Taiwan Faces Military Supply Chain Crisis as China Advances

Taiwan is grappling with a significant crisis in its military supply chain, raising concerns about its readiness in the event of a conflict with China. As tensions escalate, experts believe Taiwan lacks the capability to produce and sustain adequate military resources quickly. Currently, Taiwan can manufacture approximately 1,000 precision missiles annually, which falls short of the estimated need for over 1,200 anti-ship missiles to effectively counter a full-scale invasion by the People’s Liberation Army (PLA). With the PLA boasting more than 3,000 ballistic and cruise missiles and a capacity for rapid production, Taiwan’s existing inventory could be depleted within days.

A significant factor contributing to Taiwan’s vulnerability is its reliance on US arms sales. As of 2024, Taiwan faces a backlog of over US$21 billion in promised military support—an amount exceeding its entire annual defense budget. Notably, critical equipment such as fighter jets and anti-ship missiles will not be delivered until 2026 or later, while even basic weapons like Stinger missiles are arriving three years behind schedule. This delay poses a severe risk should conflict arise in the near future.

Taiwan allocates merely 2.45% of its GDP to defense spending, which is less than that of South Korea or Israel, and only marginally above NATO’s recommended threshold. A substantial portion of this budget is consumed by personnel costs, leaving less than 25% for procurement and research. Of the limited funds available, approximately NT$145.8 billion (US$4.5 billion) is dedicated to weapons acquisition, but this is hampered by legislative freezes on NT$90 billion of the budget. Consequently, major projects, including a next-generation submarine, have faced delays.

Taiwan’s defense industry is characterized by low production levels and a lack of integration between civilian and military sectors. Although the country boasts a manufacturing workforce of approximately 2.99 million, fewer than 0.15% are engaged in defense-related roles. Despite having about 1.1 million skilled technicians under the age of 40, the absence of a reserve force or civilian-military integration plan severely limits mobilization capabilities. Furthermore, Taiwan’s military production infrastructure is inadequate, with only one composite repair dock for fighter jets, servicing just four to six aircraft at a time.

Taiwan’s missile production capabilities are similarly constrained. In 2024, the nation is projected to produce just over 1,000 missiles, including various types such as surface-to-air and anti-ship missiles. For instance, the Hsiung Sheng long-range missiles are produced at a rate of 140 units per year, while Sky Bow III interceptors are limited to 96 annually. The Chien Hsiang loitering munition line, although growing, is capped at 200 units per year. The situation regarding ammunition is even more dire, as the military estimates a need for between 50,000 to 70,000 rounds of 155 mm artillery in the first month of combat, while current monthly production hovers below 5,000 rounds.

The frailty of Taiwan’s supply chains exacerbates these challenges. Over 70% of missile components, including seeker heads and GPS units, are still imported, with many subject to stringent US arms export regulations that restrict local alternatives. The backlog of US arms now totals US$21.5 billion, representing 110% of Taiwan’s 2025 defense budget. Key systems such as Patriot missiles and SLAM-ERs are experiencing delivery delays of three to five years, with some orders dating back to 2017.

China, in contrast, has a far more robust military production capacity. China’s defense industry includes over 200 major state firms and thousands of private suppliers, all interconnected within a military-civil system that allows for rapid mobilization. The country excels in shipbuilding, producing over 50% of the world’s total output, and dominates the market for drones and missiles. With plans to manufacture over 1 million loitering munitions annually by 2026, China showcases an industrial strength that Taiwan struggles to match.

To enhance its military capabilities, Taiwan needs to develop a defense industry capable of mass-producing effective weapons rapidly. The example of South Korea’s focus on “good enough” systems, coupled with clear contracts and monthly production targets, serves as a potential model. Taiwan should incentivize firms that meet production quotas and involve civilian factories in defense efforts.

Moreover, Taiwan’s Ministry of Economic Affairs should initiate an investment program that promotes dual-use technology, allowing non-defense companies to participate in national security efforts. Establishing a trained tech reserve similar to Israel’s Unit 8200 could also bolster Taiwan’s defense capabilities by preparing engineers and coders for part-time roles in the military.

Collaboration with allies such as Japan, Australia, and the United States is also crucial. Establishing shared production lines for drones and munitions could enhance supply security, while exporting affordable defense products to regional partners could foster stability in the Asia-Pacific region.

Taiwan’s future depends not just on what it can procure, but on what it can manufacture. As the geopolitical landscape evolves, the ability to build a self-sufficient defense system will be vital for Taiwan’s security. A comprehensive approach that integrates civilian capabilities and focuses on rapid production will be essential in preparing for potential conflict.