By Ann Wang

SUAO, Taiwan (Reuters) -Taiwan sealed a partnership deal on Tuesday with U.S. and German-based Auterion for drone software battle-tested in Ukraine to help strengthen the island's defences against growing military threats from giant neighbour China.

Auterion, whose software is used in Ukrainian drones operating combat missions against Russia, said the deal could eventually lead to the technology being used in millions of drones for Taiwan.

China views democratically governed Taiwan as its own territory and has ramped up its military pressure over the past five years, including staging half a dozen rounds of war games. Taiwan's government rejects Beijing's sovereignty claims.

Since Russia invaded Ukraine in 2022, Taiwan has been studying how Ukraine has deployed drones, both in the air and at sea, to successfully offset Russia's numerical advantage on the battlefield, given China's forces also outnumber Taiwan's.

Auterion said it had agreed to a strategic partnership with Taiwan's defence ministry's research and development arm, the National Chung-Shan Institute of Science and Technology, for uncrewed systems and drone swarming software.

"What we're bringing to the table has been combat-proven in Ukraine to deter aggression and destroy tanks, naval assets, and other really expensive equipment. So by building a large autonomous fleet, Taiwan can deter China," Auterion's chief executive Lorenz Meier told Reuters.

"The partnership is super long-term. So I think in terms of, if you're trying to put that in number of drones or dollars, we're expecting millions of drones eventually over multiple years and hundreds of millions of dollars in value that's being created," he added, speaking at a ministry-organised sea drone exhibition at the northeastern Taiwanese port of Suao.

Pushed by the United States, Taiwan has been working to transform its armed forces to be able to wage "asymmetric warfare", using mobile and often cheaper weapons which still pack a targeted punch, like drones and truck-mounted missiles.

Chung-Shan President Lee Shih-chiang thanked the five foreign companies who participated at the Suao exhibition.

"I believe that you will soon be sanctioned by the Chinese government, but do not fear, because you have chosen the democratic camp," he added.

Ukraine has deployed sea drones not only to attack ships in Russia's Black Sea fleet, but also to shoot down aircraft.

The unmanned sea drones on display in Suao included not only those that could be packed with explosives for high-speed suicide missions, but smaller craft that can conduct low-profile reconnaissance.

(Reporting by Ann Wang; Writing by Ben Blanchard; Editing by Michael Perry)