China & Taiwan Update, August 25, 2026

Key Points:

• Taiwan’s National Chung-Shan Institute of Science and Technology (NCSIST) unveiled the Chiang Kung (Tien Kung IV) hypersonic missile interceptor, which can engage ballistic missiles at altitudes up to 70 km and will be a key component of the proposed T-Dome integrated air defense system, though legislative gridlock has delayed funding.
• Taiwan’s Ministry of National Defense plans to build two Chiang Kung systems with at least 128 missiles on a $1.13 billion budget, aiming to enhance interception capabilities and reduce reliance on U.S. military support, but the 2026 defense budget excluded funding for this and other domestic systems.
• Taiwanese prosecutors indicted nine individuals, including Nvidia and Super Micro employees, for illegally smuggling advanced AI servers with high-end Nvidia chips to China in violation of U.S. export controls, highlighting ongoing efforts to restrict China’s access to cutting-edge semiconductor technology.
• The People’s Liberation Army (PLA) is drawing lessons from the war in Ukraine to prepare for future “intelligentized” warfare dominated by AI and drone swarms, emphasizing rapid innovation, integration of legacy systems, and information superiority to disrupt enemy operational systems.
• China continues to conduct covert research vessel operations near Taiwan, expanding maritime presence to assert jurisdiction and support undersea warfare capabilities, while also limiting exports of critical minerals like germanium and quartz to Taiwan, causing supply chain disruptions in high-tech industries.