Why the EU’s €2 Billion Drone Budget for Ukraine Could Make Taiwan’s Drone Industry the Biggest Winner
- Kimi
- Oct 3
- 6 min read
EU leaders recently elevated drones to a core initiative for supporting Ukraine and strengthening European defense, both before and after the Copenhagen conference. European Commission President Ursula von der Leyen publicly stated that of the €4 billion the EU is currently allocating to Ukraine, €2 billion will be earmarked for drone development to help expand production and scale up the technology. She also launched the "Drone Alliance with Ukraine" and prepared to allocate €6 billion from ERA (a G7 initiative backed by interest from Russian assets) to accelerate drone-related cooperation and joint industrialization. This means that Europe has shifted from a wait-and-see approach to full investment in the "low-cost, high-volume" drone combat model.
Meanwhile, the International Drone Capability Consortium, co-chaired by the UK and Latvia, is expanding its supply with the goal of delivering "one million drones per year." The UK Ministry of Defence has already ordered 30,000 drones, and the consortium's overall funding is rapidly accumulating between 2024 and 2025. The EU has also unveiled plans for a " drone wall" and counter-drone networks, which have recently become a focal point of the European defense agenda.
In other words, Europe's drone demand is about to enter a structural "supercycle." At this juncture, who has the best chance of securing this massive €2 billion drone order and spilling over into the broader European market? The answer is obvious: Taiwan.
1. How was €2 billion allocated? The EU's clear path to "increase investment" in drones
Direct Use: Vondelein stated that the EU and Ukraine have agreed to "immediately allocate €2 billion to drone development" with the goal of enabling Ukraine to rapidly scale up existing technology. This statement was cited by European and Ukrainian media outlets, including The Irish Times and The Kyiv Independent.
Medium-term Framework: The EU's 2025 "State of the Union" document further stated that Europe would allocate €6 billion from the ERA and establish a "Drone Alliance." It would also use the SAFE (Security Action for Europe) loan facility to leverage up to €150 billion in joint military procurement and explore the possibility of providing bonuses to those who "support Ukraine or purchase Ukrainian equipment." These signals reinforce the predictability of the drone supply chain.
Strategic Environment: EU and NATO statements have recently repeatedly emphasized the need to establish drone and counter-drone capabilities as a permanent capability on Europe's eastern flank (the so-called "Great Wall of Drones"). This concerns not only Ukraine but also Europe's defense landscape as a whole.
2. Demand Explosion vs. Capacity Bottleneck: Why Does Europe Urgently Need "Reliable External Supply"?
Ukraine is pushing drone warfare toward a new paradigm of " affordable consumables + flexible innovation ," but the development of domestic production capacity in Europe is still accelerating. In large-scale tenders, the Latvian/British-led coalition has only achieved a handful of results that fully meet operational requirements, demonstrating the challenges of achieving sufficient reliability and cost control in an electronic warfare environment . This is why the EU is promoting a policy of "external procurement + internal production expansion."
At the same time, the European Parliament Research Service (EPRS) pointed out that Europe needs to quickly fill the gap in tactical-grade drones and counter-drones through joint procurement and reduced dependence on China , and strengthen cooperation and testing networks with Ukrainian industry (including test sites in Latvia).
3. Why Taiwan? Four key advantages
1) Policy Docking of the Africa-China Supply Chain and Democratic Partners
After taking office, President Lai Ching-te positioned Taiwan as the " Asia-Pacific drone hub for the democratic supply chain ." The Executive Yuan also confirmed that Taiwan has established cooperation with the United States, Poland, Latvia, Lithuania, and the Czech Republic , clearly moving toward integration into an "Africa-China supply chain." This echoes policy recommendations from the European Parliament and think tanks calling for reducing dependence on China.
2) Credibility and Compliance: Entering the "Whitelist" System
Taiwan's Thunder Tiger Technology's "Overkill" drone has been accepted into the U.S. Department of Defense's Blue UAS compliance system. Against the backdrop of expanding interoperability between the United States and NATO, a verifiable and traceable supply chain is a key stepping stone to entering large-scale joint procurement.
3) Electronics and software and hardware integration capabilities: Ability to quickly mass-produce "Ukrainian experience"
The Financial Times revealed that Taiwan is collaborating with Auterion, the National Chung-Shan Institute of Science and Technology, and Thunder Tiger to incorporate experience gained from FPV/suicide drones in combat scenarios into the AI-powered combat, vision, and mission systems of local drones, such as the Overkill. This demonstrates Taiwan's ability to rapidly advance through the "iteration-testing-mass production" process through hardware and software integration .
4) Existing European channels and connections: Opening the first door from the Middle East and Eastern Europe
Taiwan has signed MOUs for drone cooperation with the Polish and Ukrainian industries, and Taiwan's drone exports to Europe have grown significantly. In recent months, Poland has been reported as one of the largest buyers of Taiwanese drones in Europe . These are all evidence of direct connection with European demand.
4. How can Taiwan take on the €2 billion drone budget? Three most realistic paths
Path A: Becoming a key upstream supplier in Ukraine's production chain
This €2 billion is earmarked to " assist Ukraine in expanding production " and will not be consumed entirely within the EU. Ukrainian industries have also expressed a desire to reduce their reliance on foreign parts . If Taiwan can provide trusted electronic, optical, and motor components, they could quickly enter the market through "upstream supply + quality/anti-interference verification," collaborating with Ukrainian factories to boost production.
Path B: Joint venture or factory establishment in EU/neighboring countries, and jointly bid for European projects
The EU's SAFE tool restricts direct participation from third countries, but is open to Ukraine and European Economic Area countries and encourages joint procurement. Draft regulations also require a significant proportion of EU/EEA/Ukrainian content . Taiwanese companies can participate in joint procurement under SAFE/EDIRPA and other similar schemes once they meet the threshold by establishing joint ventures with Ukraine or EU member states and designing and manufacturing in Europe (localization). Romania and Ukraine's joint drone production in Romania is a prime example.
Practical Recommendation: Prioritize sites in eastern flank countries such as Poland, Romania, and Latvia (close to the front lines, with friendly policies and comprehensive testing resources), and connect with Latvia's drone test site and capability center to accelerate certification.
Path C: Directly join the Drone Alliance and participate in joint European procurement tenders
The British-Lakshadweep coalition has consistently launched and completed numerous procurement rounds (such as the 30,000-unit contract led by the UK Ministry of Defence), and its policies are gradually converging with those of the EU on technical standards and testing milestones. Taiwanese manufacturers can team up with European system integrators to jointly bid for FPV swarms, counter-unmanned aerial vehicle (C-UAS) interceptors, and reconnaissance platforms.
5. Risks and Thresholds: "Buy Europe" Trends, Technology Protection, and Legal Compliance
Policy Preference: SAFE explicitly focuses on strengthening Europe's defense industry , with restrictions on participation and local content requirements for non-EU companies. However, Ukraine is included in the scope of participation, and the EU also encourages direct purchases from Ukraine. Therefore, **co-manufacturing with Ukraine** or **co-investing in Europe** is more likely to enter the core budget than simply exporting.
Security and supply chain credibility: Security concerns about Chinese-made drones continue to grow in many Western countries, and European think tanks and the European Parliament's research office have identified reducing reliance on China as a strategic priority. Taiwan's proposal, with its lack of reliance on Chinese capital and traceable provenance, presents a natural advantage, but its resilience (resistance to interference and electronic warfare) still needs to be proven through field testing.
Actual combat threshold: The Ukrainian tender proved that few products can truly pass rigorous battlefield testing. Taiwanese manufacturers must work with the Ukrainian team to develop and improve the product, demonstrating excellence in electronic warfare, anti-interference, and cost control .
6. Taiwan Businesses' 12-18 Month Action List
Dual-track certification: Completed Blue UAS-type security/supply chain review, and simultaneously conducted anti-electromagnetic warfare testing and RF specification compliance in Latvia and Poland.
Localization and Joint Ventures: Establish joint ventures or technology licensing with partners in Ukraine, Poland, or Romania for production (especially for core components such as the chassis, power supply, and actuators), locate production capacity and proof of origin within the EU/Ukraine, and align with SAFE/EDIRPA.
Join the consortium bidding: jointly bid with European system integrators and Ukrainian teams for Yingluck's "Drone Capability Consortium" procurement and testing program (especially for anti-drone and interceptor groups).
Focus on component gaps: Targeting components that are in urgent need in Ukraine and subject to Chinese export restrictions (RF links, avionics, small optoelectronics, and motor systems), establishing a modular supply chain and shortening the iteration time for complete aircraft.
Policy integration: Transform the country's positioning as the "Asia-Pacific Center of the Democratic Supply Chain" into a European procurement advantage, continue to sign incremental MOUs, and integrate the resources of the commerce and national defense systems into a one-stop window to Europe.
Conclusion: €2 billion is just the starting point; the real market lies in Europe’s “Drone Great Wall”
The €2 billion is the igniter. The €6 billion ERA pre-funding and the €150 billion SAFE joint military procurement, along with NATO and the EU's "Great Wall of Drones" initiative, will be the main battleground for the next three to five years. If Taiwan pursues a model of "trusted supply chain + localized mass production + joint R&D with Ukraine and Europe," it has the opportunity to capture a disproportionate share of this super cycle **—perhaps even become one of the biggest winners.
