Korean Defense Firms Generate One-Third of Revenue Through Exports

It has been revealed that major defense companies in South Korea achieved one-third of their total revenue through exports in the first half of this year. Following export contracts with countries like Poland last year, actual product deliveries have commenced this year, contributing to the increase in export figures. Presently, discussions on contracts are ongoing with various countries, including not only Poland but also the Middle East and Australia. As a result, it is expected that the export achievements of defense companies will further expand.

According to industry sources on Aug. 23, in the first half of this year, the total revenue of four defense companies – Hanwha Aerospace (Land Systems), KAI, LIG Nex1, and Hyundai Rotem (Defense Solutions) – amounted to 4.58 trillion won (US$3.43 billion), with exports accounting for 1.54 trillion won, representing 33.6 percent of the total. This figure has more than doubled compared to the first half of last year at 16.6 percent.

The company with the highest export share is Hanwha Aerospace, accounting for 42.5 percent. Compared to the first half of last year at 5.7 percent, this represents a significant increase of 36.8 percentage points. In the first half of this year, the export amount reached 612.1 billion won, which was over 18 times higher compared to the same period last year at 32.7 billion won. A Hanwha Aerospace spokesperson said, “The increase in export revenue is due to the fulfillment of contracts awarded last year, although the performance of Hanwha Defense, which was incorporated this year, was officially included in the calculations starting from the second quarter.” During the first half of this year, Hanwha Aerospace supplied some of the K9 self-propelled howitzer units to Poland under a contract signed last year.

Hyundai Rotem achieved a remarkable increase in exports in the first half of this year, reaching 38.8 percent, which is more than 38 percentage points higher than the 0.4 percent recorded in the same period last year. During the same period, export revenue increased significantly from 1.5 billion won to 288.5 billion won, showing an increase of nearly 200 times. This growth can be attributed to the delivery of the K2 tanks to Poland this year, following the supply contract signed last year.

KAI, which focuses on the export of fighter aircraft and aircraft components, saw an increase of 3 percentage points in its export revenue share, rising from 31 percent to 34 percent. With KAI recently commencing deliveries of the FA-50 fighter aircraft to Poland, it is anticipated that export revenue will dramatically increase in the future. LIG Nex1, which exports guided missile systems to Southeast Asia and other regions, also experienced a notable increase, with its export revenue share rising from 10.1 percent to 17.7 percent, a rise of over 7 percentage points.

South Korean defense companies, which were previously heavily reliant on domestic sales, have recently undergone a significant transformation in response to growing global security uncertainties. They have leveraged their advantages, such as superior performance for price and on-time delivery, to successfully secure contracts with countries like Poland and the United Arab Emirates (UAE).

South Korea’s presence in the global defense market is growing. According to the Stockholm International Peace Research Institute, an independent, non-profit think tank based in Sweden, South Korea ranked 9th in terms of its share of the global defense exports market, with a 2.4 percent share from 2018 to 2022. The gap between South Korea and 5th-ranked Germany, at 4.2 percent, is a mere 1.8 percentage points.

The outlook for South Korean defense companies’ exports remains positive. Hanwha Aerospace, for instance, has been selected as the preferred bidder for the Australian government’s infantry fighting vehicle procurement project last month, leveraging its future-oriented Redback armored vehicle. If the final contract is signed, the Australian military plans to deploy 129 Redback vehicles starting from the second half of 2027.

KAI has formed a consortium with Lockheed Martin and is preparing to participate in the U.S. project for up to 500 training aircraft and tactical introductory aircraft for the U.S. Air Force and Navy. LIG Nex1’s long-range surface-to-air defense weapon system, Cheongung-II, is garnering significant interest in the Middle East. Hyundai Rotem is currently in discussions regarding a second-phase export contract for the K2 tank with Poland.