Taiwan's Special Defense Budget Cut Plummets Military Stocks; Industry Fears Impact on Confidence
Taiwan's special defense budget has been reduced to NT$780 billion, causing a widespread decline in military-industrial stocks. The drone and unmanned vessel sectors were particularly hard hit. Industry insiders worry about the impact on industrial confidence, capital market trust, and international partners' judgment of Taiwan's strategic direction over the next 10 to 20 years.
📋 Article Processing Timeline
- 📰 Published: May 11, 2026 at 19:44
- 🔍 Collected: May 11, 2026 at 20:02 (17 min after Published)
- 🤖 AI Analyzed: May 11, 2026 at 20:32 (29 min after Collected)
Central News Agency (CNA)
(Taipei, May 11, CNA reporter Chiang Ming-an) Taiwan's special defense budget has been cut, with the ceiling set at NT$780 billion, leading to a sharp decline in military-industrial stocks today. The drone and unmanned vessel sectors became the hardest-hit areas. Industry players believe this affects Taiwan's industrial confidence, capital market trust, and international partners' assessment of Taiwan's strategic direction over the next 10 to 20 years.
The Legislative Yuan passed the Special Act for National Defense on May 8, setting the budget ceiling at NT$780 billion, a reduction of NT$470 billion from the Executive Yuan's original proposal of NT$1.25 trillion over eight years. The market's concern over a shrinking defense procurement scale caused military-industrial concept stocks to tumble today, with drone and unmanned vessel sectors becoming the hardest hit.
CSBC Corporation, Taiwan, closed down nearly 7%, while Lungteh Shipbuilding plunged over 9%. Drone concept stocks like Thunder Tiger and AIDC also saw declines exceeding 9.5%. Aerospace Industrial Development Corporation (AIDC) and Evergreen Aviation Technologies Corporation fell by nearly 6%. Other military-industrial stocks such as Sheng-Tien, Coretronic, Ecom Technology, and Carbide also weakened, painting a grim picture for the sector.
Defense industry sources told CNA that the budget reduction might indeed affect "Taiwan's Shield" initiative, the non-red supply chain, and domestic unmanned aircraft procurement projects. However, the actual impact will depend on how the government allocates the budget afterward. They added that "if it is instead supported stably through regular budgets, it may not be a bad thing."
Chen Wen-hung, chairman of Carbide, a major domestic manufacturer specializing in military drones, posted on Facebook that the Legislative Yuan passed the NT$780 billion version of the Special Act for National Defense. Many planned projects for indigenous defense, drones, unmanned vessels, and the non-red supply chain could not be fully included. For Carbide, which began shifting to export-oriented operations last year to align with international standards, the current impact is limited.
However, Chen Wen-hung stated, "As an important manufacturer in the unmanned and defense technology industries, I feel deeply regretful." He believes this will impact Taiwan's industrial confidence, capital market trust, and international partners' judgment of Taiwan's strategic direction over the next 10 to 20 years.
Chen Wen-hung explained that some international investors, initially optimistic about Taiwan's unmanned industry, are now re-evaluating risks. Some supply chain partners are also concerned about the continuity of future policies. He believes that Taiwan's true shield is not just procured weapons, but its ability to build long-term, independent, and sustainable technological and industrial capabilities.
Carbide CEO You Pei-wen believes that the reduction in the special defense budget will affect not only most drone manufacturers but also cause other related industries to halt their development into drone and unmanned vessel applications. For small companies betting on military procurement, this could be a significant blow. However, larger companies, like Carbide, typically diversify their presence across many markets, such as exports, contract manufacturing, and other industrial applications, which helps mitigate risks.
The Taiwan Defense Industry Development Association and the Taiwan Aerospace Industry Association had previously warned that Taiwan, situated in a critical strategic position in the Indo-Pacific, has seen global supply chains accelerating their restructuring in recent years. "Trusted supply chains" and "non-red supply chains" have become a trend, presenting Taiwan with an important opportunity to enter the defense technology supply chain. (Editor: Chang Chun-mao) 1150511
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(Taipei, May 11, CNA reporter Chiang Ming-an) Taiwan's special defense budget has been cut, with the ceiling set at NT$780 billion, leading to a sharp decline in military-industrial stocks today. The drone and unmanned vessel sectors became the hardest-hit areas. Industry players believe this affects Taiwan's industrial confidence, capital market trust, and international partners' assessment of Taiwan's strategic direction over the next 10 to 20 years.
The Legislative Yuan passed the Special Act for National Defense on May 8, setting the budget ceiling at NT$780 billion, a reduction of NT$470 billion from the Executive Yuan's original proposal of NT$1.25 trillion over eight years. The market's concern over a shrinking defense procurement scale caused military-industrial concept stocks to tumble today, with drone and unmanned vessel sectors becoming the hardest hit.
CSBC Corporation, Taiwan, closed down nearly 7%, while Lungteh Shipbuilding plunged over 9%. Drone concept stocks like Thunder Tiger and AIDC also saw declines exceeding 9.5%. Aerospace Industrial Development Corporation (AIDC) and Evergreen Aviation Technologies Corporation fell by nearly 6%. Other military-industrial stocks such as Sheng-Tien, Coretronic, Ecom Technology, and Carbide also weakened, painting a grim picture for the sector.
Defense industry sources told CNA that the budget reduction might indeed affect "Taiwan's Shield" initiative, the non-red supply chain, and domestic unmanned aircraft procurement projects. However, the actual impact will depend on how the government allocates the budget afterward. They added that "if it is instead supported stably through regular budgets, it may not be a bad thing."
Chen Wen-hung, chairman of Carbide, a major domestic manufacturer specializing in military drones, posted on Facebook that the Legislative Yuan passed the NT$780 billion version of the Special Act for National Defense. Many planned projects for indigenous defense, drones, unmanned vessels, and the non-red supply chain could not be fully included. For Carbide, which began shifting to export-oriented operations last year to align with international standards, the current impact is limited.
However, Chen Wen-hung stated, "As an important manufacturer in the unmanned and defense technology industries, I feel deeply regretful." He believes this will impact Taiwan's industrial confidence, capital market trust, and international partners' judgment of Taiwan's strategic direction over the next 10 to 20 years.
Chen Wen-hung explained that some international investors, initially optimistic about Taiwan's unmanned industry, are now re-evaluating risks. Some supply chain partners are also concerned about the continuity of future policies. He believes that Taiwan's true shield is not just procured weapons, but its ability to build long-term, independent, and sustainable technological and industrial capabilities.
Carbide CEO You Pei-wen believes that the reduction in the special defense budget will affect not only most drone manufacturers but also cause other related industries to halt their development into drone and unmanned vessel applications. For small companies betting on military procurement, this could be a significant blow. However, larger companies, like Carbide, typically diversify their presence across many markets, such as exports, contract manufacturing, and other industrial applications, which helps mitigate risks.
The Taiwan Defense Industry Development Association and the Taiwan Aerospace Industry Association had previously warned that Taiwan, situated in a critical strategic position in the Indo-Pacific, has seen global supply chains accelerating their restructuring in recent years. "Trusted supply chains" and "non-red supply chains" have become a trend, presenting Taiwan with an important opportunity to enter the defense technology supply chain. (Editor: Chang Chun-mao) 1150511
Choose to stand with the facts; every sponsorship you provide supports press freedom.
Download CNA's "Firsthand News" APP to stay updated.
Text, images, and videos on this website may not be reproduced, publicly broadcast, or publicly transmitted and used without authorization.