Taiwan's Executive Yuan on April 30 outlined the structure of a NT$1.25 trillion special defense procurement budget, with NT$335 billion earmarked specifically for unmanned vehicles and counter-drone systems. Premier Cho Jung-tai (卓榮泰), briefing the cabinet on the Defense Ministry's implementation plan for the "Special Act on Strengthening Defense Resilience and Asymmetric Capabilities," described the budget as built around three pillars and seven categories.
The first pillar focuses on building Taiwan's comprehensive air defense capability, including counter-drone systems. The second targets high-technology and artificial intelligence acquisition, centered on an AI-assisted decision-making system designed to help the military rapidly analyze intelligence and issue commands. The third pillar aims to develop an autonomous domestic defense industry — using Taiwan-U.S. cooperation and drone procurement as a catalyst to expand local production capacity, establish a non-Chinese-sourced supply chain, and stimulate economic activity.
Industrial cooperation between Taiwan and the United States in the drone sector gained momentum at the Taipei Aerospace and Defense Technology Exhibition last September. Shield AI, for its part, signed a formal cooperation agreement with Aerospace Industrial Development Corporation (AIDC) to build an integrated ecosystem spanning manufacturing, assembly, testing, and maintenance for advanced unmanned systems.
In February of this year, the National Chung-Shan Institute of Science and Technology (NCSIST) announced a separate contract with Shield AI to integrate the company's Hivemind AI platform into NCSIST-developed unmanned systems — advancing Taiwan's drone capability from automated operation to autonomous decision-making. According to NCSIST, the integration of Hivemind's software development kit (SDK) will enable a single operator at a ground station to simultaneously control multiple drones, enabling coordinated multi-system missions and significantly reducing personnel requirements.
The institute also noted that because GPS and communications links are highly vulnerable to jamming on the battlefield, drones equipped with Hivemind will possess independent sense-decide-act capability — able to reroute in real time, avoid obstacles, and complete mission objectives without human intervention.
Two Tracks: A Support Ecosystem with AIDC, an AI Brain with NCSIST
Brandon Tseng (曾國光), co-founder of Shield AI, said in an exclusive interview with Storm Media that if deterrence is the foundation of defense, "there is nowhere more important in the world than Taiwan" for that kind of investment. He described the company's partnerships with AIDC and NCSIST as sharing the same strategic direction, differing only in scope and detail.
The AIDC partnership is focused on building a support and sustainment ecosystem in Taiwan for Shield AI's flagship V-BAT unmanned aerial vehicle, with AIDC also identified as a potential long-term partner for the X-BAT — described by the company as the first AI-autonomous unmanned jet combat aircraft. The V-BAT is a vertical takeoff and landing reconnaissance drone.
The NCSIST partnership, by contrast, is about providing Shield AI's Hivemind AI platform so that Taiwan's drone manufacturers and the Ministry of National Defense can use the same development tools and infrastructure to build AI autonomy into Taiwan's own military unmanned vehicles.
The Highest Return on Defense Investment Taiwan Can Make
Tseng was emphatic on the strategic calculus. Combining drones with AI, he said, represents "the highest return on defense investment Taiwan can make." The core advantage, he argued, lies in scalability: "You could scale to one million or ten million drones, and you don't need that many pilots."
In the past, he explained, one million drones required one million operators — operationally impractical. AI changes that equation fundamentally, allowing a single person to control multiple drones simultaneously. The implication, Tseng said, is that the scale of military drone deployment is no longer constrained by troop strength or the number of trained pilots, but only by production capacity. "Over the next twenty-plus years, AI will be the most transformative technology in the military."
Combat Validation: V-BAT Spots a Russian Unit More Than 200 Kilometers Out
Tseng noted that Shield AI's products have been deployed directly in both the Ukraine conflict and Middle East operations, and that frontline experience feeds directly back into product development. In the Middle East context, he said, what U.S. forces most urgently need is enhanced ISR — intelligence, surveillance, and reconnaissance — capability to detect Iranian units launching Shahed loitering munitions from concealed positions such as caves before they fire. The constraint, he said, is not munitions but targeting data.
On the Ukraine front, Tseng cited a Ukrainian military unit operating V-BAT that set a battlefield record by detecting a Russian target at a distance of more than 200 kilometers. That range, he suggested, would be more than sufficient for Taiwan Strait defense applications.
Tseng detailed the trajectory of Shield AI's sourcing from Taiwan. Two years ago, Taiwan-origin components accounted for just 1 percent of V-BAT production. That figure has since risen to 16 percent, and the company is targeting 25 percent within 18 to 24 months.
"In the coming years, what we spend with Taiwanese suppliers will reach hundreds of millions of dollars," Tseng said. He quoted Shield AI's head of supply chain directly: "She says Taiwan has the best suppliers — far better than what we've found in other countries — whether it's printed circuit boards, wire harnesses, or precision-machined components.
"Asked what specifically sets Taiwanese suppliers apart, Tseng was unequivocal: "Quality, delivery, price — all of it."The pairing of Taiwan's battle-hardened electronics and precision manufacturing supply chain with a new generation of U.S. AI-driven defense companies represents more than a bilateral commercial arrangement. It marks Taiwan's supply chain moving from semiconductors and consumer AI into international defense manufacturing — while potentially injecting new capability into the island's own deterrence posture.
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