Transitioning EV tech to drones, Taiwan's self-sufficiency at 70%

Chloe Liao, Taipei; Vyra Wu, DIGITIMES Asia 0


The initial challenge in Taiwan's drone industry stemmed from its small domestic market. It wasn't until the outbreak of the Russia-Ukraine war that drone technology gained global attention, both for military and civilian applications.

Taiwan, influenced by geopolitical factors, now recognizes drones as an emerging strategic industry, as highlighted by Max Lo, Chairman of Geosat. He emphasizes the need for Taiwan to swiftly establish an independent supply chain. Currently, Taiwan achieves a self-sufficiency rate of around 70–80% in drone production. Taiwan's military drone development primarily falls into three categories: mil-spec, commercial-grade, and drone defense systems. In the commercial sector, Taiwan is almost entirely self-reliant, while in the military sector, the self-sufficiency rate is approximately 70–80%.

Lo emphasizes that critical drone components include communication systems and sensors. Some of these systems are sourced from the US and France, at costs of over NT$5 million. Achieving cost-effectiveness for mass production is a challenge, and Taiwan must establish its production capabilities. Additionally, drone control systems require security considerations. Lo points out that the control system is like the drone's brain and cannot rely on foreign systems. This aspect involves high-computing and low-power consumption chips, an area where Taiwan's semiconductor capabilities are already competent. Given Taiwan's industrial capacity, there are significant opportunities to enter this market.

To ensure long-distance communication capabilities, Taiwan can leverage next-generation 6G technology and LEO satellites. Numerous Taiwanese communication companies are investing in this technology. Currently, Geosat is collaborating with K-Best Technology in this regard.

Long-distance drone flights demand lightweight, high-strength aerospace-grade composites. Domestic materials, such as those from Formosa Plastics, can fulfill these requirements. Formosa Taffeta's carbon fiber fabric has successfully been used in domestically produced Albatross II drones. Moreover, automatic target recognition in drones relies on powerful on-board edge computing and AI algorithms, areas of expertise in Taiwan's ICT industry.

However, Taiwan's drone self-production faces a challenge in the power subsystem. Compared to engines for manned aircraft, Taiwan's drones have a higher potential for achieving short-term self-sufficiency in engine production. Geosat has partnered with NCKU Electric Motor Technology Research Center, leveraging Taiwan's successful experience in developing the EV supply chain. They are actively working on domestically manufactured universal motors for drones, which have shown an 8% performance improvement compared to mainstream foreign-brand motors currently available.

In the commercial sector, Taiwan's national drone team has united over 40 domestic supply chain companies, including the major electronics manufacturers. Lo emphasizes that large-scale EMS factories in Taiwan have experience in producing consumer electronics and can use this experience to establish automated mass production capabilities for drones in the future. In recent years, the electronics industry has been transitioning, focusing on specialized industries to move away from the low-margin era. Among these, automotive and military industries have gained prominence. According to aerospace supply chain sources, gross margins for general military products are at least 50%.

Drones have emerged as a strategic industry due to their potential to reshape warfare systems. Lo cites Ukraine as an example, where drone tactics consume around 4,000 drones on average per month. Even with U.S. support, it takes two months for them to replenish their supplies. Ukraine's indigenous defense and military-industrial complex have made significant contributions.

In Taiwan, the production cycle for one military aircraft could extend to 20 years with high costs. However, many industrial products, such as millimeter-wave radar and visual sensors for EVs, can be readily adapted for drone production, reducing costs from hundreds of millions to hundreds of thousands or even tens of thousands. Taiwan's advanced chip manufacturing capabilities and extensive precision manufacturing outsourcing system should be harnessed to create a reliable military supply chain.