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If they used hydrogen peroxide to supply oxygen, the diesel engines could be used while the submarine is submerged.

IF.... The Germans still haven't perfected the hydrogen peroxide propulsion last I heard. They are working on it, however...

If you are Taiwan, you want the subs ASAP for their deterrent effect. You might not want to rely on German intentions (they could just say that their were continuing problems with the h-p reactors). The Germans have already shown themselves suseptible to PRC pressure.

Taiwan has been flirting with the Collins (Australian) design as a fallback, but I think that they'd rather have the Type 209 (German).

If you think of it the more modern diesel subs employ what is known as an AIP (Air-Independent Propulsion) System. This allows a diesel sub to have some of the characteristics that make a nuclear powered sub so lovely, although obviously it does not possess the ability to go submerged non-stop! However it can stay submerged much longer without having to rise and use air to recharge the electrical batteries.

The AIP system uses a fuel cell equipped with hydrogen and oxygen storage, as well as several Polymer Electrolyte Membranes (PEM) fuel cells; and this AIP is connected to the 'normal' conventional system with a diesel generator with a lead-acid battery.

This system, especially for nations like Taiwan and India who really do not need to travel far in their subs, is amazingly good technology since it gives their subs great capabilities. And those subs can be quite deadly to enemy ships (read Pakistani and Chinese ships for the two countries mentioned).

And several submarine designs actually employ AIP systems. For example the Swedish SSK Gotland Class ( Type A-19), the Russian Kilo Class (the newer Kilos have the AIP , eg the ones India is getting upgrades in. I am not sure whether the Chinese hulls have received any such upgrades); and the French Agosta 90-B (the versions being sold to Pakistan are being up-graded with the MESMA AIP system, probably to counter the Indian Kilo upgrades).

However i do think the reason Taiwan is coming to the US for a Diesel submarine is probably due to pressure from China to other nations that sell such subs to not sell to Taiwan.

Currently China has the edge on Taiwan in terms of submarine capability, both in quality and quantity! The Republic of China Navy, ROCN (which is actually the Taiwanese Navy. confusing isn't it. The Red Chinese Navy is the PLAN).anyway the Taiwanese navy ROCN only has two hull desings, the Guppy Class(basically obsolete, and obsolete for decades now) and the Chien Lung (derived from the Dutch Zwaardvis design and is quite advanced, however Taiwan only got two hulls due to pressure from China).

However i still think them turning to the US is due to more pressure from China to other nations that supply diesel subs (although why they cannot go to Australia or Israel for the subs does not compute)