Nikkei Asia reported today (14th) that Taiwan’s drone industry is actively seeking international collaboration to become part of the global democratic supply chain, citing comments from DSET research fellow Lai Chun-kuei .
In recent years, Taiwan has made significant efforts to develop its drone industry, aiming to establish a de-red supply chain in response to potential military threats from China and to strengthen its national defense strategy. President Lai Ching-te has also pledged to position Taiwan as the Asian hub of UAV supply chains for global democracies.
Although the government has designated drones as a priority industry and actively supported its development—leveraging Taiwan’s technological expertise—the industry still faces significant challenges that must be overcome before it can fully integrate into the global market.
DSET research fellow Lai Chun-kuei stated that to compete with China in the international market, Taiwan’s drone industry must rely on larger-scale international orders or increased government procurement to enhance production scale and reduce costs.
He estimates that Taiwanese drone companies have seen a surge in inquiries from abroad, with some potential orders reaching tens of thousands of units. However, he cautioned that demand for dual-use drones is likely driven by global conflicts, which could subside. “Solely relying on these orders is too risky for Taiwanese firms’ long-term investments.”
Challenges in Industry Development: Investment Incentives and Key Component Bottlenecks
According to Nikkei Asia, senior executives at Aerospace Industrial Development Corporation (AIDC, Hanxiang Aviation) noted that while the U.S. is actively promoting a de-Chinafied supply chain and creating new opportunities for Taiwan’s drone sector, the industry still struggles with insufficient investment incentives. The high costs of research and development and the difficulty of achieving economies of scale make it challenging for companies to commit significant capital to drone production.
The report also highlights key component shortages as a major bottleneck for Taiwan’s drone industry. Limited funding has slowed the development of gimbal camera technology, communication modules, and high-end chip production, all of which are critical for drone manufacturing.
International Collaboration and Uncertainty in U.S.-Taiwan Relations
Rupert J. Hammond-Chambers, president of the U.S.-Taiwan Business Council, suggested in an interview with Nikkei Asia that Taiwan should actively attract top international electronics manufacturers to join the drone industry to strengthen large-scale production capacity and reduce dependence on government support.
However, the report also highlighted uncertainties in U.S. President Donald Trump’s attitude toward Taiwan, especially as he has demanded an increase in Taiwan’s defense budget and threatened to impose tariffs on Taiwan’s semiconductor industry. Future bilateral cooperation thus requires close observation.
DSET stated that it will continue to research the resilience of Taiwan’s drone supply chain and monitor the latest international cooperation developments in the drone industry between the U.S. and Europe.