Last week, Taiwan signed a deal with US defense start-up Vatn Systems to develop autonomous underwater vehicles and strengthen its “asymmetric warfare capabilities” amid growing military pressure from Beijing.
Executed through the National Chung-Shan Institute of Science and Technology (NCSIST), Taiwan’s government-funded top weapons developer, the agreement marks the latest in a series of moves to expand the island’s unmanned underwater capabilities.
Under the memorandum of understanding, NCSIST and Vatn will explore artificial intelligence-enabled command-and-control systems, deploy autonomous underwater vehicles (AUVs), and establish supply-chain and maintenance support in Taiwan.
Reportedly, both NCSIST and Vatn Systems are sanguine that their partnership would combine overseas technology with Taiwan’s industrial and research capabilities to accelerate AUV development and systems integration, while strengthening underwater reconnaissance and maritime defense resilience.
According to Vatn co-founder and CEO Nelson Mills, “Building affordable undersea autonomy for US and allied partners and deploying that capability at scale is core to our strategy, and this agreement gives us a chance to explore how that technology can support Taiwan’s naval modernization effort.”
But then Vatn is not the only American organization that NCSIST is collaborating with. Given the situation that China’s navy outnumbers Taiwan’s by more than 3 to 1, Taipei is betting that swarms of cheap, smart, and expendable underwater drones can do what traditional submarines cannot – deny the Taiwan Strait to China at scale if the latter invades.
Taiwan seems to have learned the lesson from the ongoing war in Ukraine, where the cheap drones have been able to change the course of the war by demolishing sophisticated fighter aircraft, ships, and missiles that cost millions of dollars.
Taiwan is not only increasingly looking to unmanned underwater systems for surveillance, seabed mapping, mine countermeasures, and the protection of critical infrastructure, but is also exploring their potential military applications as part of its preparations for any cross-strait conflict.
Viewed thus, the NCSIST and Vatn agreement seems to be the latest development in the pattern that began last year.
Though it was reported only last month, NCSIST had signed agreements in September 2025 to develop drones with US defense tech company Maritime Tactical Systems. The plan is to produce 27 maritime drones for the Coast Guard — 25 unmanned surface vessels and 2 underwater drones — with at least one prototype for testing in the first half of 2027.
Secondly, NCSIST is training personnel to deliver America’s Anduril Industries product, the DIVE-LD autonomous underwater vehicle.
Planned for delivery this month (August 2026), the DIVE-LD is 5.8 meters long, can dive to 6,000 meters, and carries synthetic aperture sonar, a multibeam echo sounder, a magnetometer, and a high-resolution camera. Its first mission will be to inspect undersea cables with Taiwan’s Chunghwa Telecom, but NCSIST has said it will also be evaluated for other missions.
Incidentally, NCSIST and Anduril had agreed in September 2025 to co-produce the Barracuda-500 autonomous cruise missile and an underwater drone. It was the first time that Taiwan had agreed to jointly manufacture such systems with a foreign company. The focus, it was said, was on “mass producibility” and sustainable local production.
Other US firms are also participants in Taiwan’s defense industry. Shield AI, a San Diego company, partnered with Taiwan’s Thunder Tiger group in May 2026 and demonstrated AI-guided “Sea Shark” 600 and SeaShark 800 unmanned attack boats on July 29 in Pingtung (Taiwan).
Similarly, Virginia-based Auterion, which specializes in AI swarming software that links thousands of drones across air, sea, and land domains, is also partnering with NCSIST.
Significantly, increased collaboration between the American and Taiwanese companies in drone production is due to recent changes in US laws that were previously quite prohibitive. As US Congressman Michael McCaul said in Taipei on August 7, he was “very optimistic” about joint drone production, citing US law that now authorizes co-production with Taiwan. He compared it to AUKUS — “a partnership to anchor democratic drone manufacturing”.
Asked what could encourage US defense companies to choose Taiwan over China for drone manufacturing, given China’s dominance of the global drone industry, McCaul, chairman emeritus of the US House Foreign Affairs Committee, highlighted intellectual property protection and cybersecurity.
“You don’t want your supply chain compromised by your adversary,” he said, noting that China has supplied Russia with significant technology during its war against Ukraine.
Another incentive for US manufacturers to partner with Taiwanese firms, McCaul said, is that many Taiwanese manufacturers have already obtained, or are close to obtaining, US certifications showing that their drones are secure and contain no Chinese components. “Those certifications are important with the US government. And I think it’s in both of our interests. (Because otherwise) We export things that obviously end up in the wrong hands sometimes.”
In other words, McCaul was saying that a partnership with Taiwan creates a “democratic” drone supply chain free of Chinese components. That aligns with Washington’s broader tech decoupling.
Seemingly, all these collaborations between the US and Taiwan fit well into the policy of “strategic denial” to the Chinese military in Taiwanese waters. The idea is that nothing deters conflict more than turning Taiwan into a “hornet’s nest of air, surface, and subsurface drones”.
This is known as the “Hellscape Strategy.”
‘Hellscape’ envisions a battlefield filled with tens of thousands of unmanned ships, aircraft, and submarines all working in tandem to engage thousands of targets across the vast span of the West Pacific. Admiral John Aquilino, former commander of the Indo-Pacific Command (INDOPACOM), originally coined the term in August 2023 at the Emerging Technologies for Defense Conference and Exhibition.
The concept was brought up again at the Shangri-La Dialogue by current INDOPACOM (now rechristened Pacific Command) commander Admiral Samuel Paparo in an interview with The Washington Post.
At its core, the concept leverages the Pentagon’s initiative to rapidly procure and field large numbers of unmanned systems, drawing on critical lessons from the ongoing War in Ukraine, which has revolutionized unmanned warfare. Because of these lessons, Deputy Defense Secretary Kathleen Hicks announced the Department’s “Replicator initiative” at the same conference in 2023.
‘Hellscape’ and ‘Replicator’ are said to be closely related to each other, and many of the capabilities set to be delivered in the Replicator program will have direct applications to the Hellscape concept envisioned by Admiral Paparo.
In the event of a Chinese assault, the Taiwan Strait would be flooded with thousands of unmanned systems — air, surface, and subsurface — to attract landing forces before they reach shore.
Taiwan’s geography makes this strategy especially relevant. Since the 180 km-wide Strait is shallow, noisy, and crisscrossed by shipping lanes and undersea cables, it is said to be a nightmare for large submarines. In this situation, small UUVs that can lie on the seabed, patrol cable routes, or conduct mine reconnaissance will prove to be very handy, it is explained.
Historically, asymmetric maritime warfare relied on sea mines, fast attack craft, and shore-based anti-ship missiles. While effective, these methods carry inherent limitations in flexibility, range, and adaptability.
The subsurface maritime environment is inherently opaque, acoustically unpredictable, and incredibly difficult to monitor. For a conventional navy, securing a vast maritime zone against subsurface threats requires immense resource expenditure, including sonobuoy fields, maritime patrol aircraft, and specialized anti-submarine warfare (ASW) frigates.
Against this, a UUV can bypass surface radar, visual lookouts, and standard thermal imaging systems. Equally important is the economy of scale.
For instance, a single conventional attack submarine or a guided-missile destroyer costs hundreds of millions, if not billions, of dollars to construct, maintain, and crew. The loss of a single such vessel represents not only a catastrophic financial blow but also a severe depletion of national prestige and operational capability. In contrast, underwater drones can be produced at a fraction of the cost.
Similarly, if an asymmetric actor deploys a swarm of low-cost, explosive-laden underwater drones against a multi-billion-dollar aircraft carrier, the defensive force must successfully intercept every single threat to guarantee safety. And that involves many expensive platforms and weapons. Conversely, the attacker needs only a single drone to penetrate the defensive screen and achieve a strategic victory.
Incidentally, Taiwan is not the only weaker power that finds UUVs attractive in asymmetric warfare against a much stronger adversary.
All leading military powers are seeking UUVs for military purposes. That explains why the global underwater drone market size, which was valued at USD 7126.14 million in 2025, is projected to grow from USD 7974.15 million in 2026 to USD 19603.12 million by 2034, registering a CAGR of 11.9%.
North America, mainly the US, dominated the underwater drones market with a 36.4% market share in 2025. Europe is the second-largest region in the global underwater drones market. It is estimated to reach USD 3,930 million, growing at a CAGR of 12.2% during the forecast period of 2026-34.
Incidentally, the Indian Navy is also looking to develop and incorporate underwater drones into its weaponry to keep an eye on China’s growing footprint in the Indian Ocean.
In line with the strategy, the Indian Navy procured four HUGIN AUV systems (manufactured by Norway’s Kongsberg Maritime) in September 2020. Several start-up companies are said to be developing underwater drones, creating umpteen growth opportunities for the underwater drones market.
The Defense Research and Development Organization (DRDO) announced last month that it had developed man-portable autonomous underwater vehicles (MP-AUVs), marking a turning point in the country’s naval warfare.
Former Indian Navy chief Admiral Dinesh Tripathi had also confirmed that the country is indeed developing underwater drones, and the program has reached a stage where these assets will be inducted into the nation’s blue-water force soon.
However, all this does not mean that underwater military drones will replace submarines or ships. There are still significant technological hurdles.
Radio waves do not travel well through saltwater, meaning long-range communication and real-time remote control are difficult when a drone is deeply submerged. UUVs do rely on acoustic communications, which have low bandwidth and are easily jammed.
If they operate with a high degree of autonomy, which is feasible, they also face ethical and technical challenges. If an underwater drone loses contact with its operators, it must rely on onboard artificial intelligence to identify and engage targets. But the consequent risks of fratricide and civilian collateral damage—such as striking a commercial cargo ship instead of a warship—are unpredictable.
However, despite these challenges, it must be admitted that UUVs are transforming the global maritime landscape. And in the context of Taiwan, a paradigm shift is taking place in the contested Taiwan Strait with the help of US technology and software.
- Author and veteran journalist Prakash Nanda is Chairman of the Editorial Board of the EurAsian Times and has been commenting on politics, foreign policy, and strategic affairs for nearly three decades. He is a former National Fellow of the Indian Council for Historical Research and a recipient of the Seoul Peace Prize Scholarship.
- This is an Opinion Article
- CONTACT: prakash.nanda (at) hotmail.com
