The Straits Times recently published a feature article titled “Amid Chinese security threat, are drones ‘the next big thing’ for Taiwan after chips?” which examined the rise of Taiwan’s drone industry. The article noted that amid growing security threats from China, unmanned aerial vehicles (UAVs) are increasingly being seen as Taiwan’s “next big thing” after semiconductors. It cited remarks from Professor Tu Wen-Ling, Director of the Research Institute for Democracy, Society and Emerging Technology (DSET), and drew on DSET’s latest research report, “Drones for Democracy: U.S.-Taiwan Cooperation in Building a Resilient and China-Free UAV Supply Chain”.
The report observed that Russia’s war in Ukraine, combined with frequent Chinese drone incursions over Kinmen, has fueled surging demand in Taiwan for drones and counter-drone systems. In response to a question from The Straits Times, Professor Tu emphasized that “the drone industry has become a very strategic one for Taiwan,” adding that since President Lai Ching-te took office, government policy has shifted to position Taiwan as a key UAV manufacturing hub in the Asia-Pacific. The goal, she noted, is to develop a “China-free” dual-use supply chain that serves both commercial and defense needs while reinforcing democratic alliances.
According to DSET’s latest report, Taiwan’s drone industry has grown rapidly within just a few years. Industry output rose from NT$28 billion in 2023 to NT$50 billion in 2024. In the first half of 2025 alone, Taiwan exported US$11.89 million worth of drones—more than five times the total for all of 2024. Major export markets include Poland, the United States, Germany, the Czech Republic and Hong Kong, signaling that Taiwanese-made drones are gaining traction in highly regulated markets across Europe and the United States.
At the same time, the DSET report cautioned that the industry faces significant structural challenges. The government’s push to eliminate Chinese-made components has driven costs sharply higher, with some video transmission chips imported from friendly countries costing up to ten times more than those produced by DJI. Taiwan’s relatively small domestic market, limited testing grounds, and modest procurement volumes further constrain industry growth. Meanwhile, Chinese manufacturers, backed by massive scale and low costs, continue to dominate the global commercial drone market, placing Taiwanese producers under intense competitive pressure.
The article quoted the DSET report as noting that although Taiwan’s drone industry is far smaller than its semiconductor sector, its strategic value lies in cultivating a complete ecosystem of operators, engineers, and supply chains that can sustain capabilities during prolonged conflict. Unlike semiconductors, drones straddle both civilian and defense markets. By building a dual-use sector that supports global commercial applications while enhancing national security, Taiwan’s drone industry could emerge as the island’s second strategic pillar alongside chips.