DSET’s National Security Group publishes a biweekly drone newsletter. It reviews a curated selection of the most noteworthy domestic and international sources, providing insights into the development of Taiwan’s drone industry and the implications of global uncrewed aerial vehicle (UAV) trends for Taiwan.
This Issue’s Drone Highlights:
In late December 2025, the U.S. FCC restricted non-U.S. drones and key components, with Chinese drones most affected. Despite the Commerce Department withdrawing its proposal, the FCC rules stand. This issue highlights the resulting opportunities and uncertainties for Taiwan’s industry.
Taiwan’s Ministry of National Defense announced plans to procure more than 200,000 drones between 2026 and 2033—far exceeding the previously stated plan to acquire 50,000 drones during 2026–2027. However, the associated budget remains stalled in the Legislative Yuan.
A PLA drone entered Taiwan’s Dongsha airspace this week, raising pressure on Taiwan and exposing gaps in high-altitude ISR and layered counter-drone capabilities.
China released counter-swarm drone exercise footage, underscoring the strategic competition in swarm and counter-drone technologies among China, the U.S., and Taiwan.
Taiwan advanced drone chip subsidies, with 2026 IC design support focused on anti-jamming communications, GPS, thermal imaging, and laser ranging, though software funding remains limited.
Japan launched large-scale subsidies for domestically produced drones, strengthening prospects for Taiwan–Japan non-China supply chain cooperation.
The U.S. is advancing reforms: DHS created a drone and counter-drone procurement office with USD 115 million in funding, and the U.S. Marine Corps is formalizing FPV drone training.
Russia intensified drone attacks on Ukraine’s energy infrastructure; Taiwan has announced measures to strengthen counter-drone protection for critical infrastructure, drawing lessons from Ukraine.
FCC Drone Ban Announced: Taiwanese Firms Remain Highly Optimistic, but Uncertainty Persists
(Author: Chih-Cheng Sung)
In December 2025, the US Federal Communications Commission (FCC) stated that the United States would place all drones and related critical components manufactured outside the United States on the national security Covered List. Under this framework, any new drone models or critical components that have not undergone review and received approvals would be prohibited from being imported into, or sold within, the US market.
This measure is widely interpreted as having a direct impact on Chinese drone manufacturers, most notably DJI. Taiwanese firms, by contrast, have expressed broad optimism. At a recent forum, Chin-pin Tsao, Chair of the Taiwan Excellence Drone International Business Opportunities Alliance (TEDIBOA), noted strong confidence that the market is poised for takeoff. Coretronic Intelligent Robotics Corporation (CIRC)—one of the earliest Taiwanese drone exporters to the United States—has likewise stated that, once U.S. restrictions take effect, as much as 60 percent of the market could be released almost immediately, and disclosed that CIRC may be eligible for inclusion on the U.S. Department of Defense’s Blue UAS Cleared List, opening the door to integration into U.S. supply chains.
However, because the FCC’s new rules apply broadly to all foreign-manufactured products, concerns remain regarding their potential impact on products from U.S. allies. In response to these concerns, the FCC announced exemption measures in early January, allowing certain foreign-manufactured new drone models and components to continue to be imported and sold, including a blanket exemption for products already listed on the U.S. Department of Defense’s Blue UAS list.
Several days later, Reuters reported that the US Department of Commerce had confirmed the withdrawal of a separate plan aimed at restricting Chinese-manufactured drones. That plan, proposed in September 2025 and submitted to the White House for interagency review the following month, had contemplated imposing import controls—potentially extending to an outright ban—on Chinese-manufactured drones on national security grounds.
It is important to note that the withdrawal of the Department of Commerce’s related plan is not directly connected to the regulatory measures adopted by the FCC, nor does it affect the FCC’s existing regulatory framework governing newly introduced foreign-manufactured drones. Any drones and critical components from other countries that are not included on the FCC’s exemption list will continue to be subject to the relevant review and approval requirements before they may be sold in the US market.
A closer review of the FCC’s exemption provisions indicates that they do create opportunities for Taiwanese products that have already obtained Blue UAS certification, but also introduce uncertainty for other firms. Under the FCC’s latest exemption measures, exemptions may be obtained through four principal pathways going forward:
Inclusion in US federal government procurement Procurement by US federal agencies does not require FCC equipment authorization; accordingly, the Covered List does not affect procurement by the Department of War, the Department of Homeland Security, or other federal agencies. It should be noted, however, that drones sold to US state governments remain subject to FCC regulatory requirements.
Inclusion on the US Blue UAS list Under FCC rules, through January 1, 2027, drone models and critical components included on the Defense Contract Management Agency’s (DCMA) Blue UAS Cleared List are exempt. In Taiwan’s case, the Thunder Tiger Overkill FPV drone, which has already been listed on the Blue UAS Cleared List, will not be affected by the new FCC rules. If media reports are accurate, a drone model referenced by CIRC as nearing certification may also qualify for this exemption.
Compliance with the Buy American Standard Also through January 1, 2027, drones and critical components that qualify as “domestic end products” under the Buy American Standard are eligible for exemption. Under this standard, the drone or its critical components must be manufactured in the US, and the cost of US-origin components must exceed 65 percent of the total cost of the finished product.
Application for a “Conditional Approval” For drones or critical components not covered by the exemption framework, manufacturers may apply to the FCC for an individual Conditional Approval. Such cases are referred to the Department of Defense and the Department of Homeland Security for a case-specific national security determination. If the product is deemed not to pose a national security risk, it may be exempted from the FCC’s restrictions.
While this mechanism may appear relatively permissive, it is important to note that applicants are required to submit a clear U.S. manufacturing and onshoring commitment plan as part of the application. The extent to which applicants will be expected to establish manufacturing operations in the United States, however, remains undefined under the current rules.
Taiwan’s Ministry of National Defense Announces Plans to Procure Over 200,000 Drones Over the Next Seven Years
(Author: Chih-Cheng Sung)
Taiwan’s Ministry of National Defense (MND) disclosed this week that, under the proposed Special Act on Procurement to Enhance Defensive Resilience and Asymmetric Capabilities, it plans to invest NT$1.25 trillion in defense procurement between 2026 and 2033. The plan includes the acquisition of 2,032 ALTIUS-series anti-armor drones from U.S.-based Anduril, approximately 200,000 coastal surveillance and attack drones—including coastal ISR and coastal attack variants (loitering, munition-dropping, and suicide drones)—as well as more than 1,000 unmanned surface vessels (USVs). The program also includes the parallel deployment of various counter-UAS systems.
Compared with the MND’s previously announced plan in 2025 to procure 50,000 drones during 2026–2027, the newly disclosed figures represent a substantial increase and have provided a significant boost to the domestic drone industry. However, the proposed procurement legislation remains blocked in the Legislative Yuan by opposition parties, and the timeline for its passage remains uncertain.
China has conducted its first confirmed drone intrusion into Taiwan-controlled airspace, marking a clear escalation in cross-strait coercive pressure. In the early hours of January 17, a Chinese surveillance uncrewed aerial vehicle (UAV) entered the airspace over Pratas (Dongsha Island) at 5:44 a.m. and departed approximately four minutes later after Taiwan’s military issued warnings via international radio channels. A Taiwanese official identified the platform as the WZ-7 (無偵-7), known as Soaring Dragon (翔龍), which operates at altitudes of roughly 18,000 metres—far beyond the island’s current air-defence engagement range of about 4,000 metres.
The incident is significant for three reasons. First, it marks a qualitative shift from sustained maritime militia and coastguard-led gray-zone activities to an explicit aerial violation by a PLA military drone. Second, it directly tests Taiwan’s “first strike” doctrine: while unauthorized entry by a Chinese military asset into territorial airspace may legally justify self-defence, the episode exposed a practical gap between declaratory thresholds and enforceable response options when intrusions occur outside weapons range. Third, it underscores an urgent operational requirement to strengthen counter-UAS and intelligence, surveillance, and reconnaissance (ISR) capabilities—particularly high-altitude detection, persistent sensing, and layered counter-drone measures—to deny Beijing low-risk means of probing Taiwan’s deterrence posture.
In fact, Taiwan has begun addressing these gaps. The Coast Guard Administration has secured NT$7.6 billion (~$235 million USD) under a homeland security and resilience special budget to upgrade coastal radar and counter-drone systems. Separately, the Ministry of National Defense plans to allocate more than NT$9.6 billion in its 2026 budget to procure site-defence systems and 635 portable counter-UAS units by 2028, with priority deployment to Dongsha and naval vessels. Implementation, however, remains contingent on legislative approval of the central government budget.
A Race of Scale and Speed: Countering Swarms Is Now a Two-Way Problem
(Author: Ting-Wei Lin)
China’s state broadcaster CCTV aired footage on January 4 showing a Chinese Navy exercise focused on countering “suicide drone swarms.” In the drill, a “blue force” acting as a notional adversary launched multiple suicide drones to simulate ultra-low-altitude penetration attacks against maritime targets; the “red force,” typically representing the PLA, responded with ship-launched missiles and onboard interception systems to neutralize the incoming swarm. Several days later, on January 8, the U.S. Navy’s nuclear-powered aircraft carrier USS Abraham Lincoln conducted live-fire exercises in the South China Sea, with training likewise emphasizing defense against saturation attacks involving drone swarms and suicide boats.
Although neither side explicitly identified a hypothetical adversary, both developments point to the same trend: drone “saturation” attacks are becoming a two-way problem. A report by the U.S. think tank CNAS warns that U.S. forces could be overwhelmed by massed Chinese drone attacks and recommends that the U.S. Navy adjust its doctrine by reserving its most expensive and scarce air-defense missiles for high-end threats, while employing cheaper, shorter-range interceptors against drones.
China, the United States, and Taiwan are all preparing for scenarios in which large numbers of low-cost drones could overwhelm defenses. Taiwan is currently advancing “AI-coordinated swarming” capabilities through procurement programs and cooperation with foreign firms. The primary bottlenecks lie in software—maintaining coordination under intense jamming, mission-level command and control, and ensuring safety and reliability at scale. The National Chung-Shan Institute of Science and Technology (NCSIST) is seeking to accelerate capability development through cooperation with Auterion on the Nemesis swarm platform, with Anduril on command-and-control systems, and potentially with Shield AI on the Hivemind mission system. These collaborations, however, remain at an early stage. Over the coming year, comparisons between Taiwan’s swarm capabilities and China’s counter-swarm measures will be a key focus of attention.
Taiwan Is Ramping Up Investment in Drone Chips
(Author: Ting-Wei Lin)
Taiwan is accelerating efforts to close long-standing gaps in its drone supply chain, focusing on the government-identified shortfalls in the so-called “three chips, two software” framework—namely flight-control, communications, and navigation/sensing chips, as well as flight-control and ground-station software. Since 2023, the Ministry of Economic Affairs (MOEA) has used drone-related subsidy programs to encourage domestic firms to invest in these critical chip technologies.
This month, the government announced the 2026 Advanced Development Incentive Program for Domestic IC Design Firms. Under this program, the MOEA has designated drones, robotics, and satellite communications as the three priority areas. Reportedly exceeding NT$1 billion in total funding, individual projects may receive support for up to three years. For drones, priority funding areas include communications chips (e.g., long-range and anti-jamming), laser range-finding chips, thermal imaging chips, and GPS chips.
To date, however, Taiwan’s policy incentives have been clearly skewed toward the “chip” side of the “three chips, two software” agenda, with limited direct support for software development. Software capabilities are being supplemented primarily through foreign technology transfer and system integration, such as the National Chung-Shan Institute of Science and Technology’s cooperation with U.S. firms Auterion and Anduril.
Japan Launches New Drone Subsidy Program, Injecting Momentum into Taiwan–Japan Cooperation
(Author: Ryan Teng)
In January 2026, Japan’s Ministry of Economy, Trade and Industry (METI) allocated ¥13.9 billion under the Economic Security Promotion Act to advance the development of its domestic drone industry. The funding targets two primary objectives: first, to establish the capacity to produce 80,000 Japan-made drones annually by 2030; and second, to ensure the long-term stability of supply chains for critical components.
Japanese authorities have further indicated that key components—including motors, batteries, communications modules, and flight-control systems—will increasingly be sourced from “like-minded countries,” underscoring a strong emphasis on supply-chain de-risking.
Taiwan and Japan have signed seven memoranda of understanding on drone cooperation in recent years. However, due to the relatively slow pace of Japan’s domestic drone industrialization, Taiwan’s exports of drone components to Japan have not seen growth comparable to exports to Eastern European markets. Japan’s newly announced large-scale subsidy program is therefore expected to inject new momentum into Taiwan–Japan cooperation.
Beyond Bans: The United States Accelerates Domestic Industrial Reform
(Author: Samara Duerr)
Concurrent to the FCC restrictions of foreign technologies, the US is endeavoring to secure domestic drone and counter-drone capabilities into federal frameworks. Dedicated to this task, on January 12, the US Department of Homeland Security announced the launch of the Program Executive Office for Unmanned Aircraft Systems and Counter-Unmanned Aircraft Systems.
This new office will manage the rapid procurement and employment of UAV technologies, including a $115 million USD investment into counter-drone technologies, which is to be finalized this week. In parallel, this past December, the Department of War launched the US marine corps’ new drone training program.
Formalized under the Training and Education Command, this initiative standardizes training for smaller, first-person-view attack drones—like Blue UAS certified Neros Archer by Neros Technologies. This aligns with the US’ increasing investments and plans to deploy tens of thousands of attack drones across forces starting in March 2026.
Making strides towards American ‘Drone Dominance’, the US is expanding its authority over drone technology, centralizing procurement, and institutionalizing training to ensure a sufficient number of operators for mass UAV deployment.
In general, the US’ push to escalate domestic drone capacity equally symbolizes a move away from Chinese drone products, which is regarded favorably by Taiwan as it strives to position itself as an alternative supplier. Additionally, increased US capacity to man thousands of small UAVs increases the preparedness for a ‘Hellscape’ strategy—the plan to use US drone swarms in the Straits as a layer of defense in the event of a Taiwan contingency.
Russia Expands Drone Attacks on Ukraine’s Energy Infrastructure
(Author: Samara Duerr)
On January 13, Russia launched a large-scale attack on Ukraine’s energy grid, focusing on power generation facilities and substations, leaving hundreds of thousands of households without electricity and heating amid freezing temperatures. The operation employed nearly 300 attack drones, underscoring that the use of UAVs to strike critical infrastructure has become an increasingly routine tactic for both sides in the Russo-Ukrainian war.
From Russia’s perspective, the strategic intent is clear: to “weaponize winter” by creating a humanitarian crisis, paralyzing economic and military logistics that depend on electricity, and ultimately degrading Ukraine’s ability to sustain combat operations.
Earlier this month, Taiwan’s Vice Premier stated that strengthening counter-drone systems for critical infrastructure would be a policy priority. Unlike the defense procurement budgets already disclosed, counter-UAS systems for critical infrastructure are expected to be procured separately by individual government agencies, with detailed plans yet to be announced.
Author Biographies
Chih-Cheng Sung
Chih-Cheng Sung currently serves as a Senior Analyst at DSET, specializing in public relations and policy analysis. He previously served as Chief of Staff in a legislative caucus office at the Legislative Yuan, where he was responsible for policy research and legislative strategy. With in-depth knowledge of parliamentary operations and the policymaking process, he brings extensive experience in policy coordination and advocacy. Mr. Sung holds a Master’s degree in Political Science from National Chengchi University.
Ting-Wei Lin
Ting-Wei Lin is a journalist and researcher, serving as a Non-Resident Fellow at DSET’s National Security Program. Her research focuses on defense technology and supply chain resilience. Lin specializes in the intersection of technology and geopolitics, cross-strait relations, and Taiwan’s public policy. Her work has appeared in Agence France-Presse, Initium Media, The Reporter, and other publications. She holds a B.A. in Anthropology from National Taiwan University.
Samara Duerr
Samara Duerr serves as a policy analyst for the National Security and Dual-use Technology (NSDT) taskforce at DSET. Samara earned a Master’s degree in Asia Pacific Studies at National Chengchi University in Taiwan, a Bachelor’s degree in International Relations and Chinese Studies at Emory University in the US, and has also studied at Yonsei University in Seoul and the School of Oriental and African Studies (SOAS) in London. Her research focuses on dual use technology in relation to Taiwan-US and Taiwan-EU cooperation. With an emphasis on techno-geopolitics, her work specializes in the drone supply chain, emerging technology, and US-Taiwan relations.
Hung-Yuan Teng
Hung-Yuan TENG is currently a Policy Analyst of the National Security Program at DSET. His primary research focuses on Taiwan–Japan cooperation in the field of UAVs and the interplay between emerging technologies and geopolitics. Before joining DSET, he interned at the Taiwan Association for Human Rights, where he focused on the forced eviction case of the Tsai Jin-Mu residence along the Sindian Liugong Irrigation Canal, as well as human rights issues in Hong Kong, Tibet, and China. He holds a degree from Ritsumeikan Asia Pacific University (APU) in Japan, where his research centered on government foreign policy decision-making.
Cathy Fang
Cathy Fang serves as a Policy Analyst in the National Security and Economic Security Research Program at DSET, where she specializes in analyzing the convergence of technology and geopolitical dynamics. Her research portfolio encompasses critical technological domains, with particular emphasis on the semiconductor industry and the strategic implications of emerging technologies including unmanned aerial vehicles, satellite systems, and subsea telecommunications infrastructure. Currently, she contributes as an editor and podcast host at US-Taiwan Watch. Prior to her role at DSET, she held the position of policy analyst at the Project 2049 Institute. Her professional background includes tenure as a legislative assistant at Taiwan’s Legislative Yuan and research experience at the Institute of International Relations, National Chengchi University (NCCU). She holds an M.A. in Asian Studies and International Security from the Elliott School of International Affairs at George Washington University, and a B.A. in Political Science from National Chengchi University.
[DSET Drone Newsletter] How Does the FCC Ban Affect Taiwanese Drone Companies? January 21, 2026
Authors: Chih-Cheng Sung, Ting-Wei Lin, Samara Duerr, Ryan Teng, and Cathy Fang
2026-01-21
About DSET Drone Newsletter:
DSET’s National Security Group publishes a biweekly drone newsletter. It reviews a curated selection of the most noteworthy domestic and international sources, providing insights into the development of Taiwan’s drone industry and the implications of global uncrewed aerial vehicle (UAV) trends for Taiwan.
This Issue’s Drone Highlights:
(Read the full newsletter on DSET’s website here.)
FCC Drone Ban Announced: Taiwanese Firms Remain Highly Optimistic, but Uncertainty Persists
(Author: Chih-Cheng Sung)
In December 2025, the US Federal Communications Commission (FCC) stated that the United States would place all drones and related critical components manufactured outside the United States on the national security Covered List. Under this framework, any new drone models or critical components that have not undergone review and received approvals would be prohibited from being imported into, or sold within, the US market.
This measure is widely interpreted as having a direct impact on Chinese drone manufacturers, most notably DJI. Taiwanese firms, by contrast, have expressed broad optimism. At a recent forum, Chin-pin Tsao, Chair of the Taiwan Excellence Drone International Business Opportunities Alliance (TEDIBOA), noted strong confidence that the market is poised for takeoff. Coretronic Intelligent Robotics Corporation (CIRC)—one of the earliest Taiwanese drone exporters to the United States—has likewise stated that, once U.S. restrictions take effect, as much as 60 percent of the market could be released almost immediately, and disclosed that CIRC may be eligible for inclusion on the U.S. Department of Defense’s Blue UAS Cleared List, opening the door to integration into U.S. supply chains.
However, because the FCC’s new rules apply broadly to all foreign-manufactured products, concerns remain regarding their potential impact on products from U.S. allies. In response to these concerns, the FCC announced exemption measures in early January, allowing certain foreign-manufactured new drone models and components to continue to be imported and sold, including a blanket exemption for products already listed on the U.S. Department of Defense’s Blue UAS list.
Several days later, Reuters reported that the US Department of Commerce had confirmed the withdrawal of a separate plan aimed at restricting Chinese-manufactured drones. That plan, proposed in September 2025 and submitted to the White House for interagency review the following month, had contemplated imposing import controls—potentially extending to an outright ban—on Chinese-manufactured drones on national security grounds.
It is important to note that the withdrawal of the Department of Commerce’s related plan is not directly connected to the regulatory measures adopted by the FCC, nor does it affect the FCC’s existing regulatory framework governing newly introduced foreign-manufactured drones. Any drones and critical components from other countries that are not included on the FCC’s exemption list will continue to be subject to the relevant review and approval requirements before they may be sold in the US market.
A closer review of the FCC’s exemption provisions indicates that they do create opportunities for Taiwanese products that have already obtained Blue UAS certification, but also introduce uncertainty for other firms. Under the FCC’s latest exemption measures, exemptions may be obtained through four principal pathways going forward:
Procurement by US federal agencies does not require FCC equipment authorization; accordingly, the Covered List does not affect procurement by the Department of War, the Department of Homeland Security, or other federal agencies. It should be noted, however, that drones sold to US state governments remain subject to FCC regulatory requirements.
Under FCC rules, through January 1, 2027, drone models and critical components included on the Defense Contract Management Agency’s (DCMA) Blue UAS Cleared List are exempt. In Taiwan’s case, the Thunder Tiger Overkill FPV drone, which has already been listed on the Blue UAS Cleared List, will not be affected by the new FCC rules. If media reports are accurate, a drone model referenced by CIRC as nearing certification may also qualify for this exemption.
Also through January 1, 2027, drones and critical components that qualify as “domestic end products” under the Buy American Standard are eligible for exemption. Under this standard, the drone or its critical components must be manufactured in the US, and the cost of US-origin components must exceed 65 percent of the total cost of the finished product.
For drones or critical components not covered by the exemption framework, manufacturers may apply to the FCC for an individual Conditional Approval. Such cases are referred to the Department of Defense and the Department of Homeland Security for a case-specific national security determination. If the product is deemed not to pose a national security risk, it may be exempted from the FCC’s restrictions.
While this mechanism may appear relatively permissive, it is important to note that applicants are required to submit a clear U.S. manufacturing and onshoring commitment plan as part of the application. The extent to which applicants will be expected to establish manufacturing operations in the United States, however, remains undefined under the current rules.
Taiwan’s Ministry of National Defense Announces Plans to Procure Over 200,000 Drones Over the Next Seven Years
(Author: Chih-Cheng Sung)
Taiwan’s Ministry of National Defense (MND) disclosed this week that, under the proposed Special Act on Procurement to Enhance Defensive Resilience and Asymmetric Capabilities, it plans to invest NT$1.25 trillion in defense procurement between 2026 and 2033. The plan includes the acquisition of 2,032 ALTIUS-series anti-armor drones from U.S.-based Anduril, approximately 200,000 coastal surveillance and attack drones—including coastal ISR and coastal attack variants (loitering, munition-dropping, and suicide drones)—as well as more than 1,000 unmanned surface vessels (USVs). The program also includes the parallel deployment of various counter-UAS systems.
Compared with the MND’s previously announced plan in 2025 to procure 50,000 drones during 2026–2027, the newly disclosed figures represent a substantial increase and have provided a significant boost to the domestic drone industry. However, the proposed procurement legislation remains blocked in the Legislative Yuan by opposition parties, and the timeline for its passage remains uncertain.
PLA Drone Enters Dongsha Airspace, Challenging Taiwan’s ‘First Strike’ Threshold
(Author: Cathy Fang)
China has conducted its first confirmed drone intrusion into Taiwan-controlled airspace, marking a clear escalation in cross-strait coercive pressure. In the early hours of January 17, a Chinese surveillance uncrewed aerial vehicle (UAV) entered the airspace over Pratas (Dongsha Island) at 5:44 a.m. and departed approximately four minutes later after Taiwan’s military issued warnings via international radio channels. A Taiwanese official identified the platform as the WZ-7 (無偵-7), known as Soaring Dragon (翔龍), which operates at altitudes of roughly 18,000 metres—far beyond the island’s current air-defence engagement range of about 4,000 metres.
The incident is significant for three reasons. First, it marks a qualitative shift from sustained maritime militia and coastguard-led gray-zone activities to an explicit aerial violation by a PLA military drone. Second, it directly tests Taiwan’s “first strike” doctrine: while unauthorized entry by a Chinese military asset into territorial airspace may legally justify self-defence, the episode exposed a practical gap between declaratory thresholds and enforceable response options when intrusions occur outside weapons range. Third, it underscores an urgent operational requirement to strengthen counter-UAS and intelligence, surveillance, and reconnaissance (ISR) capabilities—particularly high-altitude detection, persistent sensing, and layered counter-drone measures—to deny Beijing low-risk means of probing Taiwan’s deterrence posture.
In fact, Taiwan has begun addressing these gaps. The Coast Guard Administration has secured NT$7.6 billion (~$235 million USD) under a homeland security and resilience special budget to upgrade coastal radar and counter-drone systems. Separately, the Ministry of National Defense plans to allocate more than NT$9.6 billion in its 2026 budget to procure site-defence systems and 635 portable counter-UAS units by 2028, with priority deployment to Dongsha and naval vessels. Implementation, however, remains contingent on legislative approval of the central government budget.
A Race of Scale and Speed: Countering Swarms Is Now a Two-Way Problem
(Author: Ting-Wei Lin)
China’s state broadcaster CCTV aired footage on January 4 showing a Chinese Navy exercise focused on countering “suicide drone swarms.” In the drill, a “blue force” acting as a notional adversary launched multiple suicide drones to simulate ultra-low-altitude penetration attacks against maritime targets; the “red force,” typically representing the PLA, responded with ship-launched missiles and onboard interception systems to neutralize the incoming swarm. Several days later, on January 8, the U.S. Navy’s nuclear-powered aircraft carrier USS Abraham Lincoln conducted live-fire exercises in the South China Sea, with training likewise emphasizing defense against saturation attacks involving drone swarms and suicide boats.
Although neither side explicitly identified a hypothetical adversary, both developments point to the same trend: drone “saturation” attacks are becoming a two-way problem. A report by the U.S. think tank CNAS warns that U.S. forces could be overwhelmed by massed Chinese drone attacks and recommends that the U.S. Navy adjust its doctrine by reserving its most expensive and scarce air-defense missiles for high-end threats, while employing cheaper, shorter-range interceptors against drones.
China, the United States, and Taiwan are all preparing for scenarios in which large numbers of low-cost drones could overwhelm defenses. Taiwan is currently advancing “AI-coordinated swarming” capabilities through procurement programs and cooperation with foreign firms. The primary bottlenecks lie in software—maintaining coordination under intense jamming, mission-level command and control, and ensuring safety and reliability at scale. The National Chung-Shan Institute of Science and Technology (NCSIST) is seeking to accelerate capability development through cooperation with Auterion on the Nemesis swarm platform, with Anduril on command-and-control systems, and potentially with Shield AI on the Hivemind mission system. These collaborations, however, remain at an early stage. Over the coming year, comparisons between Taiwan’s swarm capabilities and China’s counter-swarm measures will be a key focus of attention.
Taiwan Is Ramping Up Investment in Drone Chips
(Author: Ting-Wei Lin)
Taiwan is accelerating efforts to close long-standing gaps in its drone supply chain, focusing on the government-identified shortfalls in the so-called “three chips, two software” framework—namely flight-control, communications, and navigation/sensing chips, as well as flight-control and ground-station software. Since 2023, the Ministry of Economic Affairs (MOEA) has used drone-related subsidy programs to encourage domestic firms to invest in these critical chip technologies.
This month, the government announced the 2026 Advanced Development Incentive Program for Domestic IC Design Firms. Under this program, the MOEA has designated drones, robotics, and satellite communications as the three priority areas. Reportedly exceeding NT$1 billion in total funding, individual projects may receive support for up to three years. For drones, priority funding areas include communications chips (e.g., long-range and anti-jamming), laser range-finding chips, thermal imaging chips, and GPS chips.
To date, however, Taiwan’s policy incentives have been clearly skewed toward the “chip” side of the “three chips, two software” agenda, with limited direct support for software development. Software capabilities are being supplemented primarily through foreign technology transfer and system integration, such as the National Chung-Shan Institute of Science and Technology’s cooperation with U.S. firms Auterion and Anduril.
Japan Launches New Drone Subsidy Program, Injecting Momentum into Taiwan–Japan Cooperation
(Author: Ryan Teng)
In January 2026, Japan’s Ministry of Economy, Trade and Industry (METI) allocated ¥13.9 billion under the Economic Security Promotion Act to advance the development of its domestic drone industry. The funding targets two primary objectives: first, to establish the capacity to produce 80,000 Japan-made drones annually by 2030; and second, to ensure the long-term stability of supply chains for critical components.
Japanese authorities have further indicated that key components—including motors, batteries, communications modules, and flight-control systems—will increasingly be sourced from “like-minded countries,” underscoring a strong emphasis on supply-chain de-risking.
Taiwan and Japan have signed seven memoranda of understanding on drone cooperation in recent years. However, due to the relatively slow pace of Japan’s domestic drone industrialization, Taiwan’s exports of drone components to Japan have not seen growth comparable to exports to Eastern European markets. Japan’s newly announced large-scale subsidy program is therefore expected to inject new momentum into Taiwan–Japan cooperation.
Beyond Bans: The United States Accelerates Domestic Industrial Reform
(Author: Samara Duerr)
Concurrent to the FCC restrictions of foreign technologies, the US is endeavoring to secure domestic drone and counter-drone capabilities into federal frameworks. Dedicated to this task, on January 12, the US Department of Homeland Security announced the launch of the Program Executive Office for Unmanned Aircraft Systems and Counter-Unmanned Aircraft Systems.
This new office will manage the rapid procurement and employment of UAV technologies, including a $115 million USD investment into counter-drone technologies, which is to be finalized this week. In parallel, this past December, the Department of War launched the US marine corps’ new drone training program.
Formalized under the Training and Education Command, this initiative standardizes training for smaller, first-person-view attack drones—like Blue UAS certified Neros Archer by Neros Technologies. This aligns with the US’ increasing investments and plans to deploy tens of thousands of attack drones across forces starting in March 2026.
Making strides towards American ‘Drone Dominance’, the US is expanding its authority over drone technology, centralizing procurement, and institutionalizing training to ensure a sufficient number of operators for mass UAV deployment.
In general, the US’ push to escalate domestic drone capacity equally symbolizes a move away from Chinese drone products, which is regarded favorably by Taiwan as it strives to position itself as an alternative supplier. Additionally, increased US capacity to man thousands of small UAVs increases the preparedness for a ‘Hellscape’ strategy—the plan to use US drone swarms in the Straits as a layer of defense in the event of a Taiwan contingency.
Russia Expands Drone Attacks on Ukraine’s Energy Infrastructure
(Author: Samara Duerr)
On January 13, Russia launched a large-scale attack on Ukraine’s energy grid, focusing on power generation facilities and substations, leaving hundreds of thousands of households without electricity and heating amid freezing temperatures. The operation employed nearly 300 attack drones, underscoring that the use of UAVs to strike critical infrastructure has become an increasingly routine tactic for both sides in the Russo-Ukrainian war.
From Russia’s perspective, the strategic intent is clear: to “weaponize winter” by creating a humanitarian crisis, paralyzing economic and military logistics that depend on electricity, and ultimately degrading Ukraine’s ability to sustain combat operations.
Earlier this month, Taiwan’s Vice Premier stated that strengthening counter-drone systems for critical infrastructure would be a policy priority. Unlike the defense procurement budgets already disclosed, counter-UAS systems for critical infrastructure are expected to be procured separately by individual government agencies, with detailed plans yet to be announced.
Author Biographies
Chih-Cheng Sung
Chih-Cheng Sung currently serves as a Senior Analyst at DSET, specializing in public relations and policy analysis. He previously served as Chief of Staff in a legislative caucus office at the Legislative Yuan, where he was responsible for policy research and legislative strategy. With in-depth knowledge of parliamentary operations and the policymaking process, he brings extensive experience in policy coordination and advocacy. Mr. Sung holds a Master’s degree in Political Science from National Chengchi University.
Ting-Wei Lin
Ting-Wei Lin is a journalist and researcher, serving as a Non-Resident Fellow at DSET’s National Security Program. Her research focuses on defense technology and supply chain resilience. Lin specializes in the intersection of technology and geopolitics, cross-strait relations, and Taiwan’s public policy. Her work has appeared in Agence France-Presse, Initium Media, The Reporter, and other publications. She holds a B.A. in Anthropology from National Taiwan University.
Samara Duerr
Samara Duerr serves as a policy analyst for the National Security and Dual-use Technology (NSDT) taskforce at DSET. Samara earned a Master’s degree in Asia Pacific Studies at National Chengchi University in Taiwan, a Bachelor’s degree in International Relations and Chinese Studies at Emory University in the US, and has also studied at Yonsei University in Seoul and the School of Oriental and African Studies (SOAS) in London. Her research focuses on dual use technology in relation to Taiwan-US and Taiwan-EU cooperation. With an emphasis on techno-geopolitics, her work specializes in the drone supply chain, emerging technology, and US-Taiwan relations.
Hung-Yuan Teng
Hung-Yuan TENG is currently a Policy Analyst of the National Security Program at DSET. His primary research focuses on Taiwan–Japan cooperation in the field of UAVs and the interplay between emerging technologies and geopolitics. Before joining DSET, he interned at the Taiwan Association for Human Rights, where he focused on the forced eviction case of the Tsai Jin-Mu residence along the Sindian Liugong Irrigation Canal, as well as human rights issues in Hong Kong, Tibet, and China. He holds a degree from Ritsumeikan Asia Pacific University (APU) in Japan, where his research centered on government foreign policy decision-making.
Cathy Fang
Cathy Fang serves as a Policy Analyst in the National Security and Economic Security Research Program at DSET, where she specializes in analyzing the convergence of technology and geopolitical dynamics. Her research portfolio encompasses critical technological domains, with particular emphasis on the semiconductor industry and the strategic implications of emerging technologies including unmanned aerial vehicles, satellite systems, and subsea telecommunications infrastructure. Currently, she contributes as an editor and podcast host at US-Taiwan Watch. Prior to her role at DSET, she held the position of policy analyst at the Project 2049 Institute. Her professional background includes tenure as a legislative assistant at Taiwan’s Legislative Yuan and research experience at the Institute of International Relations, National Chengchi University (NCCU). She holds an M.A. in Asian Studies and International Security from the Elliott School of International Affairs at George Washington University, and a B.A. in Political Science from National Chengchi University.
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