Taiwan - Country Commercial Guide
Aerospace and Defense

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-13


The aerospace industry is strategic for national development due to its industrial interdependence and cooperation across multiple sectors. Foreign procurement, indigenous jet trainer production, and international cooperation have driven the growth of the market.  The domestic aerospace and defense industry boasts design and development capabilities; however, technologically advanced equipment from the U.S. is still needed and coveted, presenting business opportunities in the coming years for U.S. firms. 

In 2020, the commercial aerospace sector suffered enormous financial hardship because of the COVID-19 crisis.  Taiwan’s major airlines, China Airlines and EVA Airways, endured a 70% drop in revenue compared with 2019. On the manufacturing side, Taiwan suffered an average of 40% reduction in overall production.  Defense contracts provided some hedging for Taiwan aerospace suppliers.  In Taiwan, the military aerospace sector market size and demand are currently outpacing the commercial side, at least until the overall aerospace and related sectors recover from the impact of the pandemic.

Defense Aerospace

For 2021, Taiwan’s defense budget is projected at NT$361.7 billion. According to the Directorate-General of Budget, Accounting and Statistics (DSBAS) Chu Tzer-ming, the defense budget for fiscal 2022 is estimated to grow by at least NT$10 billion (US$357.1 million) or 2.7 percent, which is consistent with the average GDP growth over the past 3 years. The defense budget would have been higher if it reflected the already approved special budget allocated for the purchase of 66 F-16 Block-70 fighter jets.  The budget of the F-16 jets is up to US$8 billion.  After the delivery of the newly procured F-16 fighter jets by 2026, the Taiwan Air Force will rank as one of the largest fleets of F-16s in the region, with over 200 F-16 fighters in operation.

U.S. arms sales remain crucial to Taiwan’s security.  Since 2019, the U.S. Government has notified Congress of more than US$17.33 billion in arms sales to Taiwan. In addition to F-16V jets, the major arms sales include MK-48 Mod 6AT, PAC-3, SLAM-ER, HIMARS, F-16 MS110 Recce Pods, Harpoon Coastal Defense Systems, M109A6 howitzers, and possibly MQ-9B, amongst others.  These sales demonstrate American policy towards Taiwan, emphasizing platforms that enhance Taiwan’s defensive posture and illustrate Taiwan continued process to modernize its military capability. With the rising tension across the Taiwan Strait, it is expected that Taiwan will further expand this capability in the coming years. 

Taiwan is hitting its stride in its indigenous aerospace and defense industry, developing critical advanced defense technologies and integrating supply chains to produce new weapon systems, next-generation fighter aircraft, new naval vessels, ICE assets, precision-guided missiles, communications, underwater detection, submarines and intelligent unmanned aerial and submersible vehicles. Besides, Taiwan aims to increase production of several missile systems, including the surface-to-air Sky Bow III and the hypersonic anti-ship Brave Wind III, a radar-guided air-to-air missile. 

Local production

Taiwan has over 180 small and medium-sized aerospace manufacturing companies.  About 60% of the local production capability is in Maintenance, Repair and Overhaul (MRO) and the remaining 40% in manufacturing (18% military and civil 22%).  There are roughly 45 local aero companies manufacturing aerostructures and components, 30 firms making engine parts, 30 in the manufacturing of interior parts, 22 in avionics, about 15 engaged in unmanned aerial system (UAS), and 25 firms are in the MRO business. 

AIDC is Taiwan’s major defense and commercial aerospace manufacturer, accounting for 60% of Taiwan’s aerospace production.  AIDC, supported by a team of over 118 local subcontractors and several U.S. firms, has built 2 Advanced Jet Trainers (AJT), a twin-engine subsonic aircraft powered by the Honeywell F124 engine for the Taiwan Air Force. According to its timetable, AIDC plans to build a total of 66 jet trainers by 2028 with a budget of over US$2.28 billion. The spillover effect of localized production and the maintenance of these military aircraft programs will benefit the civil sectors and is expected to create substantial long-term benefits for Taiwan aerospace and defense companies.

Besides making the AJT, AIDC has signed a strategic cooperation alliance with Lockheed Martin to develop Taiwan into an MRO hub for Taiwan’s and the region’s F-16 fighter jets. AIDC has obtained Lockheed Martin’s certification to manufacture 23 F-16 components.

Taiwan Aerospace and Global Market (2017-2019)  Unit: USD thousands





2021 (Estimated)

Total Market Size





 Local production  





Total Exports





Total Imports





Imports from the U.S.





Exchange Rate:  USD1





Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

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.

Space Industry

Taiwan is stepping up efforts to tap into the global aerospace market with a focus on developing Low Earth Orbit (LEO) satellites. Following the enaction of Taiwan’s first Space Development Promotion Act in May 2021, the Ministry of Science and Technology (MOST) announced it would allocate US$145 million to launch its first LEO communications satellite in 2025.  About 10 local companies, including Microelectronics Technology Inc., WIN Semiconductors Corp., and Kinpo Electronics are providing components and ground-based reception equipment for Space X.  The MOST’s goal is to help integrate Taiwan into the LEO satellite supply chain.  Taiwan has also appropriated US$838.8 million to launch one satellite per year from 2019 to 2028 to serve as high-tech tools for national security and environmental monitoring.  In case of natural disasters, these satellites will be able to provide real-time imagery and rapid tracking of safety conditions on the ground in response to changes to the environment. 

Airport Projects

With a land area of 22,370 square miles, Taiwan has four international airports, and 13 regional and military airports.  The island has the highest density of airports in the world.  Pre-COVID-19, Taiwan had 96 international airlines operating 326 flights routes that connected 150 cities and Taiwan airports handled a record-setting 72 million passengers.  To meet future demand, a third terminal at the Taoyuan International Airport (T3 Project) is under construction, with a total budget exceeding US$3.1 billion.  A third runway will be built to accommodate larger aircraft.  Based on construction scale and investment costs, the T3 Project is the single largest construction project in Taiwan.  Currently, Taiwan is continuing to upgrade its airports’ communication, navigation and surveillance systems, and air traffic management.  The Air Navigation and Weather Service (ANWS) under the CAA is working to install Taipei FIR Next Generation Air Traffic Management System (ATMS).  These developments offer new opportunities for U.S. businesses to supply airport equipment and services in Taiwan.


Trade Shows

2023 Taipei Aerospace and Defense Technology Exhibition, Taipei, August 2023 (date TBD)

Held every two years, TADTE is Taiwan’s sole trade event for military and civilian aerospace products and technology. 

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

U.S. firms interested in learning more about the aerospace and defense market and seeking to expand their export opportunities to Taiwan are encouraged to contact CS Taiwan Commercial Specialist Wendy Tien at Wendy.Tien@trade.gov .