Taiwan's president William Lai recently announced at a national security meeting that his administration will increase the defense budget to 3% of GDP through special funding, a move that industry sources say will inject momentum into the local defense sector.

Microsoft has unveiled its groundbreaking Majorana 1 quantum chip, marking a significant advancement in quantum computing technology. This development represents a fundamental shift in quantum computing architecture, combining innovative materials with a revolutionary design that promises to address long-standing challenges in the field.

Coretronic Intelligent Robotics Corporation (CIRC), a subsidiary of the Coretronic Group, is actively participating in government procurement efforts and has secured substantial contracts for military drones from the Ministry of Defense of Taiwan.

Taiwanese drone maker Thunder Tiger has announced that it will unveil key components for first-person view (FPV) military drones at the upcoming XPONENTIAL Europe 2025 in Düsseldorf, Germany, including flight controllers and gearboxes. Development and design of these components has already been completed, with mass production slated to begin in 2025.

Zyxel Communications will attend the International Defence Exhibition and Conference (IDEX) in Abu Dhabi from February 17 to 21, 2025. The company plans to present its latest software-defined radio (SDR) products, UAV/USV data link radios, satellite communication modules, advanced radar systems, and new electronic warfare reconnaissance devices to global military clients.

Taiwan's aerospace industry is gaining momentum as global demand for defense autonomy surges and the aviation sector rebounds. Industry sources note that defense and aerospace are two sides of the same coin: military applications fall under defense, while civilian use defines aerospace. Taiwan's push to bolster its defense capabilities is fueling growth in both sectors.

Taiwan's ambitious push to become a trusted partner in the US drone supply chain faces significant hurdles as manufacturers struggle to transition from their traditional hardware expertise to the demands of modern autonomous systems.

Elon Musk has intensified his advocacy for military drones, warning that the US military must accelerate research and production of unmanned aerial vehicles (UAVs) to maintain its global dominance. Yet domestic drone manufacturers acknowledge fundamental weaknesses in the industry, with critical short-term gaps that shape both the sector's trajectory and future trade partnerships.

The aviation supply chain has seen some relief from bottlenecks, but new aircraft orders continue to outpace production capacity, keeping pressure on deliveries. In response, airlines are extending leases on older jets to mitigate fleet shortages, driving up demand for after-sales services and maintenance capacity.

The EU convened a non-official defense summit on February 3, 2025, focusing on strengthening Europe's military capabilities against Russia and other threats. Given the pressing need for autonomous defense systems, the EU plans to invest EUR500 billion (US$516.33 billion) over the next decade to bolster its military industry. Following the prominent role of drones in Russia's invasion of Ukraine in 2022, market observers anticipate substantial growth in Europe's drone market as conventional warfare becomes increasingly technology-driven, with small unmanned aircraft emerging as a crucial segment.

Submarine technology has evolved dramatically with the advancement of technology, transforming naval tactics and global maritime security. From the first US Navy submarine, the USS Holland (SS-1), commissioned in 1900, to modern nuclear-powered submarines equipped with artificial intelligence (AI), the development of submarines has reshaped military operations and strategic maritime initiatives worldwide.

Amid the rapid development of dual-use technologies, the Japanese government has announced intensified regulatory measures on critical technology exports. On January 31, 2025, Japan's Ministry of Economy, Trade, and Industry (METI) revealed a revision to the Foreign Exchange and Foreign Trade Law (FEFTA) to prevent essential technologies from being diverted for military use. This regulatory overhaul targets 21 products, including advanced semiconductors and quantum computers, requiring businesses to obtain prior authorization before export.

As global defense priorities shift in 2025, Taiwan's Aerospace Industrial Development Corp. (AIDC) is positioning drones as strategic assets, leveraging the nation's technological strengths amid heightened regional tensions and evolving military dynamics.

While China implements export bans on key drone components in retaliation, the market has become increasingly volatile. Industry observers note that the drone industry's readiness has not kept pace with the rapid emergence of new competitors. Despite Taiwanese companies actively preparing for market expansion, the timing for significant growth may still be uncertain.

Since assuming office, Donald Trump has drawn global attention with tariff policies and defense strategy influence through protectionism. Dissatisfied with NATO allies' defense spending, Trump has demanded increased budgets, likened by some to a "protection fee." Now, with tariffs largely in place, defense policy appears next on his agenda.

Taiwan's digital infrastructure faced challenges again as two submarine cables connecting Taiwan and the Matsu Islands were completely severed on January 22, marking the latest in a series of disruptions that highlight the vulnerability of critical communication networks in the region.

China is broadening its ambitions from drone supremacy to the aerospace sector, aiming to challenge the dominance of European and American firms. Experts suggest that this endeavor is part of a larger geopolitical strategy where aerospace capabilities are intertwined with national security considerations.

Taiwan's military has awarded a contract to Tron Future Tech for 26 anti-drone systems, marking a significant step in the island's efforts to counter unmanned aerial threats amid rising regional tensions.

Upon Donald Trump's return to the presidency, Taiwan's overseas expansion strategies are attracting significant attention. Jyh-Huei Kuo, Taiwan's Minister of Economic Affairs (MOEA), recently highlighted the opportunities for collaboration between Taiwan and the US in aerospace technology. It will be the top priority for both Taiwan and the US in the future to strengthen partnerships in the aerospace sector.

Intel Foundry has announced the addition of two new defense industrial base (DIB) customers, Trusted Semiconductor Solutions and Reliable MicroSystems, as part of the third phase of the Rapid Assured Microelectronics Prototypes - Commercial (RAMP-C) efforts under the Trusted & Assured Microelectronics (T&AM) Program in the Office of the Under Secretary of Defense for Research and Engineering (OUSD(R&E)).

As the Legislative Yuan nears the end of its current session, opposition parties have proposed significant cuts and freezes to the 2025 central government budget. At a press conference on January 16, Premier Jung-tai Cho warned that these reductions would weaken Taiwan in five critical areas: technological development, national security, civil service performance, government communications, and overall national competitiveness.

As Donald Trump prepares to be inaugurated as President of the US on January 20, his controversial campaign statements and post-election remarks have raised alarm among allies in Europe and Asia. Proposals such as imposing higher import tariffs, demanding increased military spending from allies, withdrawing from the World Health Organization (WHO), and even attempting to purchase or annex Greenland have left countries scrambling to assess potential impacts and countermeasures.

Transcom, a provider of military-grade power amplifiers (PA), has disclosed that its revenue for 2024 reached an all-time high. The company's strong sales performance last year was primarily driven by government contracts, satellite communication-related products, and an increase in military drone shipments.

The US Department of Defense (DoD) has added Tencent Holdings, Contemporary Amperex Technology Co., Limited (CATL), and ChangXin Memory Technologies (CXMT) to its blacklist of entities allegedly tied to the Chinese military. This annual update to the Section 1260H list now includes 134 companies, as published on the Federal Register's website.

While the US semiconductor revival extends beyond Intel's prominent efforts, it critically depends on Micron, the country's sole memory chip manufacturer, expanding its domestic production capacity.