Taipei: Taiwanese suppliers are making significant strides in Ukraine's drone supply chain, yet the journey is fraught with challenges, including high costs, production scale issues, and a persistent reliance on Chinese inputs. Researchers at a Taiwan-based think tank highlighted these issues during discussions with CNA.
According to Focus Taiwan, the DSET (Research Institute for Democracy, Society and Emerging Technology) reported that Taiwan exported approximately 139,000 drones in the first quarter of 2026, surpassing the total exports of 123,000 drones for 2025. Many of these drones were destined for Ukraine, routed through Poland and the Czech Republic. Seven Ukrainian firms, out of 61 drone-related companies, were identified as sourcing flight controllers, batteries, motors, and other microelectronics from four Taiwanese companies.
Taiwan's capabilities in microelectronics, semiconductors, and manufacturing present opportunities for expanding its role in supplying advanced drone components, which Ukraine continues to demand. Additionally, Ukraine has shown interest in other Taiwanese technologies, such as fiber-optic cables, imaging payloads, and sensors. However, political sensitivities pose a significant challenge to direct government-to-government cooperation, as overt defense ties with Ukraine could provoke China.
Despite Taiwan's growing presence, the drone manufacturing sector remains dependent on Chinese components. This dependency was underscored when Ukraine secured permission to use part of a 5.9 billion euro tranche of EU-backed defense financing to purchase Chinese drone components. While EU-funded defense purchases typically require sourcing from within the bloc, Ukraine, or approved partners, exceptions can be made when eligible suppliers cannot meet demands.
The ongoing reliance on Chinese components is evident in the drone battery market, as detailed in a DSET report titled "Powering Resistance: Opportunities and Challenges in Localizing Taiwan's Drone Battery Supply Chain." The report noted that at least one Taiwanese manufacturer ships between 5 million and 7 million battery cells monthly for Ukraine's market. Despite this, Taiwan's battery supply chain remains heavily reliant on Chinese inputs.
The report highlighted that while the share of Taiwan-made drones using Chinese battery cells has decreased from around 70 percent to 50 percent, China continues to dominate the production of key materials. Avoiding Chinese materials would require a sustained demand to justify the higher costs of alternatives.
A poll conducted by the Snake Island Institute and the Ukrainian Council of Defence Industry revealed that most Ukrainian manufacturers still import some Chinese components. However, 76.7 percent expressed willingness to abandon Chinese sourcing if competitive alternatives were available.
To enhance Taiwan's production capabilities and qualify for international markets, the DSET recommended standardizing drone batteries, obtaining international certifications, and exploring joint ventures or factories abroad. Samara Duerr, a national security analyst at DSET, emphasized that access to future orders would depend on Taiwanese suppliers' ability to compete with Chinese products on cost, production scale, and delivery time.
"If Taiwanese manufacturers can prove their competitiveness on these factors against Chinese defense products, they have just as much of an opportunity to secure orders," Duerr concluded.
Source: Focus Taiwan