As global tensions have risen, South Korean weapon manufacturers and defense contractors are having a moment as they see their services in increasing demand across the world.
Less than two weeks ago in Waikiki at the Honolulu Defense Forum, a conference organized by Honolulu think tank Pacific Forum attended by representatives from 19 countries, South Korean defense officials and business executives were out in force promoting their services ranging from new warships to ship repair services, tanks, aircraft and munitions.
The conflict in Ukraine and tensions in the South China Sea have fueled anxiety in countries around the world as leaders look to bolster their own defenses. Some South Korean companies have been cashing in. Eugene Kim, chairman of the Korea Defense Industry Association, told the Honolulu Star-Advertiser, “Artillery is going off the shelf like crazy.”
“Korea happens to be in the right place at the right time, and that has catapulted us,” Kim said. “(We’ve gone) from $9 billion last year in exports to looking at about $20 billion this year. We are about the ninth-largest exporter in the world right now, and we’re looking to get into top four in the near future. So our ascent is very quick, very fast.”
Even President Donald Trump, who has been skeptical of alliances and talked bolstering up manufacturing at home, told South Korea’s now-embattled President Yoon Suk-yol that he was interested in working together on shipbuilding in a call shortly after regaining the presidency with his win in the November election.
Kim said that at the end of the Cold War, many countries decreased defense spending and production but that due to the ongoing standoff between North and South Korea — who have remained technically at war since signing an armistice in 1953 that halted open fighting between the two — the Republic of Korea never slowed its production capacity.
The ROK military began its history relying largely on hand-me-down equipment and weapons from the United States, but in the 1970s began an ambitious plan to develop its own defense systems. Since throwing off military rule and democratizing, South Korea has grown into the world’s 10th-largest economy and an increasingly important player on the global stage.
The ROK military hasn’t been shy about showing off its country’s defense industry. Lee Gabsu, director general of the ROK Ministry of Defense’s Logistics Management Bureau, told the Star-Advertiser that during a December 2023 military symposium in San Diego that “Korea was the only country where we participated in the symposium alongside actual Korean companies — we brought them along.”
Reliant on ocean trade
Seoul’s ongoing standoff with the North means it is heavily reliant on ocean trade to power its economy. As a result, the ROK has emerged into one of the world’s top shipbuilding nations, rivaled only by China in building commercial freight vessels.
“We are oceangoing by nature,” said Kim Kisu, senior manager for HD Hyundai Heavy Industry’s naval and special shipbuilding unit.
To protect its interests at sea, Seoul has pursued building up a navy of locally built ships, and in 1999 the ROK navy unveiled “Navy Vision 2020,” its strategic vision for the 2020s, which included plans for eventual aircraft carriers and ballistic missile submarines.
HD Hyundai, the world’s largest shipbuilding company, has, in addition to building commercial freighters and tankers, built 106 warships, according to Jeong WooMaan, senior vice president and head of strategy for the company’s naval and special shipbuilding unit.
That’s included warships for export to countries across the Pacific. In the summer of 2022, the Philippine navy debuted its newest guided-missile frigate, the BRP Antonio Luna, at the biennial exercise Rim of the Pacific in Hawaii. It was built by HD Hyundai and based on the ROK navy’s Incheon-class frigate with modifications to meet the Philippine navy’s specifications.
The Philippines is locked in an ongoing territorial dispute with China over several islands and reefs in the South China Sea in a region the Philippines calls the West Philippine Sea. In 2016 an international court ruled in the Philippines’ favor and declared that China’s territorial claims had “no legal basis.”
But the Chinese military doubled down, building bases on disputed islands and reefs and frequently harassing Philippine vessels and fishermen. Manilla has sought closer ties with regional countries and to build up its military to push back.
“We built two frigates for the Philippine navy,” Jeong said. “We are now building two other corvette (warships) and also six more offshore patrol vessels as well.”
Jeong said the Philippines has historically struggled to maintain its inventory of warships and that “they wanted to learn how to maintain their new ships.” He explained that “since 2022 we have provided them our services for them. It includes the parts supplying, and also we provide some regular inspection and repair them, (and provide) equipment instantly with our supply chain.”
Tensions in the South China Sea, a busy waterway that one-third of all international trade moves through, has increasingly drawn concern from countries around the globe that depend on that trade. The U.S. Navy has conducted near-constant operations around the globe, including so-called “freedom of navigation operations” in the South China Sea against Beijing’s objections.
But the high rate of operations has taken a toll on ships, with struggling American shipyards falling far behind on repairs and building new ships.
In a keynote at the Honolulu Defense Forum, the top officer for U.S. forces in the Pacific, Adm. Samuel Paparo, said, “Our maintenance backlogs grow longer each month for every critical joint force element. … Platforms age faster than we can replace them perfectly, and we operate on increasingly thin margins of error.”
Korean shipbuilding
Hawaii’s Pearl Harbor Naval Shipyard already has been busy and is undergoing an expensive modernization with the construction of a massive new submarine dry dock at Pearl Harbor — the most expensive construction project in U.S. Navy history. Now the U.S. is turning to South Korea’s shipyards to lighten the burden.
The Biden administration’s Navy Secretary Carlos Del Toro reached out to Korean shipyards about potentially repairing American ships in the region. The Trump administration seems interested in building on those efforts.
ROK military officials told the Star-Advertiser that two U.S. warships are undergoing repairs in the country. Lee said one that entered dry dock in August is expected to be checked out in March and that they hope to take in six more for repairs this year.
“We believe that the U.S. will be able to see how well we prepare the items, and they will be able to analyze how fast we did it and how much cheaper it is. They will be able to analyze all that data,” Lee said. “So they will compare that data with sending the vessel back to the U.S. and repairing it there. They will compare the turnaround time and the cost effectiveness, and will know that Korea is much more effective and efficient.”
There have been tight legal restrictions on the U.S. military’s use of foreign shipyards ostensibly to both to maintain a domestic industrial and protect military secrets. But American lawmakers have been revisiting that with new legislation.
Shares of HD Hyundai and fellow South Korean shipbuilder Hanwha Ocean rose more than 15% and 16%, respectively, on Feb. 12 after two bills were introduced in Congress to potentially allow the U.S. Navy and Coast Guard to build naval vessels in a shipyard located in a U.S.-allied country.
“Both bills are about leveraging our diplomatic relationships and the comparative advantages of our allies to ensure America remains at the forefront of maritime security,” said Republican Sen. Mike Lee of Utah, who co-sponsored the bills. “By modernizing our approach to shipbuilding and repair, we can enhance our readiness and maintain our military edge, all while ensuring fiscal responsibility.”
Many engineers in the South Korean shipbuilding industry already have experience and deep knowledge with how American systems work. Kim Kisu was an engineer for HD Hyundai’s first Sejong the Great-class destroyer, which is based in part on the U.S. Arleigh Burke-class destroyer. The company is working directly with the U.S. Navy and American contractor Lockheed Martin on a new system.
“I have experience working with the U.S. government and U.S. civilian side,” said Kim Kisu. “So we know the U.S. systems, how the U.S. naval vessels are built.”
High-level demand
When Russia launched a full-scale invasion of Ukraine in 2022, in addition to killing thousands of civilians and soldiers on both sides, it started what some defense contractors saw as a gold rush as arms flooded into the country for defending Ukrainian forces. But as the conflict ground on and casualties mounted, many contractors learned that they lacked the ability to meet demand.
“We were already at the very high level,” said Eugene Kim of the Korean defense industry. “But with Ukraine, everybody found out nobody has equipment to deliver. It’ll take a long time, and they will need years to prepare the capacity, because it was all shut down all over the world and we were the only country that was already continuously manufacturing.”
In particular, Poland has become a major buyer of Korean military equipment as it stares down Russia across its border and provides assistance to its neighbor Ukraine — including in some cases sending Korean-made equipment. The ROK has sent body armor and de-mining vehicles to Ukraine but so far has not directly sent weapons — though Yoon’s government expressed interest especially as North Korea has increased cooperation with Russia, including sending weapons and its own troops to Ukraine to fight.
But though a Gallup Korea poll in October found most South Koreans view growing military ties between Pyongyang and Moscow as a threat, 82% said they opposed sending military aid to Ukraine and fear becoming entangled in the European conflict.
Meanwhile, Seoul has lately been locked in political crisis after Yoon declared a short-lived martial law regime that was lifted when both members of the opposition and his own party widely condemned it. Soldiers stormed the Korean National Assembly, bringing back painful memories and bringing the ROK military under renewed scrutiny and investigation.
Yoon was impeached and on Thursday appeared in court for his first trial hearing on charges of insurrection. Most analysts think Yoon is unlikely to serve out the rest of his term and that his conservative government will be replaced by one led by the progressive opposition, which tends to take a more conciliatory approach to relations with the North and a generally more dovish foreign policy.
But in Hawaii, Korean defense contractors were optimistic that business will continue to boom for them.
Trump has signaled a desire to scale back American military involvement in Europe, and many European countries — particularly those closer to Russia — are anxious about the future and looking to bolster their defenses. And tensions between China and its neighbors show little sign of cooling down.
“They’re not looking for the most expensive Lockheeds and Boeings and Northrops of the world,” said Eugene Kim. “They’re looking for delivery, they’re looking for affordable, they’re looking for reliable.”
