When faced the complexity of ground law politics, Taiwan's defense expenditure in 2023 was approximately NT$415.1 billion, an increase of about 11% compared with the previous year. The budget amount exceeded 647 billion yuan in 2024 (about 2.45% of GDP), and even by 2025, it will increase to about 801 billion yuan, or about 3% of GDP. With the improvement of national defense budget, it has driven the development of Taiwan's overall military industry.
The government promotes national defense independence, and aerospace industries enter international supply chain
In fact, the government’s “5+2 Industry Innovation Plan” and the subsequent “Six Strategic Industry” policy since 2016 have brought about the independence of the people’s participation and national defense autonomy, forming a development pattern of military-civilian integration. Then in 2024, the Executive Yuan Na Army will focus on promoting the manufacturing of unmanned aircraft, aircraft and ships as one of the "five major credit industries". Among them, the National Science and Technology Association and the Executive Yuan jointly established the "Advanced National Defense Technology Group", standardized the creation resources to support the National Science and Technology Association and the Chinese Academy of Sciences to conduct forward-looking national defense science and technology such as space and AI, and established the "Asian Non-Human AI Innovation Application R&D Center" to be the core of the non-Human Machinery Industry settlement and lay out technical and business applications.
And in the above foundation, Taiwan's military industry has gradually entered the stage of mature division of labor. As the most representative aerospace industry, it is in the key stage of transformation from traditional OEM (OEM manufacturing) to ODM (Design manufacturing) and system integration. According to the Ministry of Economic Affairs’ Aerospace Industry Development and Promotion Group, the total value of the entire aviation industry will reach about NT$146.648 billion in 2024. The National Development Committee (NDC) Industry Human Resources Supply and Demand Information Network also pointed out that the annual synthetic growth rate in the past decade is about 3.35%. Taiwan has established stable cooperative relations with international aerospace manufacturers such as Boeing, Airbus, Baddy, GE, and Pratt & Whitney, becoming a chain supply ring among them.
At present, Taiwan has established a relevant chain of civil aviation products supply systems, with the main industrial settlements concentrated in Taichung, Tainan and Kaohsiung, forming a complete chain of industry from raw materials, processing, assembly to testing. In terms of market demand, the global aerospace market continues to grow, and the order pressure of Boeing and Airbus has reached nearly 15,000, bringing a significant opportunity to Taiwan's supply chain. Moreover, in order to enhance competition, Taiwan’s aerospace industry needs to continue to invest in high-level process technology, such as tempering manufacturing, composite material application, etc., to enhance the additional value of the product. At the same time, obtaining more international certifications (such as NADCAP) is the key to expanding international market share. With the development of industry, the demand for professional talents has increased, and the cultivation and introduction of related talents needs to be strengthened.
Taiwan's technological advantages layout and testing tools and strong-solid electronics industry In addition to the aerospace industry, Taiwan's military industry is actively developing core areas in sensors, system integration and strong solid electronics. In terms of strong solid electronics, it refers to electronic equipment that can operate in an extreme environment, with the ability to resist high temperature, low temperature, humidity, salt, shock, shock, and shock, and comply with military regulations, aerospace or industrial safety standards (such as MIL-STD, IP67, DO-160). This type of equipment is very important in the fields of national defense military use (such as unmanned machine controllers, radar modules), disaster response, energy infrastructure construction, industrial 4.0 and other fields. Taiwan has the advantages of developing strong solid electrons in semiconductor and electronic manufacturing, military technology foundations and industrial computer chains.
As for military sensors, because they are modern weapon systems and "eyes, ears, and nerves" for field monitoring, they determine the goal identification, precise guidance and warning capabilities of the combat system. Covering types such as electromagnetism spectrum sensing (rapida), thermal imaging/optical imaging (EO/IR), inpatient navigation (IMU/INS), and audio sensing (automatics). In the above technical fields, Taiwan has the potential for development in the field of military sensors through precision manufacturing capabilities (MEMS, CMOS), system integration energy, and the cooperation foundation between the Chinese Academy of Sciences and the industry chain. The challenge is the import of core materials, the standardization of military specifications, and talent cultivation.
Also, in terms of system integration, this field is the key capability to integrate different subsystems into a complete combat platform. Taiwan has demonstrated the power of system integration in the fields of flying systems (Xiongfeng 3, Tiangong 3), electronic warfare system, boat warfare system (Tajiang 3), diving country-made, as well as unmanned loads (Shiyu II unmanned aircraft, multi-rotor AI unmanned aircraft) and C4ISR system (Lingwang War Situation System). This capability comes from the strong foundation of ICT technology, military-civilian cooperative industry link, modular design and guidance from the Chinese Academy of Sciences.
Finally, in terms of Radar and communication, Taiwan’s private enterprises are becoming increasingly active in this field, especially by miniaturizing Radar technology (Radar semiconductor), integrating SAR Radar two-purpose unmanned machine platforms for development of military and civilians, deepening high-frequency microwave communication technology and extending to 5G/low satellites, and developing millimeter wave active antenna modules. These developments have enhanced Taiwan's competitiveness in related fields.
In order to promote the development of aerospace and various military industries, the Taiwan government has implemented the "Aerospace Industry Leading Aviation Plan" to encourage private enterprises to participate, and to enhance overall competitiveness through technical transfer and cooperation. For example, Hanxiang Company shared its knowledge on aerospace composite materials processing with enterprises such as Joweijin, Public Security, and Mengli to help them develop domestic equipment. The dual-use strategy is an important direction to encourage the development of modules that can be used in the fields of national defense, aerospace, smart cities, etc.. In the future, it is expected to use national-level platforms to consolidate military technology, establish standards and verification mechanisms, and use government-led policy and export thrust to create a strategic industry with "high added value, low quantity and high quality".
Although Taiwan's aerospace and military industry have made certain progress, it still faces challenges. Technical upgrades still require continuous investment in high-level processes, and core materials and special processes may still be imported. Obtaining more international certifications and building foreign market channels is also a challenge. The demand for talents has increased but the cultivation has been insufficient. In addition, it strengthens product price competition, inconsistent international standards, and the complexity of cross-domain technology integration (such as AI, 5G, and security). In the future, if Taiwan can effectively integrate the high-tech manufacturing capabilities of the Chinese Academy of Sciences and the civilians, establish a dedicated technical platform and domestic standards, and promote military civilian application and export, it will have the opportunity to play a more critical strategic role in the global aerospace and national defense supply chain.
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