In modern war, the side that produces faster usually wins. From the Liberty ships of World War II to the drone swarms in Ukraine, mass production, not just strategy or bravery, decides who survives. Taiwan does not yet have that ability.
Currently, Taiwan can produce about 1,000 precision missiles per year. Experts in the United States estimate it would need more than 1,200 anti-ship missiles to stop a full-scale Chinese invasion, and that is only one type.
The People’s Liberation Army (PLA) already has more than 3,000 ballistic and cruise missiles and can make more quickly. Taiwan’s current stockpile could be used up in just a few days.
Instead of building enough at home, Taiwan has depended on US arms sales. That choice now carries high risk. As of 2024, more than US$21 billion in promised weapons—more than Taiwan’s whole annual defense budget—have not yet arrived.
Some will not come until 2026 or later, including fighter jets, anti-ship missiles and mobile rocket systems. Even simple weapons like Stinger missiles are arriving three years late. If a war starts soon, they will not be ready.
At home, Taiwan spends only 2.45% of its GDP on defense. This is less than what South Korea or Israel spends and barely more than the NATO guideline. More than half of that spending goes to salaries and upkeep. Less than one-fourth of defense purchases are made inside Taiwan.
Almost all of that goes to just three state-owned companies: the National Chung-Shan Institute of Science and Technology (NCSIST), the Aerospace Industrial Development Corporation (AIDC) and the China Shipbuilding Corporation (CSBC). Private industry is barely involved.
So can Taiwan build a real defense industry with the ability to produce large numbers of weapons, manage supply chains and sustain operations during war?
Labor, output and planning gaps
Taiwan is known for high-end manufacturing, but it lacks war-ready production. There are about 2.99 million workers in manufacturing, making up 25.9% of the national workforce. Yet fewer than 0.15% work in the defense sector.
Taiwan has around 1.1 million skilled technicians under age 40 who could be mobilized, but there is no reserve force or civilian-military integration plan. The country has only one composite repair dock for fighter jets, and it can service just four to six aircraft at a time.
Production levels are far too low for modern war. In 2024, Taiwan is expected to produce just over 1,000 missiles in total, including surface-to-air, anti-ship, and cruise types. Hsiung Sheng long-range missiles are produced at 140 units per year. Sky Bow III interceptors are limited to 96 per year. The Chien Hsiang loitering munition line is growing but still capped at 200 units annually.
These rates fall short. Taiwan has fewer than 3,500 military drones in total. Ammunition is in even worse shape. The army estimates it needs 50,000 to 70,000 rounds of 155 mm artillery in the first month of combat. Current monthly production is under 5,000 rounds.
The budget structure makes things worse. Taiwan’s 2024 defense budget is NT$606.8 billion (US$18.8 billion), about 2.5% of GDP. More than half goes to salaries and pensions. That leaves less than 25%—about NT$145.8 billion (US$4.5 billion)—for weapons procurement, research and stockpiling.
Even this amount is not fully usable. The legislature froze NT$90 billion. Major projects like the next-generation submarine have been delayed. A slight increase to NT$647 billion in 2025 will not close the gap.
Meanwhile, supply chains remain fragile. Over 70% of missile parts—seeker heads, GPS units, engines—are still imported . Many components fall under US arms export rules that block local substitutes, even during war. Taiwan’s US arms backlog now totals US$21.5 billion, or 110% of its 2025 defense budget.
Key systems like Patriot missiles, SLAM-ERs, and 120 mm tank rounds are facing delivery delays of three to five years. Some were ordered as early as 2017. By mid-2025, only partial shipments have arrived. Taiwan still needs US approval for subsystem integration and has no local alternative to ITAR-controlled components.
Policy has not solved these problems. No law requires state-owned firms to help private defense companies scale up. Procurement is spread across ministries, creating delays and confusion. Civilian drone companies have offered to modify platforms for defense use, but fewer than a dozen have been approved.
The defense workforce is aging rapidly. At Aerospace Industrial Development Corporation (AIDC), the average employee is 49.3 years old. A retirement wave is coming, and no training pipeline exists to bring in younger engineers. Without new talent, critical skills will disappear, and money alone will not fill the gap.
China’s comparative industrial power
China is better prepared than Taiwan in every part of military production. It has more factories, more supplies, more trained people and a government system that moves with speed. This makes China one of the most dangerous military-industrial powers in the world.
First, China dominates the shipbuilding Industry. Its shipyards build more than 50% of the world’s total output. Just four shipyards—Dalian, Jiangnan, Guangzhou, and Hudong-Zhonghua—built more combat ships in five years than most Western navies combined.
Second, China leads in drones, missiles and rockets. It makes 70% of the world’s drones. Da-Jiang Innovations alone produces more drones in one week than some countries make in a year.
China plans to make over 1 million loitering munitions each year by 2026. It also builds tens of thousands of short-range and cruise missiles each year, along with more than 10,000 long-range artillery rockets.
Third, China’s system is built ready for upcoming war. More than 200 major state firms and thousands of private suppliers are locked into a military-civil system. Civilian factories are mapped and assigned wartime jobs. Orders can be sent and carried out in days. China’s laws allow the government to take over labor, machines and materials for military use.
Fourth, the system is full of talent and tools. China trains tens of thousands of engineers through defense universities. Top defense firms hire straight from these schools. The Ministry of Industry and Information Technology tracks every piece of production, from steel and drone parts to AI-guided targeting software.
Finally, the budget is massive. Officially, China’s defense budget is US$231 billion. But off-budget spending likely raises it to over US$470 billion. Much of this goes to weapons, infrastructure and stockpiling.
Credible Taiwan response
Taiwan needs to build a defense industry that can mass-produce simple, reliable weapons—fast. South Korea focused on “good enough” systems and gave clear contracts with monthly targets. Taiwan should copy that. Firms that meet quotas should get rewards. No more one-off prototypes.
Civilian factories must join the fight. Ukraine turned garages into drone shops and scaled defense output from US$1 billion to US$35 billion in two years. Taiwan has even better industrial skills. But it needs laws that let the government help firms switch to wartime work fast. Metal, auto parts, and electronics sectors should run drills and stock tools for conversion.
Local production must also be cheap. Ukraine now builds artillery and drones for a fraction of import costs. Taiwan’s drone makers and software firms can do the same. They just need grants, bulk orders and open calls to adapt commercial products for defense.
Innovation must go beyond the military. Taiwan’s Ministry of Economic Affairs should launch a full-scale investment program for dual-use tech. Australia already does this. Let non-defense firms apply for R&D grants if their tools help national security. The focus should be on small and medium businesses.
Taiwan also needs a trained tech reserve. Israel built one through Unit 8200. Taiwan should recruit engineers and coders into part-time defense roles with clear missions and fast call-ups.
Taiwan must also build with allies. Invite Japan, Australia, and the US to set up shared production lines for drones and munitions. Co-production means supply security. Taiwan should also export affordable drones and sensors to partners like the Philippines, Vietnam, and Indonesia. A working defense export plan builds peace through strength.
The United States and other allies will likely help Taiwan in a crisis. But help takes time, and it will not cover every need. Taiwan must be able to hold its ground until support arrives. That means building a defense system that can stand on its own.
It depends on factories, supply lines, and trained civilians who can step in when needed. A modern war needs the whole society to be ready. The future of Taiwan will be decided by what it can build, not just what it can buy.
Yenting Lin is a master’s student in public policy at George Mason University. He holds a BA and BS from National Chung Cheng University in Taiwan. His research focuses on national security and US–Taiwan–China relations.
His writing has appeared in Small Wars Journal, American Intelligence Journal, and The Defence Horizon Journal, and he contributes columns to Ketagalan Media, Asia Times, Modern Diplomacy, Geopolitical Monitor, and International Angle. The views in this article are his own.
