Leading defense industry companies in South Korea, including Hanwha Aerospace, Korea Aerospace Industries (KAI), LIG Nex1, Hyundai Rotem, and Hanwha Ocean, have hit “contract jackpots” in countries like Poland and Australia, marking a significant shift for South Korea from a defense equipment importing nation to a complete exporter in traditional weaponry. These “K-Defense” companies are now aiming to enter the ultimate stage of the defense industry, the U.S. market.
As of the end of the third quarter, the order backlog for South Korea’s top five defense companies reached approximately 96.4 trillion won (US$73.98 billion), approaching the 100 trillion won mark. This represents a 58.3 percent increase from 2019 when the backlog was 60.9 trillion won. Even considering only the planned order amounts, it is expected that this year’s order backlog will easily exceed 110 trillion won. An industry insider said, “Like the semiconductor, automotive, and shipbuilding industries before, once considered barren, South Korean defense companies are making strides to become global players.”
Commonly highlighted advantages of “K-Defense” in the global defense industry include cost effectiveness, swift supply capabilities, and customized production based on customer requests. Examples like Hanwha Aerospace’s K-9 self-propelled howitzer and Hyundai Rotem’s K-2 tank showcase the ability to quickly modify weapon systems to suit local terrains, impressing foreign authorities. Another strength lies in the attention to “details,” including the incorporation of conveniences like air conditioning according to each country’s specific requests. The Stockholm International Peace Research Institute (SIPRI) mentioned, “While increased demand for weapons is outpacing production in many places, both South Korea and Israel have many companies capable of manufacturing in response to orders at any time.”
The outlook for countries that South Korean defense companies secure contracts with is gradually becoming more diverse. Until last year, Hanwha Aerospace, KAI, and Hyundai Rotem secured large-scale contracts centered around Poland. This year, KAI exported the FA-50 fighter jet to Malaysia and expanded its presence by discussing helicopter Surion contracts with the UAE and other partners. Hanwha Aerospace has hit the jackpot by securing a contract to supply 129 units of the Redback, a futuristic tracked infantry fighting vehicle (IFV), to Australia, valued at 3.16 trillion won, while LIG Nex1 is aiming for additional contracts in the Middle East. Next year, there are expectations for new procurement projects from countries such as Uzbekistan, the Philippines, Romania, India, and Malaysia, suggesting that the trend of securing contracts in more countries will continue and potentially surpass this year’s achievements.
The focus of South Korean defense companies is turning towards the dream market, the United States. The U.S. accounts for 39 percent of global defense spending and is home to 42 of the top 100 defense companies based on revenue. KAI plans to actively participate in the introductory and training aircraft procurement projects of the U.S. Air Force and Navy. Hanwha Aerospace is set to enter the U.S. market by participating in the U.S. government’s next-generation long-range self-propelled howitzer program.