INTERVIEW/AIDC turns to drones as its next growth engine: Chairman

Taipei, Jan. 31 (CNA) Aerospace Industrial Development Corp. (AIDC) is pivoting toward drones as it seeks its next growth engine, with Chairman Tsao Chin-ping (曹進平) citing rising global demand as the company shifts from aircraft manufacturing toward developing complete drone systems.

In a recent interview with CNA, Tsao said AIDC, which has long supported Taiwan's national defense, is accelerating its transformation as the Brave Eagle advanced jet trainer project nears completion.

AIDC said the 66 Brave Eagle jets ordered by the Air Force are expected to be fully delivered by the third quarter of this year.

Drones emerge as core of AIDC's transformation

Tsao said the company's transformation strategy follows a "two-pronged approach," continuing maintenance, performance upgrades and other support for domestically produced aircraft while accelerating its entry into the drone industry.

Drones will play a central role in Taiwan's asymmetric defense strategy, Tsao said, citing the NT$1.25 trillion (US$39.56 billion), eight-year special defense budget aimed at bolstering national defense resilience.

In the drone sector, Tsao said AIDC is shifting from a supporting role to independent research and development, while collaborating with academia and industry and actively bidding on drone and counter-drone systems.

Currently, AIDC is working with domestic manufacturers Taiwan UAV and Thunder Tiger on production, and with U.S.-based Vantor to develop GPS-free visual positioning technology, Tsao said. He added that the company is also collaborating with Shield AI on software to create a common command-and-control system, enhancing drones' ability to operate alongside manned aircraft and across multiple platforms in coordinated missions.

"It may not be immediately reflected in AIDC's revenue in the short term, but it is very important for building capabilities across the entire drone ecosystem," Tsao said.

Meanwhile, counter-drone systems are also a key focus for AIDC, he said, noting that soft-kill systems designed to jam or disrupt drones are nearly complete, while hard-kill systems that physically destroy drones are expected to be ready by midyear.

Non-China supply chain a priority for Taiwan's drone industry

Tsao said Taiwan's drone industry already has strong capabilities in key components, including chips, communications, navigation, optics and mission modules, emphasizing that "avoiding Chinese-made parts is essential."

The Russia-Ukraine war has shown that cybersecurity and backend risks in drones can directly affect combat effectiveness, Tsao said, adding that Taiwan's drone and aerospace industries have demonstrated stable supply and high-quality output.

"Orders are quickly shifting to Taiwan, and the drone trend is unstoppable," he added.

Customs Administration data showed that drone exports totaled just 93 units at the end of 2023, but surged to more than 70,000 units by the fourth quarter of last year.

In recent years, Taiwan has entered the supply chains of U.S. drone maker Skydio and French company Parrot, and has become an important sourcing partner for countries including Poland.

Arizona plant to anchor AIDC's U.S. expansion

Tsao said AIDC's plan to set up a plant in Arizona was driven by the Buy American Act, with the aim of shortening supply chains and improving delivery speed and reliability.

He said the new U.S. plant will initially focus on producing engine components, adding that whether it later expands into drone or other aerospace manufacturing will depend on local regulations, workforce structure and cost conditions.

Potential customers include the U.S. military but also private-sector clients, Tsao said, adding that AIDC plans to use the Arizona plant as a foundation to further deepen industrial cooperation between Taiwan and the United States.