taiwan Perspective” at the AI+ EXPO in Washington, D.C., bringing together speakers from government, industry, and academia in Taiwan and the U.S.
In a session on Taiwan-U.S. drone cooperation, DSET invited Shield AI co-founder Brandon Tseng to participate in discussions with DSET researchers on the development of Taiwan-U.S. drone collaboration.
Shield AI Co-Founder and President Brandon Tseng shared at the forum that Shield AI’s core philosophy is that only by possessing credible and substantive defense capabilities can effective deterrence be achieved and conflict avoided. On this basis, Shield AI has chosen Taiwan as its Asia-Pacific development hub, recognizing Taiwan’s critical strategic position at the center of the first island chain and its established and growing defense supply chain ecosystem.
Tseng noted that Shield AI is actively deepening supply chain cooperation with Taiwan’s defense industry, and outlined three concrete areas of ongoing collaboration: first, supplying the V-BAT ISR platform to the Taiwan Navy to enhance intelligence, surveillance, and reconnaissance capabilities; second, integrating AI autonomy systems onto existing Taiwan platforms, with the NCSIST and Thunder Tiger jointly developed unmanned surface vessel (USV) as the primary use case; third, partnering with Aerospace Industrial Development Corporation (AIDC) on the XBAT program.
Tseng also offered his assessment of Taiwan’s special defense budget, emphasizing that it serves as an important demand signal for domestic industry, one that carries real significance for expanding production capacity and advancing technological capabilities, and that stands to contribute meaningfully to the long-term development of Taiwan’s defense industrial base.
At the Taiwan–U.S. Drone Industry Cooperation and Battery Supply Chains session, DSET Policy Analyst Cathy Fang drew on Drones for Democracy: A Blueprint for Taiwan-U.S. Non-Red UAS Supply Chain Cooperation, published last June, to review one year of progress and persistent challenges in Taiwan’s drone policy, industrial development, and Taiwan-U.S. cooperation.
On Taiwan’s progress, Fang noted that domestic procurement has expanded 29-fold and exports have grown 35-fold, with certification frameworks steadily maturing and technical cooperation with the United States continuing to deepen. Nevertheless, Taiwan’s industry continues to face several structural challenges: insufficient production capacity, persistent barriers to entering international government procurement markets, and continued heavy reliance on Chinese supply chains for critical inputs including batteries and motors.
On Taiwan-U.S. cooperation, NCSIST and domestic industry have established initial supply chain linkages and technical collaboration mechanisms with U.S. defense technology firms. However, government-level institutional frameworks, including the FY2026 NDAA co-production provisions, the Partnership for Indo-Pacific Industrial Resilience (PIPIR), and the Blue Skies for Taiwan Act of 2026, remain in early stages of development. The overall cooperation architecture is taking shape, but concrete implementation plans and supporting policy details have yet to be defined.
Fang concluded with three policy recommendations: first, the Taiwan-U.S. co-production plan expected from the State Department and Department of War (DoW) in June should be completed and issued on schedule; second, Taiwan-manufactured UAS and related components should be included within the exemption scope of FCC restrictions on imports of foreign-manufactured drone products; third, the bipartisan Blue Skies for Taiwan Act should capitalize on current policy momentum and advance through the legislative process without delay.
DSET non-resident fellow Jia-Shen Tsai delivered a briefing titled “Building Secure Battery Supply Chains for Drones.” Tsai noted that while Taiwan’s battery industry has emerged as Ukraine’s third-largest supplier by value with 42-fold growth since 2022, a typical “Taiwan-made” cell remains materially Chinese on the inside, as China dominates the refining and precursor manufacturing stages that account for most of a cell’s cost. Drone batteries thus hit every category that triggers Chinese export restrictions, making Taiwan itself a market that urgently needs to go China-free.
To respond, Tsai called on Taiwan and allied governments to follow the U.S. National Defense Authorization Act for 2026, which requires all advanced batteries in defense procurement to be at least 95 percent sourced from outside “foreign entities of concern” by January 2028. On the Taiwan side, he argued that such standards must be paired with parallel work on scale-building and supplier engagement. On the allied side, he urged partners to bring Taiwan into their critical-minerals investment plans, especially mid-stream processing and battery-grade material manufacturing, as the only way to remove the physical choke point in the drone battery supply chain.
