‘Trusted and resilient’: Taiwan’s bid to position itself as a China-free drone hub

TAIPEI – Taiwanese drone maker Carbon-Based Technology is set to more than double its workforce of 60 and move into a new manufacturing facility that is three times bigger, as global demand for its lightweight yet high-performance designs soars.

Stacy Yu, the company’s chief executive officer, said its international business activities have more than doubled in recent years, with partnerships established across the United States, Japan, Europe and South-east Asia.

Across Taiwan, drone manufacturers are seeing explosive export growth as they increasingly expand overseas to achieve economies of scale that the domestic market alone cannot support. 

In the first quarter of 2026, Taiwan’s drone exports surged past US$115 million (S$148 million), already eclipsing the total export value of US$93 million recorded for all of 2025.

The majority were shipped to the Czech Republic and Poland, although experts believe the ultimate destination was Ukraine. 

The expansion is the cornerstone of Taiwan’s broader ambition to establish itself as a regional hub for unmanned aerial systems that are “non-red”, or China-free – an initiative backed by a NT$44.2 billion (S$1.8 billion) investment plan by the government through 2030. 

As some countries grow increasingly wary over security concerns surrounding critical technologies from China, which dominates the global commercial drone market, Taiwan seeks to position itself as a trusted supplier of drones free of Chinese components. 

Typically, Taiwan exports dual-use drones – those that can be used for both commercial and defence purposes – as well as components including motors, batteries and cameras. 

While exports currently account for only around 20 per cent of Taiwan’s total drone output, the export share is projected to exceed 50 per cent by 2030, according to the Ministry of Economic Affairs. 

Overall, Taiwan’s drone production capacity is projected to jump to 100,000 units every month by the same year, a seven-fold increase from the current 15,000 units monthly, the ministry added.

“Concerns over cybersecurity and data-security risks associated with Chinese-made products have become widespread globally, creating an opportunity for Taiwan,” said Shu Hsiao-Huang, an associate research fellow at the Institute for National Defence and Security Research (INDSR), a Taiwanese think-tank.

“Taiwan’s strength lies in its highly developed precision manufacturing sector, which is capable of producing many of the key components required for drones, such as motors and engines. This provides a solid foundation for complete drone manufacturing,” he added.

Defence self-reliance

Cultivating a robust domestic drone sector also allows Taiwan to support its own asymmetric defence self-reliance as it faces the threat of an invasion from China, which claims the island as its own territory. 

Lessons from the ongoing conflicts in both Ukraine and the Middle East have demonstrated the critical role of drones in modern warfare, and the need to transition from solely relying on expensive, traditional weapons platforms to also amassing low-cost, mass-producible uncrewed systems.

This is especially true for Taiwan, which cannot match China’s military due to vast disparities in scale, naval capacity, and industrial depth. 

“Drone technology will be extremely important for Taiwan, but not because drones can win a war on their own,” said Harun Talha Ayanoglu, a visiting research fellow at INDSR.

“Their value lies in helping Taiwan offset China’s overwhelming advantages in manpower, platforms and resources,” said the drone expert.

In Ukraine, mass-produced drones integrated with autopilot software have allowed small teams to take out expensive tanks, air-defence systems and communication nodes while keeping personnel out of immediate danger. 

Meanwhile, Iran overwhelmed Gulf air defences by launching swarms of low-cost drones simultaneously from multiple directions, effectively saturating the battlefield. Even though the US and its allies have managed to intercept the vast majority of these drones, the cost imbalance was clear: While Iran’s Shahed-136 kamikaze drones cost between US$20,000 and US$50,000 to manufacture, the highly advanced interceptors needed to shoot them down cost millions of dollars each. 

“There is also a demographic factor – as Taiwan has become a super-aged society, this will over time create challenges for military recruitment and reserve manpower,” said Ayanoglu, on Taiwan’s urgent need to acquire more drones. 

“Unmanned systems cannot replace soldiers entirely, but they can help compensate for manpower constraints while increasing operational effectiveness,” he said.

Taiwan officially became a super-aged society in 2025, which means that over 20 per cent of its population are aged 65 and older. Meanwhile, its total fertility rate in the same year plunged to 0.69, believed to be the world’s lowest.

Hurdles ahead

But even as Taipei has recognised the need to build a more robust drone supply chain, experts noted that there were significant hurdles facing its ambitions – most notably, cost competitiveness.

Taiwan-made drones cost significantly more than Chinese equivalents, often running two to three times higher, and up to 10 times more for specialised military hardware. 

Even Ukraine, which has transformed into a global powerhouse in military drone manufacturing, remains heavily dependent on Chinese components, particularly rare-earth magnets and lithium batteries. 

“Chinese manufacturers enjoy economies of scale that few countries can replicate,” said Ayanoglu. “Taiwan may be willing to bear those costs for national security reasons, but foreign customers may not always reach the same conclusion.”

Taiwanese drones and components also lack battlefield experience.

“Nobody would wear brand-new hiking shoes on a long and demanding hike... The same logic applies to weapon systems,” said Ayanoglu. “Taiwanese drones need real-world use to acquire high-quality feedback about their performance, limitations and reliability.”

Still, Yu from Carbon-Based Technology – which produces delta-wing drones designed for long-range reconnaissance and strike missions, among other products – believes that there is great value in Taiwan’s trusted, secure drone supply chain despite it being a relatively new player. Production lines at the company’s new, much larger facility are expected to be operational by the end of 2026.

European customers, for instance, value not only the end product, but also supply chain transparency and long-term industrial partnerships, she said. 

To that end, Taiwan offers engineering expertise and collaborative technology partnerships that can support long-term industrial resilience, she added.

“What we are seeing is not simply growing demand for drones, but growing demand for trusted and resilient autonomous systems supply chains. That is where Taiwan can play a meaningful role,” Yu asserted.