Taiwan's only aircraft maker AIDC said Thursday that it had forged an agreement with US aerospace firm Lockheed Martin to get a piece of the island's $5.85 billion fighter upgrade deal.

Aerospace Industrial Development Corp and Lockheed Martin signed a memorandum of understanding at Britain's Farnborough International Airshow Wednesday, according to a statement released by AIDC.

AIDC attaches great importance to the biggest ever F-16 upgrade project to be obtained by Lockheed Martin, it said.

Details of the proposed subcontracts from Lockheed Martin have not been finalised, an AIDC official said.

Taiwan's defence ministry has said that the upgrade, which will take 12 years to complete, would give its 146 US-made F-16 A/Bs a significant boost.

The jets will be equipped with radar capable of detecting Chinese stealth aircraft and may also be armed with precision munitions, according to the ministry.

Ties with Beijing have improved since Ma Ying-jeou of the China-friendly Kuomintang party came to power in 2008 on promises of ramping up trade links and allowing in more Chinese tourists.

But Beijing still refuses to renounce the use of force against Taiwan should it declare formal independence, even though the island has governed itself since the end of a civil war in 1949.