By AFP | 2025-09-22

TAIPEI, Taiwan -- Taiwan is set to jointly manufacture a missile and an underwater drone with a US defense firm for the first time, a move that highlights Taipei's urgent push to bolster its defenses against China.

This landmark partnership was announced during the Taipei Aerospace and Defence Technology Exhibition, which ran from September 18 to 20 and also featured global arms makers competing to supply battle-tested counter-drone systems.

Taiwan's state-run National Chung-Shan Institute of Science and Technology (NCSIST) and US company Anduril Industries signed two key agreements. The first, reached earlier this year, establishes a partnership for the joint production of Anduril's low-cost Barracuda-500 autonomous cruise missile. The second, finalized September 18, expands this cooperation to include an underwater drone.

"These are Taiwan's first such agreements with a foreign company," said NCSIST President Li Shih-chiang. "Our purpose is if in the warfare, even the blockade, we can manufacture every weapon we need to protect ourselves."

Alex Chang, Anduril's head in Taiwan, confirmed the partnership would focus on "mass producibility" and sustainable local supply chains. According to NCSIST, it will take 18 months to establish the full production line for the Barracuda-500, which will eventually use only Taiwanese components.

Counter-drone race

The exhibition underscored the urgent threat of drones, a key lesson from the war in Ukraine. Taiwanese officials fear that China could use similar swarms of cheap unmanned aerial vehicles to overwhelm the island's defenses.

"Everyone's worried about [drone] swarms, right?" said Jonathan Lau, a regional director with British defense giant BAE Systems. He noted that Taiwan's Defense Ministry has shown interest in BAE's Advanced Precision Kill Weapon System, designed to shoot down drones at a lower cost.

Foreign firms were eager to showcase their battlefield-tested systems.

"We'd love to penetrate the Taiwanese market," said Eloi Delort of French artificial intelligence (AI) start-up Alta Ares, whose software has been deployed against Russian drones. "I think Taiwan is facing many threats here and they could use our technology either to defend against drones or to do military surveillance."

Domestic companies are scaling up their efforts. Tron Future Tech, a Taiwanese firm whose AI-based counter-drone systems are deployed in both Taiwan and Ukraine, has seen its workforce grow sixfold in two years. "Anti-drone business has contributed to more than half of our revenue," company specialist Misha Lu told AFP. Tron now produces over 100 systems a month and is considering manufacturing abroad.

For Taiwan, cost efficiency is critical. "Sending up F-16s to fire million-dollar missiles at a $10,000 drone is not sustainable," said Rupert Hammond-Chambers, president of the US-Taiwan Business Council. Scalable, low-cost defenses will be essential in any future conflict, he said.

Record spending

The exhibition coincided with a legislative debate over Taiwan's budget. A senior lawmaker told AFP earlier in September that the Defense Ministry is drafting a special allocation of up to 1 trillion TWD ($33 billion) over seven years to strengthen the island's defenses.

"We want to build a complete defense ecology to defend our country," said Wang Ting-yu, a legislator from President Lai Ching-te's Democratic Progressive Party.

He described the initiative as a "huge" upgrade aimed at integrating Taiwan's air defense systems, boosting radar and sensor technology and expanding ammunition production.

Su Tzu-yun, a military analyst at the Institute for National Defense and Security Research, highlighted the threat posed by Chinese warships patrolling near Taiwan, which could launch hundreds of missiles in minutes.

"Beyond the threat of drones, China currently patrols the waters around Taiwan with about eight warships, each carrying roughly 60 vertical launch system cells," he said.

This proposed budget would be in addition to Lai's plan to raise annual defense spending in 2026 to 949.5 billion TWD, or more than 3% of GDP, with a goal of reaching 5% by 2030. While the final figure still requires parliamentary approval, bipartisan support is crucial, say officials.

The Taipei exhibition showcased how Taiwan is working with international partners while simultaneously expanding its domestic industry. "Our purpose is if in the warfare, even the blockade, we can manufacture every weapon we need to protect ourselves," NCSIST's Li said on the sidelines of the exhibition.