Taiwan is proactively developing its domestic drone industry, aiming to establish itself as the “Asian hub of UAV supply chains for global democracies.”
In a recent report, The Economist underscored how Taiwan’s emerging “non-red” supply chains are enhancing its national defense capabilities while expanding its footprint in global export markets. The report also cited insights from Hong-Lun Tiunn, a Deputy Director of National Security Research Program at DSET.
The article noted that Taiwan possesses the technological expertise to manufacture a broad spectrum of drones — ranging from small loitering munitions frequently deployed in Ukraine to sophisticated reconnaissance drones capable of shipborne operations and enduring the harsh winds of the Taiwan Strait.
Despite its technological strength, Taiwan’s principal challenge lies in achieving production scale. Officials from the Ministry of Economic Affairs emphasized that Taiwanese manufacturers must aggressively pursue international orders to expand capacity and strengthen competitiveness.
The ongoing geopolitical rivalry between the United States and China has created new openings for Taiwan’s drone industry. Washington has prohibited the use of Chinese-made drones by its military and federal agencies and is contemplating broader restrictions, while Beijing has retaliated with sanctions against several U.S. drone manufacturers.
To capitalize on these shifts, the Taiwanese government has bolstered domestic military procurement and established the “Drone International Business Alliance” to assist firms in securing overseas contracts and integrating into global markets.
Nevertheless, Hong-Lun Tiunn cautioned that Taiwan must also anticipate emerging competition from Ukraine. With thousands of drones deployed monthly in the ongoing conflict with Russia, Ukraine has demonstrated the combat effectiveness of its domestic drone production, and claims to have achieved an annual manufacturing capacity of five million units. “Some in Taiwan are debating whether they should just buy Ukrainian drones and stockpile them,” Tiunn remarked.
The report further highlighted that previous U.S. administrations consistently encouraged Taiwan to strengthen its drone industry as a strategic hedge against potential Chinese aggression. Following Donald Trump’s return to the presidency, some Taiwanese firms have begun realigning their strategies to conform with the “Make America Great Again” (MAGA) agenda, including plans to relocate critical components of production to the United States in order to safeguard access to the American market.
Following the release of the report, DSET stated that it continues to investigate Taiwan’s drone supply chain and study efforts to strengthen Taiwan-U.S. and Taiwan-Europe drone supply chain cooperation. As discussions in Ukraine heat up regarding the lifting of export controls on drones, positioning the drone industry as a cornerstone for postwar economic revitalization, and announcing plans to produce five million drones annually, some Taiwanese companies have expressed concerns about future competitive pressures. However, others view these developments as an opportunity to expand component exports. DSET will continue to monitor and report on the evolving dynamics of Taiwan-Ukraine drone cooperation in upcoming reports.