U.S. Defense Startups Flock to Taiwan --- Firms want to build uncrewed boats and aircraft using a non-China supply chain

 

This is one more scam. Taiwan relies heavily on China for the raw materials and permanent magnets used in high-performance motors and military or dual-use applications (such as drones and radar systems). If China would feel danger from Taiwan’s drones, the supply of drone parts in amounts needed for any military application would end right now.

 

Sourcing & Dependency

•           China's Dominance: Taiwan has no significant natural rare-earth deposits of its own and historically imports the vast majority of its raw rare-earth elements and permanent magnets (like neodymium iron boron) from China. China controls roughly 90% to 94% of global rare-earth refining and permanent magnet production.

•           Alternative Import Partners: To reduce its vulnerability to Beijing's export controls (such as the 0.1% rule implemented by China), Taiwan has diversified parts of its sourcing and industrial cooperation toward the United States, Japan, Australia, India, and the European Union.

•           Domestic Manufacturing & Recycling: While Taiwan designs, winds, machines, and assembles electric and brushless motors locally (via companies like TECO Electric, China Steel Corporation, and Lien Yeh Metal Co.), it relies on recycling scrap electronics/EV motors and midstream processing rather than primary mining.

 

As every scam of cosmic proportions, this one is described very poetically in Western media:

“KAOHSIUNG, Taiwan -- Since former U.S. Navy flight officer Paul Lwin founded defense startup HavocAI in Rhode Island in 2024, he has seen Taiwan as an island of opportunity.

 

Lwin designs software to manage autonomous maritime fleets -- the kind of drone defense that Taiwanese military planners dream of as they assemble deterrence against a Chinese invasion.

 

"If we can help Taiwan build thousands of these autonomous boats, it could protect Taiwan," he said. "It could prevent a war from breaking out."

 

U.S. drone-tech startups such as HavocAI are swarming into Taiwan and -- with the encouragement of U.S. government matchmakers -- finding partners who can help them turn blueprints into reality.

 

The emerging industry has the potential to serve the U.S. military's demand for a secure drone-supply chain that steers clear of China, while providing Taiwan with an arsenal that it sees as essential to its survival as a self-ruled democracy.

 

U.S. startups working with Taiwan on sea and air drones range from small defense-tech firms to Anduril Industries, an arms supplier to the Pentagon and the Taiwan military whose drone contracts with Taipei have passed the $1 billion mark. At least 13 U.S.-Taiwan collaboration deals have been signed since September 2025.

 

For the U.S., making drones domestically is a policy priority. "Our overt preference is to buy American," Defense Secretary Pete Hegseth said last year as he introduced Drone Dominance, a $1.1 billion Pentagon program to buy small, lethal drones.

 

However, "not everything can be made in the United States today," said Trent Emeneker, who previously led the Blue UAS Project, the Pentagon program responsible for vetting secure drones and parts. "Anything that can be done to build the supply chain up outside of that mainland Chinese ecosystem, it's a good thing," said Emeneker, who runs a drone-training startup.

 

Taiwan's government spurred a gold rush in August when it allocated more than $7 billion to spend on drones over the next six years, driving new deals and breathing life into partnerships that were established when the budget was still on the horizon.

 

Officials in Taiwan see establishing a full-fledged domestic drone industry as vital to deterring China from using force to try to seize the island, which it considers to be its territory.

 

The urgency has grown as President Trump withholds approval for the sale of $14 billion in arms to Taiwan. Supporters see defense-industry collaboration as a way to strengthen ties between Washington and Taipei, amid worries that the U.S. is no longer willing or able to help the island defend itself.

 

The partnership strategy emulates the "you design it, we'll build it" model championed by Taiwan Semiconductor Manufacturing, the powerhouse of the island's economic growth.

 

Taiwan was transformed into a global manufacturing hub in the 1970s, well before it became known as the source of the world's semiconductors. It has built a reputation as a nimble contract manufacturer supported by a network of local industries.

 

"American companies are already coming to Taiwan to find R&D partners and build out their drone supply chains," Raymond Greene, director of the American Institute in Taiwan, the de facto U.S. embassy, said in a speech this summer.

 

These partnerships represent progress in building a so-called "non-red" or "democratic" supply chain that can serve both Taiwan and the Pentagon.

 

Most parts that Taiwanese vendors are making for Anduril are for products not made for use in Taiwan, said Anduril co-founder Palmer Luckey.

 

"My business interest is maybe 'designed in the U.S., made in Taiwan,' or 'designed collaboratively and made in Taiwan,' " Luckey said in a small group interview in Taipei. But Taiwan "needs to design its own weapons systems and manufacture its own weapons systems at scale" to face Chinese threats, he said.

 

The National Chung-Shan Institute of Science and Technology, the R&D arm of the Taiwanese military, signed a co-production deal last year with Anduril to manufacture the U.S. company's Barracuda 500 cruise missiles and underwater drones in Taiwan. It was one of six agreements NCSIST signed the same day with Western companies, including a plan with Northrop Grumman to explore collaboration on air and missile defense modernization for Taiwan's Defense Ministry.

 

At the end of last year, Congress directed the Pentagon to establish a joint drone program with Taiwan.

 

"The longer-term U.S.-Taiwan collaboration may have significant benefits to American defenses," said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council.

 

The partnerships also could supply U.S. forces overseas. This could be particularly valuable for U.S. Pacific Command, which operates thousands of miles from the U.S. mainland, where "Taiwanese production can fill a need that does exist," Emeneker said.

 

---

 

Shipbuilder Signs Pact

 

In Rhode Island

 

Chen Jeng-horng, chairman of Taiwan's largest shipbuilder, CSBC, saw the rush of Western startups after Taiwan's Defense Ministry said in December that it needed 1,320 one-way surface drones -- uncrewed attack boats that blow up when they reach their target. The navy later requested $930 million during a six-year period.

 

CSBC has been inundated with potential collaborators offering drone technology and in need of shipbuilding know-how. "If they want to expand their business, Taiwan is the next major client."

 

While Taiwan excels at shipbuilding, it lacks the technology to remotely control a large number of uncrewed systems across land, sea and air, he said.

 

Chen and other CSBC executives spent more than six months vetting about a dozen U.S. and European firms for partnerships to compete for the navy's drone-boat contract.

 

They toured the U.S., checked out product demos at sea and met with executives, ultimately picking HavocAI. Chen flew to Rhode Island last month to sign the deal.” [1]

 

1. World News: U.S. Defense Startups Flock to Taiwan --- Firms want to build uncrewed boats and aircraft using a non-China supply chain. Wang, Joyu.  Wall Street Journal, Eastern edition; New York, N.Y.. 14 Oct 2026: A8.