The National Security Program of DSET continues to issue its biweekly drone newsletter, curating three domestic and three international highlights per edition. Focusing on policy trends, R&D, and industrial shifts within uncrewed systems, it aims to help readers master the evolution of Taiwan’s drone ecosystem and its global context.
This issue highlights that, in late 2025, the U.S. Federal Communications Commission (FCC) formally placed all non-U.S.-manufactured drones and their critical components on the national security Covered List. The move is expected to have the most severe impact on China’s drone industry, while simultaneously creating unprecedented market space for non-China supply chains. Taiwanese firms have generally responded with optimism; however, the new rules also introduce uncertainty for “new drone models” that have not yet secured exemption status. This issue therefore provides a detailed analysis of the four principal pathways through which FCC exemptions may be obtained.
FCC Drone Ban Announced: Taiwanese Firms Remain Highly Optimistic, but Uncertainty Persists
The newsletter notes that the FCC’s regulatory framework remains intact despite the U.S. Department of Commerce’s withdrawal of a separate proposal aimed at restricting Chinese drones. The FCC’s exemption design offers short-term regulatory certainty for Taiwanese manufacturers that have already obtained U.S. Blue UAS certification. By contrast, Taiwanese firms that have yet to secure certification—or that plan to introduce new models—will need to closely monitor the interpretation and enforcement of the Buy American Standard, as well as the implementation details surrounding applications for “Conditional Approval.”
Taiwan’s Ministry of National Defense Plans to Procure Over 200,000 Drones Over the Next Seven Years
Taiwan’s Ministry of National Defense (MND) disclosed this week that it plans to procure more than 200,000 drones of various types over the next seven years, alongside unmanned surface vessels and counter-UAS systems. The scale of the proposed procurement significantly exceeds previously announced plans and has provided a strong boost to the domestic drone industry. Nevertheless, the associated special defense budget remains stalled in the Legislative Yuan, leaving the implementation timeline uncertain.
PLA Drone Enters Dongsha Airspace, Challenging Taiwan’s “First Strike” Threshold
This issue also examines the strategic implications of a People’s Liberation Army (PLA) drone’s first confirmed entry into airspace under Taiwan’s effective control over Dongsha (Pratas Island). The incident marks an escalation in China’s gray-zone activities and highlights Taiwan’s urgent need to strengthen high-altitude intelligence, surveillance, and reconnaissance (ISR) capabilities, as well as layered counter-drone defenses. Progress on these capability gaps remains closely tied to the approval of the central government’s annual budget.
A Race of Scale and Speed: Countering Swarms as a Two-Way Challenge
Chinese state media recently released footage of naval exercises focused on countering suicide drone swarms, while the United States has incorporated drone and suicide-boat defense into live-fire exercises in the South China Sea. The newsletter underscores that drone “saturation” attacks have become a two-way challenge. Taiwan is advancing AI-coordinated swarming capabilities through procurement programs and cooperation with foreign partners, though these efforts remain at an early stage.
Taiwan Steps Up Investment in Drone-Related Chips
On the industrial front, Taiwan’s Ministry of Economic Affairs and Ministry of National Defense announced 2026 IC design subsidy programs prioritizing anti-jamming communications, GPS, thermal imaging, and laser-ranging chips. These initiatives aim to accelerate progress on the “three chips, two software” agenda. The newsletter notes, however, that direct policy support for software development remains comparatively limited and continues to rely heavily on international cooperation.
Japan Launches New Drone Subsidy Program, Boosting Taiwan–Japan Cooperation
Japan has launched a large-scale subsidy program to promote domestic drone production, with a strong emphasis on supply-chain de-risking and sourcing key components from like-minded countries. DSET’s analysis suggests that, following the signing of seven bilateral memoranda of understanding in recent years, Taiwan–Japan cooperation within non-China drone supply chains could see renewed momentum.
Beyond Bans: The United States Accelerates Domestic Industrial Reform
Beyond restricting foreign products, the United States is also strengthening its domestic drone ecosystem. The U.S. Department of Homeland Security has established a dedicated Program Executive Office for UAS and Counter-UAS, while the U.S. Marine Corps has standardized FPV drone training. Together, these measures reflect Washington’s push toward “Drone Dominance” and its broader effort to reduce reliance on Chinese drone products—an overall trend viewed positively by Taiwan as it positions itself as a trusted alternative supplier.
Russia Expands Drone Attacks on Ukraine’s Energy Infrastructure
Finally, the newsletter highlights Russia’s recent large-scale drone attacks on Ukraine’s energy infrastructure, reinforcing the vulnerability of critical infrastructure to UAV strikes. Taiwan’s Executive Yuan has signaled that strengthening counter-drone protection for critical infrastructure will be a policy priority, though detailed procurement and deployment plans have yet to be announced.
DSET emphasizes that, while the FCC’s new rules open substantial opportunities for non-China drone suppliers, elevated regulatory thresholds and policy uncertainty mean that Taiwanese firms must closely track evolving U.S. localization requirements and security-compliance frameworks if they are to successfully enter or expand within the U.S. market.
The information above is current as of January 21, 2026 (Taipei time). For full details, please refer to the latest issue of the newsletter.
