With the United States decoupling from Chinese drone technology, Taiwanese companies are emerging as key partners in building secure, allied-aligned alternatives.

As global drone supply chains undergo a strategic realignment, growing regulatory pressure and geopolitical tensions are accelerating the shift away from Chinese manufacturers, which currently control an estimated 90% of the global consumer drone market and at least 70% of the enterprise market.

Taiwan, long a behind-the-scenes powerhouse in hardware manufacturing, is now stepping forward with secure, autonomous systems designed for trusted use in U.S. and allied markets.

This transition was clearly reflected at the SelectUSA Investment Summit, the U.S. government’s highest-profile event to promote foreign direct investment into the United States. Held annually by the U.S. Department of Commerce, the 2025 summit brought together more than 4,900 participants from 83 markets, including governors, cabinet officials, and corporate leaders.

Taiwan sent the summit’s largest foreign delegation for the second year in a row, with 183 representatives from 138 companies across sectors such as semiconductors, artificial intelligence, biotech, and uncrewed systems.

Drones emerged as a focal point of the Taiwanese delegation’s agenda. With strong backing from Taiwan’s Ministry of Economic Affairs (MOEA) and support from the American Institute in Taiwan (AIT), several drone-related companies used the summit to explore new partnerships, scout U.S. manufacturing locations, and deepen engagement with a growing market for secure, non-China-aligned uncrewed aerial systems.

For companies seeking to enter or expand in the U.S. market, the priority is clear: deliver systems that meet technical expectations and policy requirements while maintaining independence from China-linked capital, components, and design.

Voltasphere, a supplier of battery packs for electric vehicles (EVs) and uncrewed aerial systems (UAS), joined the SelectUSA delegation as part of a broader strategy to align with American industrial policy. Head of Finance Kai Wu says the company has separated its business into distinct entities to keep ownership and supply chains clean.

“By keeping our U.S. and Taiwan businesses separate from China, we avoid complications on either side,” Wu says. “We just feel that this is something where we can contribute and where we are welcome.”

Voltasphere is now exploring locations in the United States for a battery pack manufacturing facility that would serve drone and EV markets. The company also connects smaller Taiwanese suppliers with U.S. companies that may not be aware of their capabilities.

“There are many great Taiwanese component makers who haven’t had the opportunity to scale because of cost competition from China,” says Vivien Yang, Voltasphere CEO. “Now that the global market is changing, we see an opportunity to bring them in.”

But building a new supply chain is not without difficulty. Yang points to regulatory uncertainty, tariffs, and labor availability as ongoing challenges. She adds that while U.S. state governments are enthusiastic about battery and drone investments, many foreign companies are still waiting for policy clarity at the federal level before committing to new facilities.

In the meantime, companies like cybersecurity startup Jmem Technology (Jmem Tek) are addressing critical security concerns. Specializing in hardware-based encryption solutions for drones and other platforms, Jmem Tek is at the forefront of developing cutting-edge post-quantum encryption. This encryption, combined with hardware-level protection, prevents duplication or tampering. According to CEO John Chang, Jmem Tek’s chips secure the communication link between drone controllers and aircraft while also safeguarding onboard AI models in the event of a drone capture.

“If the signal is hijacked, the data is protected,” Chang says. “Even if a drone crashes on the enemy side, the encryption holds.”

Jmem Tek is one of the first companies to design and produce a physical chip based on a post-quantum cryptography algorithm selected by the U.S. National Institute of Standards and Technology. The company integrates these secure chips into USB dongles and embedded systems, making them deployable in a variety of commercial and military applications. Though based in Taiwan, Jmem Tek maintains a presence in Silicon Valley and is working with U.S. partners on early-stage defense projects.

Chang says the SelectUSA program has been beneficial, offering value beyond the D.C.-based conference. “We’re able to meet state-level officials, military procurement contacts, and potential partners in places we wouldn’t usually reach,” he says. “That kind of access is hard to come by without a delegation.”

Clear of China ties

SteadyBeat, originally an IC design company, has pivoted to drones in response to changing policy and funding priorities in Taiwan. Its Chairman George Hsueh says the company’s position is fully “non-red,” with no capital, components, or clients connected to China.

“We are 100% non-China,” Hsueh says. “And that’s exactly what our partners in the U.S. are asking for.”

SteadyBeat receives R&D support under Taiwan’s AI-on-Chip initiative, which it uses to develop processors for uncrewed systems. One of the company’s drone chips was presented to a space industry panel following connections made during the SelectUSA trip. SteadyBeat is now pursuing follow-up meetings in Virginia and other U.S. states to explore further integration with aerospace innovation networks.

Another key opportunity stemming from the delegation was XPONENTIAL, the leading U.S. drone and robotics trade show. Several Taiwanese companies participated in sessions and site visits tied to the conference. Some secured follow-up conversations with defense contractors and U.S. integrators as a result, and several companies have now initiated discussions with university research labs and drone training centers on pilot projects and joint testing of secure or lightweight systems.

“We met some good Taiwanese players during the trip, and we continue discussing with them to see if we can work together on U.S. opportunities,” Voltasphere’s Yang says. “The delegation really helped kickstart that.”

While defense remains an important focus, companies also emphasize growing commercial applications for drones. Voltasphere sees potential in power and mobility systems for ground-based robots, environmental drones, and industrial logistics vehicles.

Voltasphere’s Wu notes that commercial electric uncrewed ground vehicles and small drones are “underserved” by the most significant battery players and often rely on low-cost imports. “There’s a need for systems that are reliable, flexible, and customizable,” he says. “That’s where our strengths lie.”

SteadyBeat, meanwhile, is exploring how its low-power chips can enable more efficient aerial imaging and precision agriculture. Hsueh says the company is in early talks with municipal governments in Taiwan and abroad about integrating drones into public safety and infrastructure inspection programs.

Jmem Tek is seeing rising demand in the civil market as commercial drones are increasingly deployed to carry sensitive equipment or operate in critical infrastructure environments. The company’s embedded security module can serve as a safeguard against unauthorized system access, counterfeit parts, or signal interference in commercial fleets.

Chang adds that working across defense and civilian markets also helps stabilize revenue and reduce the risk of dependency on a single procurement channel. “Having dual-use applications makes us more resilient,” he says. “It also keeps us close to innovation cycles on both sides.”

The MOEA has identified drones as a critical dual-use technology and is investing heavily in both component innovation and ecosystem development. The government has also pledged to help Taiwanese companies establish a U.S. presence through new trade offices and partnerships with state governments.

Still, as SteadyBeat’s Hsueh notes, policy support alone is not enough. “There’s a lot of private-sector energy,” he says. “Someone just needs to coordinate it.”

For all three companies, the shift away from Chinese components and capital is not just a political consideration. It is an operational necessity, particularly as U.S. defense contractors, government agencies, and commercial drone buyers are increasingly subject to regulations limiting or banning Chinese-origin systems.

AIT Director Raymond Greene, who traveled with the Taiwan delegation during its U.S. visit, describes the partnership as a natural fit.

“Taiwan’s manufacturing excellence is a perfect match for U.S. innovation in software development and system design,” Greene says. He adds that partnerships between Taiwan and U.S. drone companies “are creating linkages to build secure supply chains for critical components.”

Greene says the effort to establish a China-free supply chain in the drone sector mirrors similar moves in semiconductors and AI, stressing that these industries are increasingly intertwined.

“The United States and Taiwan are well-positioned to dominate a dynamic sector where innovation and supply chain resilience will play an increasingly important role ensuring strength, security, and prosperity for both America and Taiwan,” he says.

Tax, talent, and trust

As more Taiwanese companies establish operations in the United States, several note that double taxation is becoming a growing concern. Although many companies remain in early-stage discussions or pilot project mode, those with cross-border income and staff allocation are beginning to face challenges related to tax compliance and withholding requirements in both jurisdictions.

Jmem Tek’s Chang notes that the issue is already on his radar. “We’re just now setting up our U.S. entity, and that’s where tax planning starts to become complicated,” he says. “We’re working with a professional firm to navigate it, but it’s definitely something that needs to be managed closely.”

AmCham Taiwan and other advocacy groups have long called for a U.S.-Taiwan agreement to reduce the risk of double taxation and to better support startups and small businesses operating in both markets. Without such a framework, some executives warn that growing investment enthusiasm could be tempered by financial and administrative friction.

Another challenge is scale. Many of Taiwan’s most capable hardware companies are so-called “invisible champions,” specialized SMEs with strong engineering cultures but limited international experience. Several executives note that language barriers, limited marketing resources, and unfamiliarity with U.S. certification processes can slow down potential deals or complicate pilot deployment.

To help address these gaps, companies are working with universities and community colleges in both Taiwan and the United States. Wu says Voltasphere is supporting a curriculum development initiative in collaboration with a former professor from Northwestern University to train local technicians and battery assembly specialists in the U.S. Midwest.

“We want to build up the whole supply chain — not just production but also people,” he says.

Chang adds that some state governments are beginning to link drone investors with universities and training programs, though more coordination is needed. “There’s a lot of goodwill, but we still need more structure,” he says.

Despite optimism, executives stress that the path forward is complex. For companies like Voltasphere, establishing production in the United States means navigating unfamiliar labor markets, financing models, and procurement timelines. Wu says investor interest is strong, but stakeholders still need signals like signed contracts or visible demand to trigger deployment of capital.

“We’re ready to help reindustrialize the U.S.,” he says. “But we need to know what the rules are and where the incentives will be.”

Chang notes that being a foreign company working with the U.S. defense sector brings its own challenges, including background checks and export restrictions. He says Jmem Tek is actively managing those issues and is confident in its value proposition.

“Our goal is to be a trusted supplier,” he says. “We’re ready to work with partners who care about security and supply chain integrity.”

All three companies are now in early talks with U.S. partners on potential production, licensing, and joint development agreements. For now, they continue to scale up operations in Taiwan, while preparing for longer-term expansion abroad.