Taiwan - Country Commercial Guide
Defense
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Overview 

The defense market in Taiwan has been steadily increasing in recent years as Taiwan works to bolster its resiliency in the face of geostrategic threats, particularly from across the Taiwan Strait. This, along with lessons learned from Russia’s invasion of Ukraine, has led to intense international interest in military procurement as well as commercial sales opportunities in Taiwan, particularly in the strategically important uncrewed aerial vehicles (UAV) and uncrewed aerial systems (UAS), otherwise known as “drones,” sector.

Military Procurement

Military procurement transactions with Taiwanese entities are governed by Article 104 of Taiwan’s Government Procurement Law (GPL). GPL defines three forms of military procurement: domestic tenders, Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). Military equipment sales from U.S. firms to Taiwanese entities can fall under either FMS or DCS.  

FMS transactions are for sales, normally of lethal weapons or weapons systems, that are arranged by the U.S. military to a foreign counterpart military organization. The FMS export process is managed by the U.S. Department of Defense under the Taiwan Relations Act (TRA). Taiwan’s Legislative Yuan must be notified of FMS tenders exceeding $50 million in total value or $14 million for major defense equipment procurements.  

In DCS transfers, U.S. companies sell directly to Taiwan entities involved in defense technologies and production, most often with U.S. Government permission, especially for any dual-use technologies that fall under U.S. Export Control regulations. All military equipment and supplies with a purchase amount exceeding the designated audit ceiling of NT$30 million ($981,996) for purchases made locally in Taiwan, and NT$18.5 million ($605,565) for purchases from sources outside Taiwan, must be purchased through the Ministry of National Defense (MND). 

There are exceptions to the GPL. If the procurement is for weapons, ammunition, war supplies, or is related to national security or national defense and one of the following circumstances exists, the GPL does not apply: 

  • Where the nation is confronted with a war, in mobilization for a war, or in a war
  • Where the procurement is confidential (Articles 27, 45 and 61 of the GPL may not apply) 
  • Where there is an emergency that may jeopardize an important military mission (Articles 26,

28, and 36 of the GPL may not apply) 

  • Where there is only one supplier invited to tender (the first sentence of paragraph 3 of Articles 26 of the GPL may not apply) 

U.S. companies bidding on official tenders may also qualify for U.S. government advocacy.  The Advocacy Center under the U.S. Commerce Department coordinates U.S. government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of U.S. Commercial Service offices worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts.  Advocacy assistance can take many forms but often involves AIT or U.S. government agencies’ expressing support for the U.S. bidders directly to the foreign government. Consult the Advocacy Center for Foreign Government Contracts for additional information. 

Commercial Drones

Inspired by the use of commercial-grade drones in Ukraine, Taipei is mobilizing its commercial Uncrewed Aerial Vehicle (UAV) and Uncrewed Aerial System (UAS) industries for defense production efforts. Commercial-grade UAVs are faster and cheaper to produce than military-grade drones. The successful completion of reconnaissance, search and rescue, and security patrol missions by these drones in Ukraine has increased international demand for commercial-grade UAVs with defense applications.  

To meet this growing demand, on November 1, 2022, the Ministry of Economic Affairs (MOEA) released a notice on its official website unveiling a pilot program to produce commercial-grade UAVs and UASes with defense applications.  A cross-agency task force including the Taiwan National Science and Technology Council, the Ministry of National Defense (MND), the MOEA, and the National Chung Shan Institute of Science and Technology (NCSIST) was created to lead the program, which focuses on five drone types. In December 2022, the task force selected nine domestic manufacturers to produce UAV prototypes as follows:   

  • Miniature UAVs: Thunder Tiger Group (https://www.thundertiger.com/), GEOSAT Aerospace & Technology (https://www.geosat.com.tw/TW/index.aspx, and CIRC (https://www.coretronic-robotics.com/).  
  • Surveillance UAVs: MITAC (https://www.mitac.com.tw/), CIRC, (https://www.coretronic-robotics.com/) and Qisda. 
  • Targeted Acquisition Capabilities UAVs: MITAC (https://www.mitac.com.tw/) and Strong Engineering Consulting Co., Ltd.   
    • Land-based Reconnaissance UAVs: Evergreen Aviation Technologies Corporation (https://www.egat.com.tw/en/) and GEOSAT Aerospace & Technology https://www.geosat.com.tw/TW/index.aspx
  • Shipborne UAVs: FairTech Corporation (https://www.farcorp.com.tw/en) and Taiwan UAV Corporation (https://www.uaver.com/) 

On March 21, 2023, MOEA issued a press release announcing to offer R&D funding to these companies, which are expected to produce prototypes by the end of July 2023.  After testing is completed, mass production is set to begin in 2024.  

For the UAS program, NCSIST selected four local companies to build active and passive radars and drone interference radars. NCSIST plans to transfer defense technology to firms to co-build radars. By UAS type, the selected manufacturers include:  

  • Active Radar UAS:  Tron Future Tech,and Raser Technology Co., Ltd.  
  • Passive Radar UAS: Jet Hand TechImage removed.nology Co., Ltd. and Iwavenology Co., Ltd.  (https://www.iwavenology.com/)
  • Drone-interference Radar UAS: Jet Hand Technology Co., Ltd (https://www.twincn.com/item.aspx?no=50819907). and Tron Future Tech (https://tronfuture.com/)  

With the world’s leading semiconductor manufacturing sector and its prowess in artificial intelligence, Taiwan is well positioned to incubate a commercial drone industry poised to be a leader in the production of commercial-grade drones for defense applications. 

Local industry is looking for licensing, co-design, and co-production with U.S. technology companies, particularly in infrared cameras; high frequency, long-range communication modules; military radio transmission technology; and drone flight control software.   

Upcoming Defense Fair

The 2023 Taipei Aerospace and Defense Technology Exhibition (TADATE), Taipei, was held in September, 2023. Held every two years, TADTE is Taiwan’s sole trade event for military and civilian aerospace products and technology. The date for TADATE 2025 is to be announced.