Last week, my colleague James O’Donnell wrote about a report by the think tank Center for a New American Security (CNAS) that analyzed the role of drones in a potential war in the Taiwan Strait. Right now, both Ukraine and Russia are still finding ways to source drones or drone parts from Chinese companies, but it’d be much harder for Taiwan to do so, since it would be in China’s interest to block its opponent’s supply. “So Taiwan is effectively cut off from the world’s foremost commercial drone supplier and must either make its own drones or find alternative manufacturers, likely in the US,” James wrote.
If the ban on DJI sales in the US is eventually passed, it will hit the company hard for sure, as the US drone market is currently worth an estimated $6 billion, the majority of which is going to DJI. But undercutting DJI’s advantage won’t magically grow an alternative drone industry outside China.
“The actions taken against DJI suggest protectionism and undermine the principles of fair competition and an open market. The Countering CCP Drones Act risks setting a dangerous precedent, where unfounded allegations dictate public policy, potentially jeopardizing the economic well-being of the US,” DJI told MIT Technology Review in an emailed statement.
The Taiwanese government is aware of the risks of relying too much on China’s drone industry, and it’s looking to change. In March, Taiwan’s newly elected president, Lai Ching-te, said that Taiwan wants to become the “Asian center for the democratic drone supply chain.”
Already the hub of global semiconductor production, Taiwan seems well positioned to grow another hardware industry like drones, but it will probably still take years or even decades to build the economies of scale seen in Shenzhen. With support from the US, can Taiwanese companies really grow fast enough to meaningfully sway China’s control of the industry? That’s a very open question.
A housekeeping note: I’m currently visiting London, and the newsletter will take a break next week. If you are based in the UK and would like to meet up, let me know by writing to [email protected].
Catch up with China
1. ByteDance is working with the US chip design company Broadcom to develop a five-nanometer AI chip. This US-China collaboration, which should be compliant with US export restrictions, is rare these days given the political climate. (Reuters $)
#Chinas #dominance #commercial #drones #global #security #matter
