Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 7

• 1.1. What is this Report About? 7
• 1.2. Definitions 7
• 1.3. Summary Methodology 9
• 1.4. About GlobalData 10

2. Executive Summary 11

3. Market Attractiveness and Emerging Opportunities 12

• 3.1. Current Market Scenario 13
  • 3.1.1. Primary Threat Perception 13
  • 3.1.2. Military Doctrine & Strategy 14
  • 3.1.3. Military Fleet Size 16
  • 3.1.4. Procurement Programs 21
  • 3.1.5. Social, Political and Economic Environment & Support for Defense Projects 24
  • 3.1.6. Political and Strategic Alliances 25
• 3.2. Defense Market Size Historical and Forecast 26
  • 3.2.1. Taiwanese defense budget to grow at an estimated CAGR of 3.28% during 2019-2023 26
  • 3.2.2. Issue of One China anticipated to drive military expenditure 28
  • 3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.93% over the forecast period 29
• 3.3. Analysis of Defense Budget Allocation 31
  • 3.3.1. Share of capital expenditure is expected to increase during the forecast period 31
  • 3.3.2. Capital expenditure is anticipated to record a CAGR of 3.41% during the forecast period 33
  • 3.3.3. Taiwan’s per capita defense expenditure is expected to increase during the forecast period 35
• 3.4. Homeland Security Market Size and Forecast 37
  • 3.4.1. The homeland security market in Taiwan is expected to grow at a CAGR of 1.50% during the forecast period 37
  • 3.4.2. Human trafficking to drive homeland security expenditure 39
  • 3.4.3. Taiwan falls under “Some risk” category in the terrorism index 40
  • 3.4.4. Taiwan faces very low threat from terrorist organizations 41
  • 3.4.5. Taiwan has a terrorism index score of 0.5 43
• 3.5. Benchmarking with Key Global Markets 44
  • 3.5.1. Taiwanese defense expenditure expected to remain low compared to leading spenders 44
  • 3.5.2. Taiwan will continue to remain as a small contributor in the global arms market 46
  • 3.5.3. Defense budget as a percentage of GDP is expected to remain low over the forecast period 47
• 3.6. Market Opportunities: Key Trends and Drivers 48
  • 3.6.1. Top 10 Defense Sectors by Value (US$ Million) - Projections over 2018-2023 48
  • 3.6.2. Destroyers 49
  • 3.6.3. Diesel−electric Submarine 50
  • 3.6.4. Land-based C4ISR 51

4. Defense Procurement Market Dynamics 52

• 4.1. Import Market Dynamics 54
  • 4.1.1. Defense imports increased during the period 2013−2017 54
  • 4.1.2. The US, Germany, and Italy are the major defense equipment suppliers for Taiwan 55
  • 4.1.3. Aircraft, Missiles and Naval Vessels accounted for a total share 84.9% in Taiwanese defense imports 56
• 4.2. Export Market Dynamics 57
  • 4.2.1. Taiwan defense exports was very low during 2013−2017 58
  • 4.2.2. Central American countries are the major prospects for Taiwanese defense exports 59

5. Industry Dynamics 60

• 5.1. Five Forces Analysis 60
  • 5.1.1. Bargaining power of supplier: High 61
  • 5.1.2. Bargaining power of buyer: Medium 61
  • 5.1.3. Barrier to entry: High 61
  • 5.1.4. Intensity of rivalry: Low 61
  • 5.1.5. Threat of substitution: Low 62

6. Market Entry Strategy 63

• 6.1. Market Regulation 63
  • 6.1.1. The government encourages offsets to develop the domestic defense industrial base 63
• 6.2. Market Entry Route 64
  • 6.2.1. Budgeting process 64
  • 6.2.2. Procurement Policy and Process 64
  • 6.2.3. Foreign equipment manufacturers enter the market through direct commercial sales 64
  • 6.2.4. Foreign military sales is the viable market entry route for foreign defense companies 65
  • 6.2.5. Biennial defense exhibition provides an attractive entry route 65
• 6.3. Key Challenges 66
  • 6.3.1. Corruption and lack of transparency are the factors which hinders the growth of the Taiwanese defense industry 66
  • 6.3.2. Delay of procurement programs will lead to cost overruns 66
  • 6.3.3. Lack of sales agents and stringent regulations restrict domestic defense industry growth 66

7. Competitive Landscape and Strategic Insights 67

• 7.1. Competitive Landscape Overview 67
• 7.2. Key Domestic Companies 69
  • 7.2.1. Aerospace Industrial Development Corporation (AIDC): overview 69
  • 7.2.2. Aerospace Industrial Development Corporation (AIDC): products 69
  • 7.2.3. Aerospace Industrial Development Corporation (AIDC): recent announcements and strategic initiatives 69
  • 7.2.4. Aerospace Industrial Development Corporation (AIDC): alliances 70
  • 7.2.5. Aerospace Industrial Development Corporation (AIDC): recent contract awards 70
  • 7.2.6. Chung-Shan Institute of Science and Technology (CSIST): overview 71
  • 7.2.7. Chung-Shan Institute of Science and Technology (CSIST): products 71
  • 7.2.8. Chung-Shan Institute of Science and Technology (CSIST): recent announcements and strategic initiatives 72
  • 7.2.9. Chung-Shan Institute of Science and Technology (CSIST): alliances 72
  • 7.2.10. China Shipbuilding Corporation (CSBC), Taiwan: overview 73
  • 7.2.11. China Shipbuilding Corporation (CSBC), Taiwan: products 73
  • 7.2.12. China Shipbuilding Corporation (CSBC), Taiwan: alliances 73
  • 7.2.13. The Combined Service Forces (CSF): overview 74
  • 7.2.14. The Combined Service Forces (CSF): products 74
  • 7.2.15. The Combined Service Forces (CSF): alliances 74

8. Business Environment and Country Risk 75

• 8.1. Economic Performance 75
  • 8.1.1. GDP per capita at constant prices (US$) 75
  • 8.1.2. GDP at current prices (US$) 76
  • 8.1.3. Exports of goods and services (NT$ Bn) 77
  • 8.1.4. Imports of goods and services (NT$ Bn) 78
  • 8.1.5. LCU per US$ (period average) 79
  • 8.1.6. Goods exports as a percentage of GDP 80
  • 8.1.7. Goods imports as a percentage of GDP 81
  • 8.1.8. Services imports as a percentage of GDP 82
  • 8.1.9. Services exports as a percentage of GDP 83
  • 8.1.10. Net Foreign Direct Investment as % of GDP 84

9. Appendix 85

• 9.1. About GlobalData 85