Upgrades to the Patriot Air Defense System would "help improve the security of the recipient and assist in maintaining political stability, military balance, economic and progress in the region," the DSCA said in a statement.
"This proposed sale serves U.S. national, economic, and security interests by supporting the recipient's continuing efforts to modernize its armed forces and to maintain a credible defensive capability," the agency said.
The main contractors would be Raytheon Technologies and Lockheed Martin, it said.
Taiwan's Foreign Ministry said it "highly welcomed" the decision.
"In the face of China's continued military expansion and provocative actions, our country will maintain its national security with a solid defense, and continue to deepen the close security partnership between Taiwan and the United States," it said in a statement.
Taiwan's Defense Ministry has said the decision to obtain newer Patriot missiles was made during a 2019 meeting with U.S.
The democratically governed island has complained of repeated missions by China's air force in its air defense zone, part of what Washington sees as Beijing's effort to pressure Taipei into accepting its sovereignty.
The United States, like most countries, does not have official relations with Taiwan, but Washington is its biggest backer and is bound by law to provide it with means to defend itself.
U.S. officials have been pushing Taiwan to modernize its military so it can become a "porcupine," hard for China to attack, and such arms sales always anger China.
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