US defense technology companies are increasingly looking to Taiwan as a critical manufacturing base and supply chain partner, as revealed during a recent Arizona-led trade delegation to Taipei. The mission, which included four emerging defense tech firms, highlights growing bilateral cooperation in aerospace and defense amid rising regional tensions.
The delegation, led by the Arizona Commerce Authority, showcased companies developing specialized technology in areas ranging from subsurface imaging to night vision systems. The visit comes as Taiwan aims to strengthen its domestic defense industrial base while US firms seek reliable supply chain partners outside mainland China.
Zenadrone, an autonomous systems developer, plans to manufacture up to 90% of its drone components in Taiwan as it expands its Asia operations. The company's flagship heavy-lift drone, featuring an 80-pound payload capacity, employs specialized thermal management systems for military and commercial applications, from medical supply transport to precision agricultural spraying. Their expansion strategy focuses on sourcing critical components like specialized batteries, sensors, and circuit boards from Taiwan's established electronics supply chain.
Credit: DIGITIMES
The growing interest in Taiwan's supply chain comes as the US defense industry faces significant production backlogs. Jeffrey Dutton, Commercial Officer at the American Institute in Taiwan (AIT), acknowledged ongoing delays in military shipments to Taiwan, citing "intractable supply chain and labor issues." The situation is further complicated by concurrent demands from conflicts in Ukraine and the Middle East.
Shifting Defense Strategy
The trade mission reflects a broader shift in defense technology priorities. "After what we've seen play out in Ukraine, it's crystal clear that an asymmetric defense posture is far superior," Dutton noted, pointing to Taiwan's US$1.6 billion investment in drone development and research facilities announced in late 2022.
Tony Hu, former US Department of Defense official and ex-Raytheon Taiwan manager highlighted three major Taiwanese defense manufacturers as potential partners: the National Chongshan Institute of Science Technology (NCSIST), Aerospace Industrial Development Corporation (AIDC), and the Armaments Bureau. AIDC, in particular, has established itself globally through collaborations with major aerospace companies including Boeing, Airbus, and Sikorsky.
"Taiwan has over 20 companies manufacturing energy storage devices for drones," Hu noted, emphasizing the island's specialized supply chain capabilities. He also pointed to Taiwan's advanced semiconductor industry and cybersecurity expertise as critical advantages for defense technology partnerships.
Among the visiting companies, Lunasonde presented its novel subsurface imaging technology, which uses very low-frequency synthetic aperture radar(SAR) for applications including critical mineral mapping and subsurface military infrastructure detection. The company plans to launch its first satellite next summer on SpaceX's Transporter-9 mission, with aims to deploy 10 satellites over the next 3-4 years.
Credit: AFP
Lunasonde's technology operates in the low megahertz range (8-10 MHz), distinguishing it from conventional SAR satellites that operate in the gigahertz range. This allows for subsurface penetration capabilities that could serve multiple strategic purposes: mapping critical mineral deposits in challenging-to-reach environments, assessing countries' actual economic reserves, and detecting concealed military infrastructure.
AGM Global Vision, which has grown from a startup in 2019 to generate US$117 million in revenue in 2023, is exploring partnerships for electro-optical engineering talent and components. The company has become a supplier of night vision and thermal imaging devices for both consumer and military markets, with recent contracts including approximately US$50 million in equipment deliveries to Ukrainian forces over the past two years.
Breault Research Organization, specializing in optical engineering software and services, is seeking to expand its presence in Taiwan's educational and research institutions. The company's software is used in developing sensor systems and optical technologies for defense applications.
Market Dynamics
Bilateral trade between Arizona and Taiwan has shown significant growth, with the state's exports to Taiwan increasing 145% from July 2023 to July 2024, while imports from Taiwan grew 130% during the same period, according to the Arizona Commerce Authority.
However, challenges remain. The defense industry faces ongoing supply chain constraints and increasing pressure to accelerate production timelines. "2027 is sometimes talked about as a date by which Taiwan needs to be fully prepared," Dutton said, referring to defense readiness goals.
The delegation emphasized Taiwan's cost-effectiveness as a crucial factor, particularly as the island's authorities balance defense spending with other economic pressures, including subsidized energy costs impacting state-owned enterprises.
The US and Taiwan are planning to strengthen their defense industrial cooperation, with several initiatives including a USA Pavilion at Taiwan's 2025 drone and uncrewed vehicle expo. The growing partnership reflects both sides' interest in developing robust, autonomous defense capabilities while diversifying their respective supply chains.
Credit: DIGITIMES
