CommonWealth Magazine recently reported that international orders for Taiwan’s drones have increased rapidly this year, with exports projected to continue growing. Citing DSET research statistics, the report stated that 26,000 units of drone export in the first seven months of this year, representing a 750% increase from the total of the entire 2024, with the most significant growth coming from the European market. Since Q4 of 2024, following China’s restriction on drone exports to Ukraine, many European orders have shifted to Taiwan, particularly from Poland and the Czech Republic, both of which are close to the Ukrainian frontline.
In response to this phenomenon, Ting-Wei Lin, DSET’s Non-Resident Fellow of the National Security Research Program, told CommonWealth Magazine that most of the drones exported from Taiwan to Europe are small and used for tactical reconnaissance, target acquisition, or small payload delivery, which aligns with Europe’s asymmetric combat strategy.
The procurement requirements from governments pursuing non-red supply chains have also been a key factor in the growth of Taiwan’s drone export. Over the past two years, hundreds of international drone companies have sought supplies in Taiwan. In addition to the competition for Ministry of National Defense contracts, some of these companies have been sanctioned by China and are seeking to establish a stable supply chain in Taiwan to expand their market presence.
Cathy Fang, Policy Analyst for the National Security Program at DSET, told CommonWealth Magazine that Southeast Asia’s drone supply chain is expected to grow significantly. She emphasized the need to focus on developing core drone components, including flight control chips, communications chips, satellite positioning chips, flight control software, and ground control software, to maintain its hardware advantage. Drawing on lessons from the Ukrainian frontline, Fang noted that in real combat, drone hardware is typically upgraded every seven to thirteen months, while electronic warfare technologies continue to evolve, often requiring software upgrades and communication spectrum changes within 48 hours. This highlights the crucial role of software in drone manufacturing and underscores the need for Taiwan to further strengthen its software development capabilities.
The report notes that no Taiwanese IC design company currently develops chips specifically for drones. In contrast, companies like DJI are independently creating high-performance, low-cost chips tailored for drone applications. Fang points out that cost competitiveness is not the only concern. Drones are being developed to autonomously fly, identify targets, and complete missions without relying on GPS or communications, and it is essential for Taiwan to integrate advanced AI software and specialized chips into the drone value chain to achieve these capabilities.
The report concludes that while Taiwan’s drone industry is expanding rapidly, it must go beyond advancing hardware specifications. Strategic investment in software development is also crucial to solidifying Taiwan’s position within the global drone supply chain. DSET’s report, Drones for Democracy: U.S.-Taiwan Cooperation in Building a Resilient and China-Free UAV Supply Chain, addressed the challenges and opportunities in U.S.-Taiwan drone collaboration. Further research on the Taiwan-Europe cooperation in the UAV supply chain will be released in the upcoming months.
