Boeing Arms Taiwan to Repel Invasion by China

Could a mere $200 million worth of missiles make China think twice about invading Taiwan?

Jan 20, 2014 at 8:29AM

When it comes to defense contractors, there's almost nobody bigger than Boeing (NYSE:BA).

One of America's biggest defense contractors, Boeing sold $32.6 billion worth of defense, space, and security products in 2012. This month, Boeing published a tally of all the hi-tech arms it's shipped out to military customers in calendar year 2013. Among the revelations: In all of last year, Boeing customers accepted delivery of only 29 of the company's upgraded "Harpoon II" anti-ship missiles.

File
The original Harpoon anti-ship missile, emerging from the water after being launched from a torpedo tube (circa 1983). Source: Wikimedia Commons

Just two weeks into 2014, Boeing has already beaten that record.

Missiles for peace
Boeing this year began delivering some three-dozen advanced Harpoon II missiles to Taiwan. In addition to four missiles earmarked for certifying the product for use, and use in training exercises, Taiwan bought 32 UGM-84L Harpoon II missiles for active duty. For Boeing, it's a modest-sized arms deal, worth about $196 million to the defense contractor. But for Taiwan, the Harpoons will arm its two diesel-electric attack submarines, dubbed the "Sea Dragon" and "Sea Tiger" with an advanced ship killing capability -- aimed at deterring a Chinese strike across the Taiwan Straits.

File
Taiwan's Sea Dragon (Hai Lung) diesel-electric sub. Source: Wikimedia Commons

Granted, in a world where most leading naval powers have "gone nuclear," diesel-electric submarines may sound like an anomaly. And it's true -- diesel-electrics are rather low-tech. Burning their fuel, and needing oxygen to burn it to generate electric power, these boats have both a more limited range than, and an increased vulnerability to air attack relative to nuclear boats. But diesels are also cheaper than nuke boats, and when moving stealthily under electric power, are practically invisible to an aggressor force.

This opens up the possibility for Taiwan to wage "asymmetric warfare" should it ever be attacked by the much larger, much more heavily armed People's Liberation Army. Able to strike targets as far out as 67 nautical miles out, the Harpoons will expand the submarines' range of attack beyond the reach of their torpedoes.

Also, in addition to being used to simply "sink ships," the advanced Harpoons that Taiwan bought have a land attack capability (hence the "L" designation in UGM-84L). Tactically speaking, this means that unless an invading force can sink or incapacitate Taiwan's subs, it must constantly "watch its back," lest the subs slip past the pickets and launch a missile attack on the Chinese mainland.

Foolish takeaway
Thus, arming Taiwan with Harpoons creates a situation of "mutually assured destruction" writ small. By threatening some small measure on harm on the Chinese mainland in the event it attacks Taiwan, Boeing may have helped ensure the two countries never come to blows at all.

Invest in an even better weapon
The Harpoon II is certainly a fine weapons system, in use on submarines in no fewer than four separate navies. But is it the right weapon to invest in... for you? U.S. News & World Report recently wrote about a new invention that "will drive the U.S. economy" going forward. Business Insider calls it "the growth force of our time." In a special report entitled "America's $2.89 Trillion Super Weapon Revealed," you'll learn specific steps you can take to capitalize on this massive growth opportunity. Act now, because this is your shot to cash in before the fat cats on Wall Street beat you to the potentially life-changing profits. Click here now for instant access to this free report.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers