Taiwan's Urgent Race to Build a Domestic Drone Industry Against China's Shadow
In the span of just a few years, drones have transformed the landscape of modern warfare. Conflicts across the globe, from Ukraine to the Middle East and beyond, have vividly demonstrated the indispensable role of unmanned aerial vehicles (UAVs) and other autonomous systems in contemporary combat operations. These uncrewed platforms offer capabilities ranging from persistent surveillance and reconnaissance to precision strikes and electronic warfare, often at a fraction of the cost and risk associated with traditional manned aircraft.
For Taiwan, an island nation living under the constant and increasingly immediate threat of invasion from mainland China, this evolution in military technology is not merely an academic observation; it is an existential imperative. Taiwan possesses both the urgent need and, theoretically, the industrial and technological foundation necessary to develop a formidable domestic drone program. Yet, despite these factors, the country finds itself in a desperate race against time, struggling to build this critical industry from the ground up before it's too late.
Taipei has set an ambitious goal: to produce 180,000 drones per year by 2028. This target reflects a clear understanding of the scale required to potentially counter a force as large as the People's Liberation Army (PLA). However, the reality on the ground paints a starkly different picture. Last year, Taiwan's total drone production amounted to fewer than 10,000 units, a significant shortfall that underscores the deep-seated challenges hindering its progress.
Cathy Fang, a policy analyst at the Research Institute for Democracy, Society, and Emerging Technology (DSET), acknowledges Taiwan's inherent potential. "Taiwan definitely has the ability to make the best drones in the world," she states. The question that looms large is: Why isn't it happening at the pace required?
Designing a Hellscape: Taiwan's Strategic Imperative
The DSET recently published a comprehensive report shedding light on the sluggish pace of Taiwan's drone industry development. Their research indicates that the production rate of 8,000 to 10,000 UAVs over the past year is being hampered by what they term "structural challenges." These include high manufacturing costs, low domestic procurement by the Taiwanese military, and minimal foreign government orders.
Taiwan has endured the threat of Chinese invasion for decades, but recent geopolitical shifts and Beijing's increasingly assertive posture have elevated this threat to a more immediate concern. Chinese Premier Xi Jinping has articulated a goal to complete the PLA's aggressive modernization by 2027, a timeline that many Taiwanese officials and military analysts view as a potential window for invasion, certainly before Xi's current term concludes in 2029.
While the exact nature of a potential Chinese military action remains subject to debate, a full combined arms assault—commencing from air and sea, followed by a land invasion—is a widely feared scenario. This prospect necessitates innovative and asymmetric defense strategies for Taiwan.
The concept of turning the Taiwan Strait into a "hellscape" emerged from remarks by an American commander in 2023. This strategy envisions Taiwan leveraging vast numbers of uncrewed aerial and naval vehicles to swarm and bombard incoming Chinese ships and planes. The objective is not necessarily to annihilate the considerable Chinese navy and air force outright, but crucially, to inflict enough damage and create sufficient chaos and delay to frustrate Beijing's advances. This delay would buy precious time for Taiwan's international allies to mobilize and potentially intervene.
Taiwan has already taken steps in this direction. In 2022, the government launched the Drone National Team, a program designed to foster collaboration between government agencies and domestic industry to accelerate the growth of the nascent drone sector. A key mandate of this team has been to study and learn from the experiences of Ukraine, whose defense against Russian aggression has heavily relied on small, tactical, and cost-effective UAVs. These Ukrainian drones are capable of diverse missions and are tightly integrated with ground forces. Ukraine has rapidly built a massive domestic drone industry, with plans to procure millions of small drones this year, alongside developing long-range uncrewed missiles, autonomous land vehicles, and uncrewed naval drones.
The Challenge of Competing With DJI and Supply Chain Hurdles
However, the Ukrainian example also highlights a significant disadvantage for Taiwan. In a secret workshop in Kyiv, a Ukrainian drone manufacturer revealed to WIRED that sourcing essential components like antennas and chips from China was a necessity due to the prohibitive cost of Taiwanese alternatives. This points to a core challenge for Taiwan: competing with the scale and cost efficiency of massive Chinese manufacturers like DJI.
"We are not able to compete with DJI," Cathy Fang states plainly. This inability to compete on cost, particularly for commercial-grade components that can be adapted for military use, is a major hurdle.
Other nations that have rapidly scaled up their drone programs have often accepted the integration of Chinese technology into their supply chains, viewing it either as a strategic asset or an unavoidable reality. Taiwan, given the geopolitical context and the direct threat from China, is understandably highly reluctant to incorporate any Chinese technology into its defense systems, especially critical components for its drones.
This reluctance makes drone manufacturing significantly more difficult and expensive. China holds a dominant position in the production of certain critical drone components, including gimbals, optical sensors, and antennas. To avoid Chinese sources, Taiwan must seek out suppliers from allied nations, which often comes at a considerable premium.
Even in areas where Taiwan possesses world-leading capabilities, leveraging them for the domestic drone industry has proven challenging. The country has an advanced battery industry, for instance, but even this sector is heavily reliant on critical minerals sourced from China. More paradoxically, Taiwan is home to the world's most advanced semiconductor industry, producing 60 percent of the world's semiconductors and a staggering 90 percent of the most advanced chips. Yet, according to Fang, Taiwan does not currently produce any chips specifically designed for drone applications.
"Taiwanese drone makers are buying chips from Qualcomm and Nvidia, but those chips are not specifically for drones," she explains. "Those are communication chips, sensor chips, those are for more general use." Furthermore, even these general-purpose chips from non-Chinese sources are significantly more expensive than their Chinese counterparts, sometimes by a factor of 10.
"We definitely have the ability to make them," Fang adds, referring to drone-specific chips. "But the reason why these companies are not involved in this market is because the scale is just too small."
This creates a classic catch-22 situation: Taiwanese companies cannot achieve the scale of production needed to reduce costs until they receive more orders, but they struggle to secure significant orders because their production costs are currently too high compared to international competitors, particularly those willing to use Chinese components.
To break this cycle and achieve the necessary scale, Fang argues that a significant increase in government procurement from Taiwan itself is essential. Thus far, Taiwan's Ministry of National Defense has ordered fewer than 4,000 domestically produced drones, a modest number compared to the stated production goal. While plans exist to purchase tens of thousands more in the coming years, analysts suggest that financing the level of defense spending required remains politically challenging in Taiwan. Earlier this year, opposition lawmakers in the Legislative Yuan reportedly slashed planned defense spending, highlighting the domestic political hurdles.
Given these challenges, particularly the need for scale and access to larger markets, Fang believes there is a clear answer for Taiwan's industry: America.
Building an Army of Drones: Recommendations for Taiwan and the US
The DSET report offers a series of recommendations aimed at both Taiwan and the United States to help establish and accelerate Taiwan's ambitious new drone industry. A primary recommendation for the US is to move beyond simply supplying Taiwan with American-made drones and instead actively support Taiwan's local manufacturing base.
Currently, no Taiwanese drone manufacturer has managed to secure a spot on the US Department of Defense's "blue list"—a roster of trusted drone suppliers cleared for procurement by the Pentagon. Inclusion on this list could unlock access to potentially millions or even billions of dollars in orders from the US military, providing the crucial scale that Taiwanese manufacturers need to lower costs and ramp up production.
There has been some flow of technology and systems in the other direction. The US has provided Taiwan with approximately 1,000 drones, primarily smaller systems like the AeroVironment Switchblade loitering munition, which are essentially kamikaze drones designed for tactical strikes. Taiwan has also acquired a small number of the larger, long-range MQ-9 Reaper drones from the US.
The US has also shared some novel capabilities with Taiwan, including access to its Replicator Initiative. This program aims to field large numbers of autonomous systems, including drone swarms, designed to find and destroy targets, particularly at sea. Providing Taiwan with access to such advanced concepts and technologies is a significant step.
However, DSET argues that some of these provisions have been based more on what the US perceives Taiwan needs, rather than a collaborative effort to build Taiwan's indigenous capabilities. The report contends that Washington could be far more effective by developing genuine partnerships with Taiwanese industry, making longer-term strategic decisions about the specific defense capabilities Taipei requires, and aligning procurement efforts. Furthermore, DSET recommends that Washington consider removing tariffs on Taiwanese UAVs, which could make them more competitive in the US market and provide another avenue for Taiwanese manufacturers to gain scale.
Taiwan, for its part, also has significant work ahead. DSET recommends that Taipei establish a more detailed and clear roadmap outlining the specific drone capabilities it needs, the timelines for acquiring them, and the strategy for domestic production and international partnerships. While much of the current focus is on small, first-person-view (FPV) drones—the kind that have proven highly effective and ubiquitous in conflicts like Ukraine—Taiwan needs to broaden its scope and invest in developing and procuring other types of uncrewed technology.
Although Taiwan has identified a wide spectrum of desired capabilities, DSET's analysis found that procurement thus far has largely concentrated on smaller surveillance drones. While essential, these alone are insufficient to meet the scale and variety of threats posed by a potential invasion.
The conflicts in Ukraine and the Middle East have demonstrated that long-range uncrewed vehicles can be manufactured at scale and at a significantly lower cost than traditional cruise or ballistic missiles. These systems offer the ability to strike targets deep behind enemy lines or engage naval assets from a distance. The DSET report argues that Taiwan needs to develop or acquire similar long-range capabilities, not only for its own defense but also to better integrate with potential American procurement programs, as the US military increasingly prioritizes longer-range autonomous systems.
The proliferation of drones on the battlefield also necessitates robust defenses against them, particularly in the realm of electronic warfare (EW). Drones are susceptible to jamming, spoofing, and cyberattacks. Taipei is reportedly investing in anti-drone systems, but Fang describes this as an "emerging concept." A defense analyst quoted by WIRED noted that Taiwan is simply "not prepared to fight in a complex electromagnetic environment," a critical vulnerability in an era of widespread drone use.
One of the most vulnerable points in any potential Chinese invasion scenario would be the amphibious landing phase, particularly the transport of troops and heavy equipment across the Taiwan Strait. Beijing has been rapidly building a fleet of civilian-modified landing barges, known as 'Shuqiao' ships, specifically designed for this purpose. Taiwan has been developing domestically made submarines with the hope of intercepting and sinking these barges before they can reach Taiwanese shores. This anti-amphibious capability could be significantly augmented by the development and deployment of autonomous or uncrewed submersibles capable of mine-laying, surveillance, or direct attack missions against landing craft.
Ukraine has already pioneered its own models of semi-autonomous uncrewed naval vehicles, which have achieved notable successes in the Black Sea, sinking Russian warships and damaging critical infrastructure like the Kerch Bridge in Crimea. These examples provide a potential blueprint for Taiwan's development of similar capabilities tailored to the unique challenges of the Taiwan Strait.
As Western nations and their allies increasingly look towards mass-producing cost-effective, high-impact defense systems, uncrewed vehicles are often seen as a potential silver bullet. However, as Taiwan's current struggles illustrate, translating this strategic vision into industrial reality is far easier said than done. The technical hurdles, supply chain dependencies, cost pressures, political considerations, and the need for international cooperation create a complex web of challenges.
If Taiwan fails to overcome these obstacles, DSET warns of significant risks. "Taiwan risks falling into a gray zone of limited interoperability and unscalable production," the report states. This means its domestically produced drones might not effectively integrate with systems provided by allies (like the US) and that production volumes will remain too low to meet the demands of a large-scale conflict. Simultaneously, the report cautions, "the US risks failing to develop trusted regional manufacturing capacity at the speed required to compete with China's drone diplomacy and defense exports." This highlights the mutual interest in Taiwan's success, as it could become a trusted alternative source for drones and components for the US and other allies, reducing reliance on China.
It may seem like an almost insurmountable challenge, particularly for a nation facing an existential threat from a much larger and rapidly modernizing neighbor. But, as Cathy Fang points out, Ukraine faced a similarly daunting situation just a few years ago. "Ukraine? They didn’t even imagine that kind of capacity three years ago," she says. Yet, driven by a profound "sense of survival" in the face of invasion, Kyiv managed to rapidly stand up what is now considered one of the world's most impressive indigenous drone manufacturing industries.
Taipei, Fang observes, "is, right now, in low mode," primarily because it is still in peacetime. However, she concludes with a note of cautious optimism: "But I don't want to underestimate our capacity, even though we are in a peacetime." The potential is there; the challenge is to unlock it and accelerate production before the shadow looming across the strait becomes an unavoidable reality.
