Taiwan drone exports soar amid Ukraine war

TAIPEI – Taiwan’s drone exports are taking off, fuelled by the war in Ukraine, as Taiwanese companies seek a stake in the fast-growing global market for unmanned aerial vehicles (UAVs).

Low-cost drones used for reconnaissance and strikes are in high demand as governments worldwide boost defence spending in the face of intensifying conflicts.

A relatively new player in the increasingly competitive industry, Taiwan’s pitch is to be an “Asian hub” for the production of UAVs and components free of Chinese materials, or “non-red”.

That means its UAVs can be up to three times more expensive than those of Chinese competitors, such as the world’s biggest manufacturer DJI, which benefits from its massive scale.

Nevertheless, Taiwanese companies have recorded a surge in sales as Russia’s full-scale invasion of Ukraine, where drones have been used extensively by both sides, drives demand.

China’s export restrictions on drones in recent years have also opened up an opportunity for Taiwanese companies, which have been struggling to secure sufficient sales at home.

“Domestically, there’s not enough demand,” said policy analyst Samara Duerr of the Research Institute for Democracy, Society and Emerging Technology (DSET), a Taiwan government-backed think-tank.

“So it’s reaching internationally to help bring scale and experience so that it has this capacity and knows how to have a surge ability later on.”

Taiwan’s drone exports soared to 181,159 units in the first four months of 2026, nearly 20 times higher than the same period in 2025 and more than the entire year, official trade data show.

The vast majority went to the Czech Republic, followed by Poland. DSET believes that most units are bought or funded by charitable organisations and donated to Ukraine.

Mr Max Lo, chairman of AeroSoarX, which makes military and dual-use drones, said Taiwanese companies had to look abroad to stay viable.

Although Taiwan is trying to build a domestic drone industry, budget hold-ups in the opposition-controlled Parliament mean government orders are not keeping pace.

Mr Lo said: “If we don’t have the local demand, government support or budget, how can we sustain the production line?

“That’s the reason I visit Ukraine; I visit Poland. I let them know, okay, we have this or that; we have production still available.”

‘Drone shield’

Taiwan is a global powerhouse in artificial intelligence technology and semiconductor chip manufacturing, and hopes to build on that experience in the drone industry.

The island aims to have a monthly production capacity of 100,000 drones by 2030, compared with its previous target of 15,000 by 2028.

Dr Chiou Chyou-huey, director-general of the Industrial Development Administration, said the “vast majority” of Taiwan’s drone exports were non-red, but several industry insiders told AFP they suspect most of them are not.

Taiwan wants to be able to produce enough drones on its own to repel a potential attack from China, which claims the island is part of its territory, and embed itself in global UAV supply chains, as it has done with chips.

“We call it the drone shield,” Mr Lo said. “That will become another protection (for Taiwan).”

But the government’s plan to procure more than 200,000 Taiwanese-made drones as part of a nearly US$40 billion (S$51 billion) defence spending proposal has been blocked in Parliament, hindering progress.

Taiwanese companies also face challenges breaking into a market already dominated by China, and their drones and components lack battlefield experience.

“Even though it is hard to question Taiwan’s industrial prowess, it is all about this question of practical application,” said Mr Marcin Jerzewski, head of the Taiwan office of the European Values Center for Security Policy.

“Would Taiwanese drones be combat-ready?“

Cut-throat competition

Another issue is that Ukraine, which has become one of the most advanced UAV manufacturing hubs in the world, could stop needing Taiwanese drones once the conflict is over and flood the market with its own units.

Competition is “cut-throat” and growing fast, said Dr Collin Koh, a military expert at the S. Rajaratnam School of International Studies in Singapore.

“Taiwan will have to find its niche,” he told AFP.

Where Taiwan can compete with China is in “micro components” such as lithium-ion cells, said analyst Artur Savchii of Snake Island Institute, a Ukrainian think-tank.

“That’s where Taiwan can replace China, and I think this is a big area for cooperation,” he told AFP.

Ultimately, every region is striving for “maximum localisation” of supply chains, said Mr Yaroslav Azhnyuk, founder of Ukrainian drone company The Fourth Law.

Taiwanese drone makers are increasingly partnering with companies abroad as they carve out a place in the non-red market.

Among them is Thunder Tiger, which has a joint venture to make drone motors in the US state of Ohio.

General manager Gene Su said he sees the biggest opportunities in the US, where concerns over Chinese security threats are driving demand for non-red drones and components.

Thunder Tiger also wants to set up production lines in Europe, but countries there are more price-sensitive, Mr Su added.

“Once we’re getting bigger, our costs are lower, and then we can compete with the Chinese,” he said. AFP