From Brink of Collapse to New Heights: 19-Year-Old Military Manufacturer Carbon-Based Rides Drone Wave with 'Non-Red Supply Chain' Strategy

Special report on the launch of the Democratic Trusted Industries (5 parts in total) CNA News. Initiated from the grassroots, Taiwan's drone industry, which has stumbled along for over a decade or two, has managed to blossom from ruins and is poised for takeoff from the pineapple fields of remote countryside, thanks to a never-give-up spirit. Bolstered by the trend of international trust and concerted efforts from industry, government, and academia, the national drone team, based in Chiayi County, is planning to build an industrial cluster integrating R&D, testing, and production. The drone industry is flourishing, attracting increasing capital and technology. Taiwan's 'Wings of Democracy,' marked with green and blue logos, are soaring in the sky. Taiwan has also secured a ticket to propose for NASA's lunar landing program, with opportunities to develop and position itself in the lunar economy. The 'Wings of Democracy' taking flight globally and into space concretely manifests 'Taiwan as a part of the world.'

(CNA, Taipei, 17th, by reporter Chiang Ming-yen) Walking into Carbon-Based Technology's Taichung factory, various models of drones are neatly arranged. Engineers in protective gear move back and forth; some are engrossed in applying carbon fiber cloth, while others bend over to adjust the airframe structure. Every process affects flight stability. There are no high-speed assembly lines like in consumer electronics factories; it's more like a military-industrial base gathering elite forces, nurturing Taiwan's ambition to enter the global drone market.

It's hard to imagine that this company, a long-time manufacturer of Taiwan's medium-to-large military drones, frequently visited by overseas clients, and recently planning a 3 to 5-fold production expansion, was on the brink of life and death last year due to a lack of orders. 'When I first took over as chairman, this place was actually about to go bankrupt,' said Chen Wen-hong, Chairman of Carbon-Based Technology, in a nonchalant tone during an interview with CNA, as if talking about a closed chapter.

With 19 years of deep cultivation in the military drone field, Carbon-Based had long relied on a single client and sporadic projects, leading to a business downturn. It was not until the Russo-Ukrainian War broke out, prompting nations to reassess their autonomous drone capabilities and a rapid rise in demand for 'non-red supply chains,' coupled with the Taiwan government's active support for the drone industry, that this veteran military factory returned to the forefront of the industry wave.

With 19 years of deep cultivation, Carbon-Based is an invisible veteran of Taiwan's military drones. If judged by the number of employees, it's hard to associate Carbon-Based with the defense industry. The entire company has only about 60 people, a small scale, yet it can undertake military projects worth hundreds of millions of dollars. 'The history of Carbon-Based Technology is, to some extent, part of the development history of Taiwan's military drones,' said Chen Wen-hong. Founded in 2007, Carbon-Based's core entrepreneurial team came from AIDC and NCSIST, having long participated in Taiwan's key military drone projects, including Teng Yun, Albatross, Jian Xiang, and Shyong隼, possessing capabilities from airframe design and composite manufacturing to full-system assembly.

CEO You Pei-wen led reporters through the production line, introducing the manufacturing process of large military drones, while listing the various largest, fastest, most advanced, and highest-performance drones Carbon-Based has produced, including a delta-wing drone with a basic monthly order of over a thousand units. She proudly stated, 'It wouldn't be an exaggeration to say Carbon-Based is the best in Taiwan.'

You Pei-wen explained, 'Many people think assembling large drones is just putting parts together, but it's not like that at all.' Large military drones require high precision; the airframe must be fixed on special jigs for lamination and pressing, relying on engineers' long-accumulated process experience and craftsmanship. 'Therefore, the process is difficult to automate.' Even during the processing of carbon fiber and glass fiber, professional respiratory protection is required. To achieve light weight, drone bodies cannot use traditional rivets, and the composite material process is a core technology of Carbon-Based. Chen Wen-hong explained the production of carbon fiber parts: from cutting the cloth through 4 to 5 lamination steps, it must then be cured in a vacuum hot press autoclave at over 130 degrees Celsius for 6 hours. Every step determines the strength and durability of the airframe.

From lack of orders to restructuring and transformation, Chen Wen-hong's team took over Carbon-Based for a comeback battle. Despite Carbon-Based's deep technical foundation, it didn't bring stable operations. 'The problem was simple: not enough orders,' Chen Wen-hong pointed out. For many years, Carbon-Based mainly relied on projects from NCSIST and the military, but the pace of military projects is slow and the cycle is long. Chen said, 'In the past few years, the pace for medium-to-large drones slowed down, and Carbon-Based only made two and a half units in 3-4 years.'

The financial reports of Carbon-Based honestly reflected the pressure, losing nearly half of its share capital for three consecutive years, making operations difficult to sustain. The turning point came in 2024 when Chen Wen-hong invested and became the largest shareholder, taking over as chairman the following year and working with CEO You Pei-wen, who is in charge of brand marketing, to promote organizational transformation. Chen, not from a typical military-tech background, jokingly calls himself a 'layman.' 'Although I'm not the one who knows the most about technology, I'm more daring to offend people.' After taking office, Chen reorganized the organization and R&D direction, cutting projects not aligned with the core, and concentrating resources on three main areas: medium-to-large military drones, small dual-use (military/civilian) drones, and unmanned surface vehicles (USVs).

'Large military drones are Carbon-Based's foundation, but we can't rely solely on that,' Chen Wen-hong clearly stated. The service life of large military platforms is up to 20 years, and demand will saturate in a few years, so they must plan for the next market phase early. Currently, Carbon-Based has invested in the R&D of FPV (First-Person View) drones, loitering munitions, and USVs, hoping to capture both export and domestic military contracts.

With overseas orders coming in, Carbon-Based predicts a major revenue surge in 2027. After the Russo-Ukrainian War, the demand for drones exploded, and Carbon-Based felt the rapid increase in orders. Chen Wen-hong revealed that in the past six months, several overseas clients from Japan, India, Southeast Asia, etc., have visited and started small-batch trial cooperations. The potential order quantity from a single country could be in the thousands. Among them, Southeast Asia is considered one of the most promising regions. You Pei-wen observed that the Southeast Asian market is price-sensitive but has numerous island chains and vast demand. Recently, overseas teams have been visiting almost every month to see samples and arrange flight tests. 'Logistics for island nations, offshore island replenishment, and coast guard surveillance all require unmanned vehicles,' said Chen Wen-hong. Markets like Indonesia and the Philippines could become important application areas for USVs in the future, representing the next blue ocean market beyond the sky.

However, the defense industry is different from consumer electronics. The cycle from contact, flight testing, modification to mass production usually takes six months to a year. Chen Wen-hong estimates, 'Next year will be a year of explosive revenue growth, and Carbon-Based's operations will take off again.' Currently, Carbon-Based's main export products include a delta-wing drone with a control range of over 90 kilometers and a catapult-launched small attack drone. You Pei-wen stated that these products have the advantages of lower cost, high mobility, and modularity, allowing mission payloads to be adjusted according to needs, which aligns with the current global military trend of 'asymmetric warfare.'

Another potential product is a high-speed unmanned vehicle. Carbon-Based recently delivered it to NCSIST for testing. It can reach speeds of over 900 km/h (about Mach 0.69 to 0.8), claimed to be one of the 'fastest' drones in the world. If testing is successful this year, there is significant potential for subsequent mass production and strong international demand.

Carbon-Based is racing against time to expand production, with competition for talent from mainstream tech being a major challenge. With orders starting to come in, Carbon-Based's biggest problem is now production capacity. The current Taichung plant is about 700 to 800 pings. With the existing setup, it takes about 3 days to manufacture a single consumable drone. Chen Wen-hong admitted that the current capacity is insufficient to meet future demand. Carbon-Based is actively looking for a larger new plant in Taichung, targeting a scale at least 3 times the current size, hoping to increase monthly production capacity and the assembly rhythm by more than 5 times. At the same time, there are plans to move into the Chiayi Minxiong Drone Industry Base, but new capacity is not expected until 2030. 'Our talent recruitment website is almost always active, and we are training new staff every day,' said Chen Wen-hong. The current workforce of over 60 is only enough for the planned production of four 'Albatross II' drones this year. To take on orders for dual-use drones and USVs, Carbon-Based must expand to 150 people. Military-industrial talent is not readily available; training time is long, and technical requirements are high, making expansion and talent acquisition a race against time for Carbon-Based. You Pei-wen said the drone industry requires interdisciplinary talent in flight control, communications, and software/firmware, but Taiwan's top talent often flows to the mainstream tech industry. The lack of a systematic education and training system leads to high talent turnover. Carbon-Based has been actively promoting drone education in recent years, hoping to attract more cross-disciplinary talent.

With the boom of non-red drones, Taiwan's 'foundation of trust' holds a huge opportunity. Taiwan's drone industry has been developing for a long time but has not seen much success. Chen Wen-hong revealed that DJI Technology visited Taiwan and Carbon-Based for inspiration over a decade ago, then grew strong with support from Chinese government policies, conquering markets globally. But after the Russo-Ukrainian War, the logic of the global supply chain began to change. 'Now, many clients' first question is whether we can achieve a non-red supply chain and what the percentage of autonomous supply is,' observed You Pei-wen. Starting in 2025, the non-red supply chain has shifted from a market trend to a global consensus. 'Because Carbon-Based started with military drones, a non-red supply chain is part of our core DNA,' said You Pei-wen. In the past, non-Chinese supply chain options were few and costly, but in recent years, Taiwan's related supply chain has matured, with manufacturers of motors, imaging systems, and chips starting to establish and expand product lines suitable for drones. She revealed that three years ago, a Taiwanese-made drone was 5 times more expensive than a Chinese one; this gap has been narrowed to 1.5 to 2 times. 'Previously, the market only looked at price, but now it values security and trustworthiness more,' analyzed You Pei-wen. In recent years, international orders have been flocking to Taiwan, with 'trust' being a crucial foundation for Taiwan. Furthermore, government agencies continue to release public tenders, helping the industry to estimate order volumes in advance, allowing the supply chain to calculate costs more accurately.

For Taiwan's drone industry to break through, it must shift from individual efforts to a team game. Even with market opportunities emerging, it's hard for a single Taiwanese company to have all the necessary capabilities. From flight control, communications, navigation, AI, payloads, airframes, to engines, each part requires specialization. '90% of Taiwanese drone companies are SMEs, with a typical capital of less than 100 million NTD,' You Pei-wen admitted. Small companies generally face fundraising difficulties. Additionally, the high upfront costs of product development, manpower, testing, and participating in overseas exhibitions severely impact cash flow and corporate survival. They also generally lack mass production experience and expansion capabilities, not to mention that obtaining US Green UAS and NDAA certifications can cost millions of NTD. 'In the past, everyone was fighting alone, but Taiwan's drone industry must play as a team,' said Chen Wen-hong. Since taking office, he has spent more time visiting industry partners than in the factory. His idea is simple: Carbon-Based is strong in composites and manufacturing, while others are strong in flight control, systems, and software. 'Instead of competing, let's integrate.' Chen Wen-hong cited examples: THC is renowned for its autonomous flight control and software development, and NCF is currently the top seller of medium-to-large multi-rotor drones. Carbon-Based cooperates closely with them, co-developing and co-selling products. This strategy extends to USVs; Carbon-Based's Marlin J6 and Marlin S6 are co-produced with GEOTEK and an American company. 'The future of drones will be like the United Nations; no single country will do it all by itself,' said You Pei-wen. Japan excels in engines and software, the US has advantages in autonomous systems and platform integration, and Taiwan is strong in hardware manufacturing and supply chain integration. In her view, Taiwan's goal is not to replace China but to find its niche in the global non-red supply chain market. Chen Wen-hong believes that with Taiwan's foundation in electronics, IC design, and precision manufacturing, as flight control and supply chains mature, the drone and unmanned vehicle industry has great potential to become Taiwan's next 'guardian mountain' industry. (Editor: Lin Shu-yuan) 1150517