US and Taiwan seek to strengthen drone supply chain to keep out China

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Taiwan and the US are looking to kick-start co-operation between their drone companies as part of efforts to build supply chains that do not rely on China.

Executives from 26 US makers of uncrewed systems or anti-drone systems will arrive in Taipei on Sunday for three days of meetings with Taiwanese industry counterparts, military officials in charge of weapons procurement and development, and other researchers and engineers.

The US group also includes officials from the commerce department, the Pentagon’s Defense Innovation Unit and Dev Shenoy, who leads the defence department’s microelectronics research and engineering.

The exchanges highlight the “de-risking” efforts across a broadening spectrum of industries, driven by US-China competition and Washington’s security concerns about some Chinese products, particularly those with dual civilian and military applications. China has the world’s biggest drone industry.

They also underscore how Taiwan’s technology helps it maintain a crucial role in global supply chains, even as many western countries seek to limit their dependence on its chip manufacturers.

Part of the visit’s focus will be for US companies to find non-Chinese component suppliers or manufacturing partners.

The US mission is “an opportunity for us to become part of their supply chain and do co-production”, said Wellington Koo, Taiwan’s defence minister. “As the US is putting such emphasis on removing China from supply chains and because drones can be dual-use products, a lot of other players will have to integrate their supply chains.”

Among the visiting companies is AeroVironment, the vendor of the Switchblade suicide drone, of which Taiwan is buying more than 700 sets.

Other delegation members are Dedrone, a provider of counter-drone systems, and weapons contractor Northrop Grumman, which has announced a big push into the Taiwan market.

Koo said integration into US supply chains could help Taiwan overcome the fact that its international status makes it difficult for its companies to export defence products. Under pressure from China, which claims Taiwan as part of its territory, all but 12 countries have cut diplomatic ties with Taiwan and avoid being seen as conducting official exchanges with it.

Home to some of the world’s leading manufacturers of electronic components and a broad range of machine tool makers, Taiwan has dozens of commercial drone companies. However they are tiny compared with China’s and have traditionally focused on relatively small aerial vehicles.

Triggered by Russia’s attack on Ukraine in 2022, Taiwan’s government is trying to boost the industry under a plan for a “drone national team”.

That resulted in a handful of private companies including Taiwan UAV, the country’s oldest drone maker, and Coretronic Intelligent Robotics, winning defence ministry orders worth NT$6.8bn ($210mn) last month to supply autonomous platforms including microdrones, ship-borne reconnaissance drones and some other large drones.

The orders are a first for Taiwan’s armed forces, which have in the past tried to work exclusively with the National Chung-Shan Institute of Science and Technology, a state-run arms development body.

Taiwan UAV, which is developing a domestically made drone engine, has said the military orders would give it the scale to put the new component into mass production.

But defence experts said the programme fell short because dozens of other promising private companies lost out in the tender.

“Many of our companies need to build up capacity. But those that didn’t get orders from the defence ministry, how can they afford to do that?” said Chen Po-hung, a board member of the Taiwan Defence Association, a non-government group and until recently a drone researcher at the defence ministry’s think-tank.

Koo said manufacturing orders from US drone companies could help solve that problem.

“If our domestic drone industry doesn’t have enough scale, it’s going to be hard to support our military’s needs,” he said. “But if we manage to get into international supply chains, then we have the opportunity to build that scale.”