K-Defense Monitor - Issue No. 2
Strategic Insights into South Korea's Defense Industry
Industry News
Hanwha Aerospace and Agency for Defense Development (ADD) to jointly develop multifunction radar (MFR) for the “Korean Iron Dome.”
Hanwha Aerospace looking to start export push for M105, a lower-price alternative to the K-9 self-propelled howitzer, focusing on the Latin American and South-East Asian markets.
South Korea’s top defense contractors continue to create jobs, having more than doubled in headcount since 2022.
Component manufacturers continue to benefit from the ongoing defense exports surge. The latest example is MNC Solutions whose Q1 2025 operating profit increased by over 400% YoY.
North Korean hacking attempts against South Korean defense contractors and shipbuilders have significantly increased, as Kim Jong-Un looks to continue military modernization drive.
Hanwha Aerospace has been selected to develop the MFR system for South Korea’s LAMD system. Hanwha will be partnering with the state-run ADD, the South Korean equivalent of DARPA. With a contract value of KRW 131.5 billion (USD 93 million), the MFR’s developmental phase is scheduled to conclude by November 2028.
LAMD has been nicknamed the “Korean Iron Dome,” as it is intended for use against North Korean artillery, many of which are not only positioned along the demilitarized zone (DMZ) separating the two Koreas but also within close proximity of Seoul.
Hanwha Aerospace is looking to export a lower-price alternative to the K-9 self-propelled howitzer. The K105 is a 105mm howitzer installed on the back of a truck. K105 is by no means a new invention, as it first debuted during the Korean War (1950-53). However, the latest version of the K105 reportedly includes certain modern technologies seen in the K-9, such as those relevant to automation and fire control. Hanwha reportedly plans to focus K105 sales in Latin America and South-East Asia. Meanwhile, Hanwha is in the process of delivering 850 units of the K105 to the South Korean armed forces. The K105’s price tag (KRW 800 million/USD 560K) is 1/10 of the K-9 (KRW 8 billion/USD 5.6 million).
The combined overall headcount at South Korea’s three largest defense contractors — Hanwha Aerospace, LIG Nex1, and Hyundai Rotem — grew by 9.7% (1,599) between 2024-2025, and now totals 16,630. Among the 1,599 new positions created, a substantial portion was known to be in R&D. In addition to hiring talent to develop next-generation technologies, such as AI and uncrewed systems, the hiring demand was also attributed to increasing export opportunities and the consequent customer requirements to adapt existing systems for use across varying terrains and climates. All three companies have seen a steep increase in hiring since 2022, as illustrated in the above infographic.
MNC Solutions, a local parts supplier, reported during its Q1 2025 earnings that its operating profit increased 413.2% YoY, having gone from KRW 1.9 billion (USD 1.3 million) in Q1 2024 to KRW 9.5 billion (USD 6.7 million). MNC attributed this growth to its defense business, as the company is a key supplier for several big-ticket defense export items, such as the K-9 self-propelled howitzer, Chunmoo multiple launch rocket system (MLRS), and the AS-21 Redback infantry fighting vehicle.
According to the National Intelligence Service (NIS), the South Korean government’s main intelligence organization, North Korean hacking attempts against South Korean defense contractors and shipbuilders have noticeably increased. The NIS attributes this development to an order previously given by Kim Jong-Un, as North Korea looks to continue its military modernization drive.
Deep Dive
Hanwha Looking to Acquire "Multiple" US Shipyards
As part of its US naval market entry strategy, Hanwha may be interested in snapping up US shipyards beyond Philly Shipyards and Austal USA
As rumored, Navy Secretary John Phelan is in South Korea this week. In addition to meeting the country’s acting president (who has since resigned), Phelan met with the two South Korean naval shipbuilders seeking US Navy shipbuilding and MRO contracts, which would be HD Hyundai Heavy Industries and Hanwha Ocean. While details of these meetings have yet to be revealed, Hanwha Vice Chairman Dong Kwan Kim made an interesting remark about acquiring additional US shipyards.
“In line with the US Navy’s strategic needs, we have been building up our shipbuilding infrastructure, so that Hanwha Ocean can respond quickly in any situation…. We plan to further strengthen our position in the North American market by acquiring multiple shipyards in the United States.”1
To provide some context, Hanwha was originally expected to acquire a single US shipyard. Their initial interest in Austal USA — builder of the Independence variant of the Littoral Combat Ship (LCS) — faltered in April 2024, following the Austal board’s rejection of Hanwha’s takeover offer. About two months later in June 2024, Hanwha acquired Philly Shipyards, a move that was questioned by industry stakeholders, due to the gravity of challenges faced by the Philadelphia-based shipyard.
In March 2025, Hanwha renewed its pursuit of Austal by acquiring a 9.9% stake in the Australian shipbuilder and applied for permission to increase its holding to 19.9%, which would make the South Korean company Austal's single largest shareholder.
An important takeaway from Kim’s comment and the preceding acquisition of Austal shares is that Hanwha may be looking to take an approach that is more extensive than previously thought.
When it comes to foreign acquisition of US naval shipyards, Fincantieri and Austal are prime examples, with both establishing their US presence through the acquisition of Marinette Marine and Bender Shipbuilding & Repair, respectively. As for Hanwha, it seems intent on taking a more extensive approach by pursuing shipyards beyond Philly and Austal.
Then, which US shipyards are potential targets for Hanwha? I’ve yet to hear any rumors, but stay tuned to this newsletter to track this important topic and others. So, please subscribe!
This quote has been translated from the Korean language by yours truly. The original Korean-language quote was as follows: “한화오션은 미 해군의 전략적 수요에 맞춰 어떤 상황에서도 신속하게 대응할 수 있는 건조 체계를 완비하고 있다…. 미국 내 여러 조선소를 확보해 시너지를 극대화하고 북미 시장에서의 입지를 더욱 강화할 계획.”