Nikkei Asia this week spotlighted a new policy report by the National Security Research Program at DSET, titled “Drones for Democracy: The Strategic Imperative for U.S.–Taiwan UAV Cooperation.” The report offers a timely assessment of the strategic and institutional risks posed by former U.S. President Donald Trump’s latest executive order prioritizing domestic drone procurement.
In its June 6 executive order, the Trump administration mandated that U.S. federal agencies prioritize drones that are “made in America,” while notably excluding language that supports defense-industrial cooperation with democratic partners such as Taiwan. The Nikkei article, titled “US drive for domestic drones risks sidelining Taiwan, report warns,” directly cited DSET’s findings and interviewed the report’s authors.
The DSET study is based on a year-long series of interviews with seven major UAV manufacturers in Taiwan, current and former government officials, and industry associations in both Taiwan and the United States. It also draws upon regulatory documents, national defense strategies, and trade data to analyze the current state of Taiwan’s drone industry, assess bilateral progress, and review the Taiwanese government’s UAV industrial strategy—commonly summarized as “three goals, five strategies.” The report offers detailed diagnostics of policy gaps and institutional bottlenecks while proposing forward-looking recommendations.
In the Nikkei interview, Tiunn Hong-lun, DSET Deputy Director of National Security Research Program and lead author of the report, argued that the U.S. domestic-first approach risks marginalizing Taiwan’s strategic contributions and further complicates defense coordination. “This isn’t just a trade issue,” Tiunn said. “It’s a question of readiness. Taiwan has repeatedly expressed a willingness to cooperate, but the window for institutional engagement is narrowing quickly.”
Unlike Japan and South Korea, Taiwan has no bilateral mechanisms with the United States for joint production, final assembly, or UAV product certification. The executive order could further constrain Taiwan’s integration into U.S. defense supply chains, despite the island’s growing strategic importance.
The Nikkei report also highlighted DSET’s industry data, which show rapid growth in Taiwan’s drone sector despite structural barriers. Industry output rose from NT$2.8 billion in 2023 to NT$5 billion (USD 155 million) in 2024. Exports surged from just 290 units in the second half of 2023 to 3,473 units in 2024. In Q1 2025 alone, Taiwan exported 3,426 drones—almost matching the total volume of the previous year. However, total export value remained relatively low at USD 2.3 million.
President Lai Ching-te’s administration has announced plans to procure 47,000 additional UAVs over the next three years, supplementing the 3,422 units already acquired. The government also aims to produce 180,000 UAVs annually by 2028, with a projected yearly output value of USD 937.5 million.
Despite this momentum, DSET’s report warns of persistent production shortfalls. Taiwan’s actual annual production capacity is estimated between 8,000 and 10,000 units—far below the 2028 target. Nikkei also cited former Vice Minister of National Defense Lin Chong-bin, who noted that Hsinchu-based Coretronic, a key Taiwanese UAV manufacturer, “has made significant progress” but will require time to expand capacity and enhance technical capabilities.
As of May 2025, no Taiwanese drone company has secured U.S. federal procurement contracts or been included in the Department of Defense’s Blue UAS or industry-led Green UAS certification lists. Coretronic remains the only known Taiwanese firm supplying drones to U.S. state-level police, fire, and public safety departments.
Tiunn warned that the executive order may effectively exclude frontline democracies like Taiwan. “If a conflict were to erupt in the Taiwan Strait, foreign UAVs and components would likely be unable to reach the island,” he said. “Helping Taiwan develop a resilient, localized drone supply chain must become a strategic priority for democratic allies.”
Co-author and policy analyst Cathy Fang emphasized that Taiwan could help partners reduce dependence on Chinese UAVs and components. “With Taiwan’s strengths in semiconductors and electronics, it is well-positioned to offer trusted alternatives and support the construction of a ‘non-red’ supply chain,” she said.
The DSET report outlines several policy recommendations for U.S. stakeholders:
- Facilitate cybersecurity and supply chain certifications for Taiwanese UAV vendors to enable future federal procurement.
- Establish a Final Assembly and Check-Out (FACO) facility in Taiwan for modular or co-developed military drones.
- Develop bilateral certification frameworks and joint R&D programs focused on autonomous navigation and mission software.
The full report is now available here: Drones for Democracy: The Strategic Imperative for U.S.–Taiwan UAV Cooperation
