If deployed effectively, uncrewed maritime systems could provide Taiwan with a cost-effective way to offset China’s massive naval power.

Since late May, China has sharply accelerated what it claims to be law enforcement and survey operations in the waters east of Taiwan. Ostensibly a response to the launch of maritime delimitation talks by Japan and the Philippines — which Beijing has condemned as infringing on its maritime rights — the unprecedented deployment of Chinese government vessels (naval, coast guard, and research) has highlighted China’s ability to threaten Taiwan’s strategic Pacific periphery.

In contrast to the shallow and contested Taiwan Strait, these deep Philippine Sea waters enable operational depth. They serve as vital conduits for global trade, digital infrastructure, and submarine movement. While some analysts see China’s operations in this area as rehearsals for a blockade of Taiwan, others view them as a way for Beijing to change the status quo. In an August report, the Center for Strategic & International Studies said China could be looking to establish “a semi-permanent presence” and exercise “some form of jurisdiction east of Taiwan.”

Maritime drones — including uncrewed surface vessels (USVs) and autonomous underwater vehicles (AUVs) — offer Taiwan a realistic way to counter China’s expanding operations. By deploying swarms of inexpensive, expendable sea drones, Taiwan can strengthen surveillance and complicate Chinese military planning without risking crewed assets.

“In the grey zone and other short-of-invasion scenarios, USVs allow Taiwan to have a better operating picture of enemy forces, and the potential of hitting them accurately and cheaply, if necessary,” says Grant Newsham, a foreign affairs analyst and retired U.S. Marines colonel.

If China were attempting to invade Taiwan, “USVs are a powerful addition to a layered defense that a PLA (People’s Liberation Army) commander would have to fight through,” he says. Hard-to-spot maritime drones could eliminate China’s ability to achieve tactical surprise, sink Chinese warships, and help other weapons systems target Chinese military assets, he adds.

USVs equipped with explosives or light munitions can disable or sink multi-million-dollar warships, offering Taiwan an asymmetric way to counter China’s immense maritime assets. China operates the world’s largest navy by number of ships. In addition, the China Coast Guard (CCG) is the biggest and most heavily armed maritime law enforcement fleet in the world. Some of its large ships carry rapid-fire 76mm main guns — the same caliber found on many military warships and comparable to major tank armaments — as well as smaller 30mm guns.

 

Procurement plans

Taiwan currently possesses very few operational sea drones. The ones it does have are mostly functional prototypes and test units, including Taichung-based Thunder Tiger’s Sea Shark 600/800 and the Kuai Chi strike vessels.

But Taipei is now pushing to ramp up the size of its maritime drone fleet. In late August, the opposition-controlled Legislative Yuan passed the Act on Strengthening Defense Autonomy and Developing the Unmanned Vehicles Industry, which earmarks NT$40 billion (US$1.26 billion) of the annual central government budget over six consecutive years for drone funding. The new bill is in addition to the NT$63.4 billion (US$2 billion) for drone development and procurement that was included in the 2026 budget passed earlier that month.

Separately, Taiwan plans to procure 25 USVs and two underwater drones, or AUVs, for its Coast Guard Administration. The state-run National Chung-Shan Institute of Science and Technology (NCSIST) is collaborating on the project with U.S. defense technology firm Maritime Tactical Systems. Initial prototypes are scheduled for testing in early 2027.

These sea drones will be deployed in the waters around Taiwan’s outlying island archipelagos of Kinmen and Matsu, where intrusions by CCG vessels are frequent. They will aim “to strengthen response capabilities against CCG gray-zone law enforcement in the Kinmen-Matsu area while enhancing undersea cable security patrols and underwater evidence collection,” the Taipei-based Research Institute for Democracy, Society, and Emerging Technology said in a July news release.

Analysts say that Taiwan can draw on its decades of shipbuilding experience to ramp up its sea drone fleet. “Taiwan has that capacity to put out those hulls,” says Jason Wang, chief operating officer of geospatial intelligence firm ingeniSPACE.

Eric Du, founder of the non-profit business association United Pacific Innovation Alliance (UPIA), which facilitates partnerships between U.S. defense firms and their counterparts in the Indo-Pacific, notes that “Taiwan has a pretty capable shipbuilding industry, but it is oriented towards exquisite, manned vessels.” Sea drones require expertise in sensor fusion, resilient communication links, and AI autonomy stacks that traditional shipbuilders lack, he says.

Partnering with U.S. defense tech firms can help Taiwan bridge software-related gaps, Wang says. “They shouldn’t be trying to reinvent the wheel. Those platforms already exist and are being used by USPACOM,” he says, referring to the Hawaii-based combatant command of the U.S. military.

Saronic, an Austin, Texas-based maritime autonomy startup valued at US$9.25 billion, signed a memorandum of understanding with NCSIST in April. The deal focuses on development of AI-enabled command-and-control (C2) software and broader systems integration. The tie-up will also explore how Saronic’s dual-use autonomous surface vessels and related technologies can support Taiwan’s maritime needs, the company said in a news release.

In August, NCSIST signed a deal with Rhode Island-based Vatn Systems to explore joint naval defense projects on behalf of the Ministry of National Defense (MND). The agreement will focus on developing AI-enabled C2 systems and fielding AUVs including Vatn’s S12. “Taiwan is one of many allies rethinking what undersea defense looks like,” Nelson Mills, the company’s co-founder and CEO, said in a news release.

 

Budgetary bottlenecks

The drone bill that was passed last month did not come easily. It follows a months-long impasse between the ruling Democratic Progressive Party (DPP) administration and the opposition parties that control the legislature, the Kuomintang (KMT) and the Taiwan People’s Party (TPP), over how to fund the country’s nascent drone industry.

In June, Taiwan passed a pared-down special defense budget, which focuses heavily on procurement of legacy defense systems from the United States. Cut from the original Cabinet version of NT$1.25 trillion to NT$780 billion (US$39 billion to US$24 billion) by the opposition, it does not provide any funding for domestic military drone manufacturing and joint venture initiatives with the United States.

To make up for that shortfall, the Cabinet next put forward a NT$210 billion (US$6.6 billion) special budget over six years focused on low-cost uncrewed systems, including 1,446 coastal reconnaissance drones, 208,200 coastal attack drones, and 1,320 USVs.

Rather than approve the Cabinet’s proposal, the opposition advanced its own legislation, while making several concessions to the ruling party, such as incorporating the tactical drone categories prioritized by Lai’s administration into the bill. It also designated the MND as the competent authority for military drone procurement rather than the Ministry of Economic Affairs.

On September 11, President Lai Ching-te formally enacted the opposition’s drone bill. Still, his administration has continued to express severe concerns over parts of the legislation, arguing that the NT$40 billion annual cap would make it difficult for Taiwan to adequately build up its drone capabilities.

Despite the funding debate, defense companies are hoping Taiwan can move forward quickly on drone procurement plans. UPIA’s Du says that members of the business association “have been flooding into Taiwan” over the past half-year and are “very interested in this market.” He adds that startups with fewer capital constraints are working with the semi-governmental Industrial Technology Research Institute on research and development programs.

“[U.S. defense startups] are still looking at finding the right local partners so that when money becomes available, they can ramp up production quickly,” he says.