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: 2022-09-15


The aerospace industry is strategic for Taiwan’s development due to its cross-sectoral interdependence and cooperation. 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 United States is still needed and coveted, presenting business opportunities in the coming years for U.S. firms. Since 2020, the commercial aerospace sector has suffered enormous financial hardships because of the COVID-19 crisis.

Taiwan’s major airlines, China Airlines and EVA Airways, endured a 70 percent drop in revenue in their passenger business, but their cargo business helped buttress their bottom lines against these substantial losses. Taiwan’s aerospace manufacturing side, because of the cancellation of international orders, suffered an average of 40 percent reduction in overall production. However, defense contracts provided some hedging for Taiwan aerospace suppliers, which often produce both commercial and defense components. In Taiwan, the military aerospace sector market size and demand are currently outpacing the commercial side and will continue to do so until the overall aerospace and related sectors recover from the impact of the pandemic.

Defense Aerospace

On August 25, 2022, Taiwan proposed a budget of $17.3 billion in defense for 2023, a 14.9 percent increase. If the special defense fund is included, the total military budget is estimated to reach $19.5 billion. The budget is now with the Executive Yuan for approval, where it is often reduced.

U.S. arms sales remain crucial to Taiwan’s security. From 2019 to August 2022, the U.S. Government has notified Congress of more than US$17.8 billion in arms sales to Taiwan. In addition to F-16V jets, major arms sales since 2019 included F-16 Block 79, MK-48 Mod 6AT, PAC-3, SLAM-ER, M1A2T Tanks, HIMARS, F-16 MS110 Recce Pods, Harpoon Coastal Defense Systems, Field Information Communication System, MQ-9B, spare parts for tanks and combat vehicles, plus technical assistance, among others. These sales reflect American policy towards Taiwan, emphasizing platforms that enhance Taiwan’s defensive posture and illustrate its commitment to continue modernizing its military capability. With rising tensions 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 to integrate supply chains and produce new weapon systems, such as next-generation fighter aircraft, new naval vessels, ICE assets, precision-guided missiles, communications, underwater detection, submarines, and intelligent unmanned aerial and submersible vehicles. Furthermore, 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

There are about 180 manufacturers and 60,000 aerospace industry-related employees in Taiwan. About 60 percent of the local production capability is in Maintenance, Repair, and Overhaul (MRO) and the remaining 40 percent in manufacturing (18 percent military and 22 percent civil). There are roughly 45 local aerospace companies making aerostructures and components, 30 firms manufacturing engine parts, 30 in interior parts, 22 in avionics, and about 20 engaged in unmanned aerial systems. Taiwan’s aviation industry has successfully cut into the global supply chain in the fields of airframe, engine casting, turbine blades, aircraft fasteners, composite material structure, air cargo containers, cockpit instrument panels, and the conversion of passenger airlines to cargo aircraft.

The pandemic wreaked devastating losses across the global airline and aviation industry. Likewise, all aviation subsectors in Taiwan reported losses in international orders in 2019-2021, but they largely survived by their efforts in support of Taiwan’s indigenous military programs.

AIDC is Taiwan’s major defense and commercial aerospace manufacturer, accounting for 60 percent 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 sector 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. AIDC is also currently working with the National Chung Shan Institute of Science and Technology to make preliminary R&D designs for Taiwan’s next-generation fighter jets.

Through these indigenous aircraft production programs, it is expected Taiwan will continue to drive growth in the aviation industry. Export opportunities available to U.S. companies include advanced aviation manufacturing technologies and equipment, composite material technologies, maintenance, repair and overhaul and base oper ation, aviation schools, unmanned aerial vehicle development and manufacturing, and innovative applications and services.

Table: Taiwan Aerospace and Global Market (2019-2022) Unit: USD thousands







Total Market Size





Local production





Total Exports





Total Imports





Imports from the U.S.




$3, 640,000

Exchange Rate:






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.

The following sub-sectors provide good business opportunities for U.S. suppliers.

Leading Sub-Sectors for U.S. suppliers

  • Aircraft
    • Aircraft engines and parts
    • Aircraft precision parts and components
  • Aircraft Cabin equipment
    • Avionics systems, including communication, navigation, identification and safety
    • Cybersecurity
    • Missiles and space vehicle parts
    • Parts and components for maintenance, repair and overhaul
    • Radar devices
    • Unmanned Aerial Vehicles and counter UAV.

The New Commercial Space Industry

Space has become a realm for fast-growing competition from around the globe. After 30 years of development, Taiwan has developed the complete infrastructure and advanced capabilities for the space sector. In January 2022, Taiwan started implementing the Space Development Act. This Act has laid an important legal foundation for the space industry in Taiwan by providing a basis for the public and private sectors to develop more forward-looking technologies. In April 2022, Taiwan passed the National Space Center Establishment Act. Under the new act, the National Space Promotion Organization (NSPO) will be upgraded to a non-department public body directly under the National Science and Technology Council, will be responsible for managing Taiwan’s space industry and will exercise public authority regarding space- related matters. Furthermore, the NSPO will have greater budget and authority to integrate resources from industry, government, academic, and research sectors across Taiwan and to enhance international cooperation programs.

The NSPO is working on “the National Space Technology Long-Term Development Program” with a budget of roughly $838.8 million to launch ten satellites from 2019 to 2028. Taiwan’s FORMOSAT-8 program is the top priority mission for the NSPO. It is the first initiated remote-sensing satellite program with a generic bus platform to serve as the common platform for all satellite missions in this long-term space program. The FORMOSAT-8 program is developing six high-resolution optical remote sensing satellites with a resolution of 1 meter. These satellites will be deployed in a sun-synchronous orbit to form a constellation. The first and second satellites of FORMOSAT-8 are scheduled to be launched in 2024 and 2025.

An important next step for Taiwan’s space industry is to develop space-grade electronic components that can pass high-energy radiation testing. Taiwan aims to develop over 60 percent of its electronic components by 2024. About ten major local companies, including Microelectronics Technology Inc., WIN Semiconductors Corp., and Kinpo Electronics are providing components and ground-based reception equipment for leading international space companies. Taiwan is aggressively developing a Low Earth Orbit satellite supply chain.

The small but fast-growing new space market offers opportunities for U.S. suppliers in areas such as satellite launch services, imaging, training, and application services.

Trade Shows

2023 Taipei Aerospace and Defense Technology Exhibition (TADATE), Taipei, September 14-16, 2023. 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.