Taiwan is running out of time to find replacements for its aging submarine force. Taiwan currently has four boats. Two are 70 year old American Guppy class subs. These are used only for training, and are increasingly difficult and expensive to maintain. The two Hailung class subs were built in Holland and entered service in 1986. These 2,500 ton boats are armed with twenty torpedoes and Harpoon missiles (launched from the torpedo tubes.) But there's a new problem as well, because of plummeting morale among the 200 sailors who run these boats. Years of delays in obtaining new subs, and dim prospects of ever getting them, discourages qualified young sailors from volunteering for the submarine service, and many old hands are retiring as soon as they are eligible.
Nevertheless, the search for a shipyard willing to build, for Taiwan, eight diesel-electric submarines, continues. None of the European shipyards that specialize in this sort of thing will do it, as they fear economic retaliation from China. The United States had not built a diesel electric sub since the 1950s. Getting an American shipyard up to speed on building diesel electric subs would be expensive, and no one is sure exactly how expensive. Moreover, the uncertainty of how much it might cost is scaring many Taiwan supporters in the U.S. government. So alternative solutions are still being sought. Publicly, Taiwan says it wants the subs for anti-submarine work. But it's been pointed out that there are cheaper and more effective anti-sub capabilities available via helicopters, aircraft and UAVs. What is left unsaid is that the subs could also be used to shut down China's ports, crippling the economy and causing lots of political problems for China's leaders. It's also possible to shut the ports without using subs (air dropped naval mines, or just threatening to attack any merchant ship entering Chinese waters), but nothing does this sort of thing as effectively as a submarine, especially a very quiet diesel-electric sub.
Ideally, Taiwan wants eight new diesel-electric boats, preferably with AIP (air independent propulsion). This would drive the price up to nearly a billion dollars a boat. There are two potential sources.
One prospect is India, which has become quite alarmed at China's growing naval strength. India is building its own subs. Currently, six French Scorpene class diesel-electric submarines are being built in India. The Scorpene is a very modern design (and the result of cooperation between a French and a Spanish firm) that displace 1,700 tons, and with a crew of 32. It has six 533mm (21 inch) torpedo tubes, and carries 18 torpedoes and/or missiles. It is equipped with an AIP.
With well trained crews, Scorpenes can get close to just about any surface ship, no matter how good the defender's anti-submarine defenses are. But it's the AIP boats that makes these boats real killers. Without AIP, subs spend most of their time just below surface, using their diesel engines (via a snorkel device that breaks the surface to take in air, and get rid of the engine exhaust.) Snorkels can be spotted by modern maritime patrol aircraft, and both nations are getting more of these.
India is getting its first Scorpene in 2015, with one a year after that. Only the last three will have AIP. The price of the contract is quoted as $300 million for each boat. That could include AIP, because the boats are being built in Indian yards, which have much lower costs. European built AIP boats go for about half a billion dollars each. Typically, AIP adds about $100 million to the cost of a sub.
Since the Scorpenes are being built with Spanish and French technology, China could still pressure those nations to forbid India to build any of these boats for Taiwan. But India is also building nuclear subs, using Indian technology. At the moment, India is building all these nukes for their own use. But a Taiwanese order for over $10 billion worth of nuclear boats could change that. There are no active discussions with India on this matter. But the Taiwanese have approached Russia on the matter of collaborating in submarine construction. These discussions are still underway, and might come to fruition before Indian options become real.