Taiwan - Aerospace and DefenseTaiwan - Aerospace and Defense
Overview
Taiwan’s 2019 defense budget amounted to $11.21 billion, approximately 2.16 percent of GDP, with a year-on-year growth of 5.6 percent. The previous year, Taiwan spent $5.8 billion dollars on defense equipment purchases including Foreign Military Sales (FMS), Direct Commercial Sales (DCS), and domestic tenders. Traditionally, Taiwan’s military and civil aerospace market has been heavily oriented toward U.S. technology and products. Due to its politically-isolated international status, Taiwan’s Air Force is composed of mostly U.S.-made fighter jets.On August 20, 2019, U.S. President Donald Trump approved an FMS to Taiwan of 66 F-16 Block 70 fighter jets for an estimated total of $8 billion. The F-16 Block 70 is the most advanced variant of the F-16 Fighting Falcon multirole fighter and will help boost Taiwan’s self-defense capabilities. This sale of brand-new F-16V jets will also include F110 General Electric Engines, Link-16 Systems, Improved Programmable Display Generators, APG-83 Active Electronically Scanned Array Radars, Modular Mission Computers, LN-260 Embedded GPS/INS, and M61 Vulcan 20mm Guns. On July 8, 2019, the United States approved an FMS to Taiwan of M1A2 Abrams Main Battle Tanks and Stinger Missiles for a total value of $2 billion. The Department of State has formally notified Congress of its approval. Furthermore, on April 15, 2019, the United States announced a possible FMS to Taiwan of F-16 Pilot Training and Management and Logistics Support for an estimated $500 million.
On September 24, 2018, the United States announced its approval of a Foreign Military Sales Order (FMSO) to Taiwan with an estimated value of $330 million. The FMSO would provide funds for blanket order requisitions for stock replenishment supply of standard spare parts for F-16, C-130, F-5, Indigenous Defense Fighter (IDF), and all other aircraft systems and subsystems.
Since 2008, U.S. administrations have notified the U.S. Congress of more than $32 billion in arms sales to Taiwan. Under the Taiwan Relations Act, the United States is committed to providing Taiwan with defense articles and services to enable Taiwan to maintain self-reliant defense capability. It is anticipated that the Taiwanese defense sector will continue to offer such opportunities to the United States.
Defense Procurement Source: Taiwan Ministry of National Defense
U.S. Defense Exports to Taiwan Unit: USD thousands
| 2015 | 2016 | 2017 | |
| Value | 19,676,000 | 1,023,000 | 589,000 |
| Ranking as a U.S. Export Market | #2 | #7 | #11 |
Indigenous Defense Industry
In recent years, Taiwan has been aggressively pursuing defense self-sufficiency by developing its indigenous defense industry. Taiwan has successfully developed its missile systems, rocket artillery, surface ships, fighter aircraft, armored vehicles, and unmanned aerial vehicles (UAVs). Currently, Taiwan is moving on a variety of ambitious, new advanced weapons platforms, including a plan to create Taiwan’s first indigenous submarine fleet. The National Chung-Shan Institute of Science and Technology (NCSIST), the Aerospace Industrial Development Corporation (AIDC), and the Taiwan International Shipbuilding Corporation (CSBC) are Taiwan’s major aerospace and defense technology R&D and production organizations. In addition, Taiwan has about 200 small- and medium-sized aerospace and defense suppliers.Commissioned by the Taiwan Air Force, the NCSIST and AIDC are building 66 Advanced Jet Trainers (AJT) which are based on F-Ck-1 IDF to replace 29 F-5E/F Tiger II fighters and 48 AT-3 AJTs. The budget of the AJT program totals $2.28 billion. The first prototype is scheduled to be completed in 2020 and the full fleet is estimated to be delivered by 2026.
Civil Aerospace Sector
On the commercial side, 65 percent of Taiwan’s aircraft fleet is comprised of Boeing planes, 80 percent of which are powered by American-made engines. In 2018, total U.S. aerospace exports to Taiwan exceeded $2.8 billion dollars and comprised about 1.84 percent of U.S. aerospace exports overall. That year, Taiwan was ranked the United States’ 13th largest aerospace exports market by the U.S. Census Bureau. Taiwan has significant competitive advantages in the aerospace sector, including strong manufacturing and supply chain expertise. The Taiwan aerospace market continues to offer excellent prospects for U.S. products, services, and technology because its civil and military aircraft fleets consist largely of American aircraft.Aerospace Market Unit: USD thousands
| 2016 | 2017 | 2018 | 2019 (est.) | |
| Total Market Size | $6,777,100 | $7,388,184 | $7,998,46 | $9,400,000 |
| Total Local Production | $3,106,536 | $3,634,807 | $3,976,688 | $4,800,000 |
| Total Exports | $298,993 | $319,561 | $384,587 | $400,000 |
| Total Imports | $3,969,557 | $4,072,938 | $4,406,345 | $5,000,000 |
| Imports from the U.S. | $3,303,900 | $3,100,900 | $2,755,500 | $3,000,000 |
| Exchange Rate: USD1 | 32.40 | 29.65 | 30.59 | 30.86 |
Source: Committee for Aviation Industry Development, Ministry of Economic Affairs; Bureau of Foreign Trade, Ministry of Economic Affairs; U.S. Census Bureau, U.S. Department of Commerce
Leading Sub-Sectors
- Aircraft
- Aircraft engines and parts
- Aircraft precision parts and components
- Aircraft cabin equipment
- Avionics systems, including communication, navigation, identification and safety
- Airport ground handling equipment and services
- Cybersecurity
- Missiles and space vehicle parts
- Parts and components for maintenance, repair and overhaul
- Radar, surveillance devices
- Raw materials
- Unmanned Aerial Vehicles (UAV)
Web Resources
Trade Shows
Relevant Authorities
- Bureau of Foreign Trade (BOFT)
- Committee for Aviation Industry Development (CAID)
- Ministry of National Defense (MND)
- Taipei Aerospace Industry Association (TAIA)
- Taiwan Defense Industry Development Association (TWDIDA)
- U.S.-Taiwan Defense and National Security