Taipei aims to leverage geopolitics by positioning itself as an Asia-Pacific drone hub built on a supply chain decoupled from mainland China, though challenges relating to scale, politics and timing threaten its ambitious industrial strategy.
The push reflects a broader effort by the administration of Taiwanese leader William Lai Ching-te to position the island as a node in what officials have described as a “democratic supply chain” free of mainland Chinese components amid rising geopolitical tensions.
Under a government blueprint, Taiwan plans to invest NT$44.2 billion (US$1.38 billion) between 2025 and 2030 to develop its uncrewed systems industry, with the aim of lifting annual output to NT$40 billion by the end of the decade.
Taiwanese Premier Cho Jung-tai said drones were no longer confined to military use and would become central to future supply chains spanning logistics, agriculture and infrastructure inspection.
“The goal is to build Taiwan into an Asia-Pacific hub for the democratic drone supply chain,” Cho said during a visit to a counter-drone system maker in central Taiwan on Sunday.
The strategy would help firms expand globally while strengthening industrial autonomy, he added.
Officials in Taiwan said the island already had a base to build on.
About 250 companies are involved in the drone sector, covering components, modules and full-system manufacturing, supported by strengths in semiconductors and information and communication technology integration.
Economic affairs minister Kung Ming-hsin said Taiwanese firms had entered the supply chains of leading Western drone makers, including US-based Skydio and France’s Parrot, amid rising demand for alternatives to mainland Chinese supplier DJI, which dominates the global market.
Kung said drone output in Taiwan reached NT$12.9 billion in 2025, up about 2½ times year on year, while exports of complete drones surged more than 20-fold to NT$2.95 billion.
“We are very confident,” the minister said, setting a target of NT$20 billion in output this year as a step towards the 2030 goal.
At the heart of the strategy is the development of a “non-red supply chain”, a term widely used in Taiwan to describe production lines free of mainland Chinese components.
Officials argue that geopolitical risks and security concerns have driven Western governments and companies to seek trusted suppliers, creating an opening for Taiwan.
Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the United States, do not recognise Taiwan as an independent state. But Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.
The Taiwanese government has organised an island-wide team of more than 250 firms, signed cooperation agreements with partners in the US, Japan and Europe, and is seeking to localise key technologies such as flight control systems, chips and ground software.
Analysts said Taiwan’s strengths in chipmaking and edge computing could give it an advantage in integrating drone systems.
According to Lin Yu-cheng, a professor of automatic control engineering at Feng Chia University in the central city of Taichung, Taiwan could “gain a first-mover advantage” in linking air, sea and land systems through its semiconductor capabilities.
Others singled out the strategic dimension.
Citing lessons from the wars in Ukraine and the Middle East, Yu Tsung-chi, a retired army major general, said drones were vital to Taiwan’s push for asymmetric warfare, helping offset the mainland’s numerical advantage.
“Building a local drone industry is not just economic policy but a core part of defence resilience,” Yu said.
That view is echoed within the defence establishment.
Taiwan’s defence minister, Wellington Koo Li-hsiung, has said the priority is not simply acquiring large numbers of drones but ensuring Taiwan can produce them locally during wartime.
“The key is whether we can sustain production under blockade conditions,” Koo told lawmakers on Monday, citing lessons from the armed conflicts in Ukraine and the Middle East.
Yet the strategy faces mounting political headwinds.
Opposition parties have taken a hard line against parts of a proposed NT$1.25 trillion special defence budget, including funding for uncrewed systems, raising the risk of delays.
Military officials warned that procurement timelines had already slipped, with large-scale acquisition unlikely before 2027 at the earliest, if the budget impasse continued.
Ma Wen-chun, a legislator from the Kuomintang, Taiwan’s main opposition party, questioned whether the spending plan offered sufficient returns.
“There is a mismatch between high investment and relatively modest output targets,” Ma said, adding that delays in US arms deliveries raised further concerns about execution.
Some analysts also voiced scepticism about whether Taiwan could compete at scale.
Max Lo, executive director of the Taiwan International Strategic Study Society in Taipei, said production targets remained far below those seen in Ukraine or mainland China.
“Scale matters in this kind of warfare,” Lo said, noting that Ukraine produced about four million drones in a single year.
He also pointed to structural challenges, including reliance on imported components and the dominance of DJI, which accounts for about 70 per cent of the global market.
“Under the defence ministry’s proposed NT$1.25 trillion special budget, the military plans to procure about 200,000 drones over eight years until 2033,” Lo said. “Would that be enough in a conflict?”
The rapid pace of technological change also complicates planning.
Former navy captain Lu Li-shih wrote on social media that drone capabilities evolved “on a quarterly basis”, casting doubt on large upfront procurement plans. -- SOUTH CHINA MORNING POST
