Taiwan Defense Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

The Taiwan Defense Market Report is Segmented by Armed Forces (Air Force, Army, and Navy), Type (Personnel Training and Protection, C4ISR and Electronic Warfare, Vehicles, and More), Domain (Land, Air, Naval, Space, and Cyber and Electromagnetic Spectrum), and Procurement Nature (Indigenous Production, and Foreign Procurement). The Market Forecasts are Provided in Terms of Value (USD).

Taiwan Defense Market Size and Share

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Taiwan Defense Market Analysis by Mordor Intelligence

The Taiwan defense market is valued at USD 6.80 billion in 2025 and is forecasted to reach USD 8.06 billion by 2030, reflecting a 3.46% CAGR. Spending growth is paced yet persistent, driven by cross-strait threat escalation, a record TWD 647 billion (USD 20.2 billion) defense budget allocation equal to 2.45% of GDP, and the legislature’s continued commitment—despite periodic cuts—to modernizing forces.[1]Source: Nikkei Asia desk, “Taiwan allots record defense budget to meet China threat,” asia.nikkei.com Platform demand centers on fighter upgrades, intelligence networks, and asymmetric assets such as long-range precision fires and underwater systems. Foreign equipment remains dominant, but rising local production, especially in missiles and submarines, gradually reduces single-source dependence. Technology-transfer frameworks, industrial co-production, and cooperative research on unmanned platforms are emerging as core opportunity areas for suppliers that can align with export-control rules and Taiwan’s “porcupine strategy.”

Key Report Takeaways

  • By armed forces, the air force led with 42.90% of the Taiwanese defense market share in 2024, while the navy is projected to grow at a 4.20% CAGR to 2030.
  • By type, C4ISR and electronic warfare systems accounted for a 23.65% share of the Taiwanese defense market in 2024; unmanned systems are forecasted to expand at a 6.54% CAGR.
  • By procurement nature, foreign purchases represented 65.45% share of the Taiwanese defense market size in 2024, whereas indigenous production is rising at a 4.65% CAGR.
  • By domain, the air segment held 43.50% of Taiwanese defense market share in 2024; space assets are advancing at a 6.78% CAGR through 2030.

Segment Analysis

By Armed Forces: Air Force dominance amid naval acceleration

The Air Force’s 42.90% slice of Taiwan's defense market share in 2024 is anchored by the ongoing delivery of 66 F-16V Block 70 fighters and negotiations for E-2D early-warning aircraft that promise enhanced detection of stealth threats. Yet the Navy’s 4.20% CAGR signals a relative tilt toward undersea and littoral capabilities, led by submarine construction and compact frigates optimized for strait patrols.

 The Army maintains robust funding for 108 M1A2T tanks and a fully operational HIMARS regiment capable of cross-strait precision strikes. Integration exercises conducted in 2025 illustrate a joint doctrine where air assets furnish targeting data, naval units deny chokepoints, and ground forces deliver saturation fires. This paints a composite demand profile that sustains both traditional platforms and nimble missile batteries across the Taiwan defense market.

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Note: Segment shares of all individual segments available upon report purchase

By Type: C4ISR leadership challenged by unmanned-systems surge

C4ISR and electronic warfare assets captured 23.65% of Taiwan defense market size in 2024, propelled by the TWD 7.81 billion Field Information Communications System and network-gateway upgrades to Link-16 and planned Link-22 interoperability. Nevertheless, unmanned systems expanded at a 6.54% CAGR as government financing and relaxed procurement rules unlock scale production of air, surface, and subsurface drones. 

Missile-manufacturing throughput topped 1,000 rounds in 2024, while Clouded Leopard II armor achieved 89% domestic content, underscoring a maturing industrial base. Growth potential persists for electronic-warfare pods, multispectral sensors, and secure datalinks that tie unmanned nodes into the broader kill chain.

By Domain: Air supremacy gives way to space innovation

Air assets retained 43.50% of % Taiwan defense market share in 2024 through F-16V induction and NASAMS rollout. Yet, investments in orbital assets drive a 6.78% CAGR for space systems as sovereign satellite networks become indispensable for beyond-line-of-sight coordination.

Naval developments like the Hai Kun submarine supply strategic depth, while land forces focus on mobile launchers that leverage satellite cueing. Counter-UAS projects ready for Q3 2025 fielding fuse radar, electro-optical, and cyber effects into a layered defense, illustrating how boundaries between air, land, and space are blurring inside the Taiwan defense market.

Taiwan Defense Market: Market Share by Domain
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Note: Segment shares of all individual segments available upon report purchase

By Procurement Nature: Foreign dependence gradually yields to indigenous growth

Foreign platforms still account for 65.45% of Taiwan's defense market size in 2024, exemplified by the USD 987 million F-16 sustainment deal and continued HIMARS deliveries. However, Indigenous programs now log a 4.65% CAGR after missile production tripled and submarine construction proved viable at scale. 

Local content in Clouded Leopard II armored vehicles has reached 89%, while the Chien Hsiang loitering munition moves toward low-rate initial production. Bilateral pacts with Japan's drone sector add propulsion and precision-machining know-how, reinforcing a procurement balance that shifts from outright imports to blended co-manufacture, anchoring sustainable growth in the Taiwan defense market.

Geography Analysis

Taiwan’s insular geography and 180 km separation from mainland China dictate a defense posture reliant on rapid-response fires, mobile sensors, and survivable basing. Harpoon anti-ship launchers enter service in mid-2025 to police the Taiwan Strait’s narrow sea lanes. NASAMS batteries shield northern population centers closest to Chinese air bases, while the island’s mountainous east hosts submarine pens and mobile missile depots that exploit natural cover.

Strategic depth is enhanced through US-Japan-Australia coordination under Indo-Pacific frameworks; a memorandum with Japan’s UAS industry anchors supply-chain cooperation in semiconductors and precision mechanics. Regional integration shapes platform interoperability choices and amplifies demand for link-compatible data networks.

Infrastructure upgrades concentrate on resilient command nodes designed to survive first-strike scenarios. Satellite communications link dispersed units, while fiber-optic redundancy spans urban regions. The geography-driven focus on compact launchers, sea-denial drones, and hard-to-detect missile trucks fosters continued local innovation.

Competitive Landscape

The Taiwan defense market is moderately concentrated, with US primes dominating high-value systems and Taiwanese entities scaling up subsystems and indigenous platforms. Lockheed Martin leads fighter sustainment and upgrades, RTX supplies missile inventory, and Leidos supports F-16 fleets. The National Chung-Shan Institute of Science and Technology (CSIST) tripled missile output in 2024, reflecting rising domestic capability.

Emerging private players such as Thunder Tiger and Geosat Aerospace compete in the expanding drone space, while CSBC Corporation anchors naval programs through the Hai Kun submarine line. Co-production clauses embedded in recent US contracts and the Taiwan-US Defense Industry Forum accelerate technology migration to local firms. Competitive advantage favors suppliers offering modular designs compatible with Taiwan’s dispersed basing and joint data standards.

Market entrants face stringent export-control vetting and must contend with cyclic budget reviews. Yet, opportunities abound in sustainment, cybersecurity, training, and obsolescence upgrades as Taiwan shifts from platform acquisition to readiness optimization.

Taiwan Defense Industry Leaders

  1. National Chung-Shan Institute of Science and Technology

  2. Aerospace Industrial Development Corporation

  3. Lockheed Martin Corporation

  4. RTX Corporation

  5. General Dynamics Corporation

  6. *Disclaimer: Major Players sorted in no particular order
Taiwan Defense Market Concentration
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Recent Industry Developments

  • April 2025: The cabinet cleared a TWD 410 billion (USD 12.6 billion) special budget that carves out TWD 150 billion (USD 4.6 billion) for UAV infrastructure, coast-guard upgrades, and IT enhancements, pending legislative sign-off
  • February 2025: A military source confirmed on Monday that the United States finalized a deal to sell Taiwan three National Advanced Surface-to-Air Missile Systems (NASAMS) for approximately TWD 24.98 billion (USD 761.94 million). This agreement underscores the strengthening defense collaboration between the two nations amidst rising regional security concerns.

Table of Contents for Taiwan Defense Industry Report

1. INTRODUCTION

  • 1.1 Study Assumptions and Market Definition
  • 1.2 Scope of the Study

2. RESEARCH METHODOLOGY

3. EXECUTIVE SUMMARY

4. MARKET LANDSCAPE

  • 4.1 Market Overview
  • 4.2 Market Drivers
    • 4.2.1 Escalating PLA incursions over Taiwan Strait
    • 4.2.2 US-Taiwan Foreign Military Sales (FMS) pipeline expansion
    • 4.2.3 Indigenous Defense Submarine (IDS) program milestones
    • 4.2.4 Whole-of-society “Porcupine Strategy” implementation
    • 4.2.5 Dual-use semiconductor R&D spin-offs for C4ISR
    • 4.2.6 Private UAV start-ups filling tactical ISR gaps
  • 4.3 Market Restraints
    • 4.3.1 Legislative Yuan budget-cap debates
    • 4.3.2 ITAR and export-licence restrictions on critical tech
    • 4.3.3 Conscript force downsizing amid ageing population
    • 4.3.4 Industrial talent drain to commercial chip sector
  • 4.4 Value Chain Analysis
  • 4.5 Regulatory Landscape
  • 4.6 Technological Outlook
  • 4.7 Porter’s Five Forces Analysis
    • 4.7.1 Bargaining Power of Buyers/Consumers
    • 4.7.2 Bargaining Power of Suppliers
    • 4.7.3 Threat of New Entrants
    • 4.7.4 Threat of Substitute Products
    • 4.7.5 Intensity of Competitive Rivalry

5. MARKET SIZE AND GROWTH FORECASTS (VALUE)

  • 5.1 By Armed Forces
    • 5.1.1 Air Force
    • 5.1.2 Army
    • 5.1.3 Navy
  • 5.2 By Type
    • 5.2.1 Personnel Training and Protection
    • 5.2.2 C4ISR and Electronic Warfare
    • 5.2.3 Vehicles
    • 5.2.4 Weapons and Ammunition
    • 5.2.5 Unmanned Systems
    • 5.2.6 Space and Cyber Systems
  • 5.3 By Domain
    • 5.3.1 Land
    • 5.3.2 Air
    • 5.3.3 Naval
    • 5.3.4 Space
    • 5.3.5 Cyber and Electromagnetic Spectrum
  • 5.4 By Procurement Nature
    • 5.4.1 Indigenous Production
    • 5.4.2 Foreign Procurement

6. COMPETITIVE LANDSCAPE

  • 6.1 Market Concentration
  • 6.2 Strategic Moves
  • 6.3 Market Share Analysis
  • 6.4 Company Profiles (includes Global level Overview, Market level overview, Core Segments, Financials as available, Strategic Information, Market Rank/Share for key companies, Products and Services, and Recent Developments)
    • 6.4.1 National Chung-Shan Institute of Science and Technology
    • 6.4.2 Aerospace Industrial Development Corporation
    • 6.4.3 Lockheed Martin Corporation
    • 6.4.4 RTX Corporation
    • 6.4.5 General Dynamics Corporation
    • 6.4.6 The Boeing Company
    • 6.4.7 Northrop Grumman Corporation
    • 6.4.8 BAE Systems plc
    • 6.4.9 DronesVision Inc.
    • 6.4.10 Thunder Tiger Technology Co., Ltd.
    • 6.4.11 Lungteh Shipbuilding Co., Ltd.
    • 6.4.12 Jong Shyn Shipbuilding Co. Ltd.
    • 6.4.13 Karmin International Co., Ltd.
    • 6.4.14 Linton-cutlery Co., Ltd.
    • 6.4.15 TUNG GWO PROTECTIVE EQUIPMENT CO., LTD.
    • 6.4.16 Taiwan Aerospace Corp.
    • 6.4.17 Viasat, Inc.
    • 6.4.18 Taiwan Semiconductor Manufacturing Company, Ltd.

7. MARKET OPPORTUNITIES AND FUTURE OUTLOOK

  • 7.1 White-space and Unmet-Need Assessment
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Taiwan Defense Market Report Scope

The Taiwan defense market report covers a detailed analysis of the country’s defense sector, encompassing various aspects such as military budgets, equipment procurement, indigenous defense production, defense OEMs, and security policies. The report focuses on Taiwan’s defense market and analyzes different aerial, naval, and land platforms.

The Taiwan defense market is segmented by equipment type (personal training and protection, communication, armament, and transport) and platform (terrestrial, aerial, and naval). The report offers the market size in value terms in USD for all the abovementioned segments.

By Armed Forces Air Force
Army
Navy
By Type Personnel Training and Protection
C4ISR and Electronic Warfare
Vehicles
Weapons and Ammunition
Unmanned Systems
Space and Cyber Systems
By Domain Land
Air
Naval
Space
Cyber and Electromagnetic Spectrum
By Procurement Nature Indigenous Production
Foreign Procurement
By Armed Forces
Air Force
Army
Navy
By Type
Personnel Training and Protection
C4ISR and Electronic Warfare
Vehicles
Weapons and Ammunition
Unmanned Systems
Space and Cyber Systems
By Domain
Land
Air
Naval
Space
Cyber and Electromagnetic Spectrum
By Procurement Nature
Indigenous Production
Foreign Procurement
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Key Questions Answered in the Report

What is the value of the Taiwan defense market today and in 2030?

The market stands at USD 6.80 billion in 2025 and is projected to reach USD 8.06 billion by 2030, growing at a 3.46% CAGR.

Which armed service holds the largest share and which is expanding the quickest?

The Air Force commands 42.90% of 2024 spending, while the Navy shows the fastest growth with a 4.20% CAGR through 2030.

Why are unmanned systems central to Taiwan’s modernization plans?

Government funding of USD 1.35 billion targets monthly production of 15,000 drones by 2028, supporting a porcupine strategy built on distributed, low-cost platforms.

How does the Indigenous Defense Submarine program benefit the domestic industry?

The TWD 284 billion (~USD 9.18 billion) program has multiplied CSBC Corporation’s revenue eight-fold and opened long-term orders for local sonar, combat-system, and torpedo suppliers.

What major obstacles slow Taiwan’s defense procurement cycles?

Legislative budget freezes reduced the 2025 allocation by 6.6%, and tightened US export-license rules add delays to a USD 19 billion arms backlog.

How important is the US-Taiwan Foreign Military Sales pipeline for market growth?

Combined FMS and direct commercial deals totaled USD 1.75 billion in 2024, with an extra USD 300 million approved for Altius-600M UAVs, generating follow-on demand for sustainment, training, and infrastructure.

Page last updated on: June 30, 2025

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