Some Southern Hospitality Could Go a Long Way for S. Korean Nuclear Submarines
Why acquiring Austal’s Alabama shipyard could be the key to addressing South Korea’s nuclear submarine ambitions and Hanwha's Philly Shipyard predicament
When President Donald Trump announced that South Korea would build its nuclear submarines at Hanwha Philly Shipyard, observers immediately identified a glaring problem: the facility lacks almost everything needed for such an undertaking. However, while debates rage over whether construction will occur in Philadelphia or South Korea, Hanwha has been quietly pursuing what may be the most pragmatic solution for all those involved: acquiring Austal, a shipbuilder already embedded in the United States (US) submarine industrial base.
The Philadelphia Problem
As I mentioned in a recent Substack article, uncertainty persists over where these nuclear submarines will be built. President Trump stated Philadelphia, while South Korean Defense Minister Ahn Gyu-back bluntly assessed that “Philly Shipyard currently lacks significant technical capability, workforce, and facilities.” Ahn isn’t wrong. The yard, which Hanwha acquired for USD 100 million in 2024, has historically built commercial vessels, such as container ships and training vessels for the US Maritime Administration. Philly Shipyard has never constructed a naval combat vessel, let alone a nuclear submarine.
Building the necessary capabilities from the ground up could take well beyond a decade and billions in investment before a keel is laid for the lead boat. Such a timeline would defeat the strategic urgency driving South Korea’s nuclear submarine ambitions.
How can Hanwha address these concerns on an accelerated timeline?
Sweet Home Alabama
Since 2023, the South Korean conglomerate has been trying to acquire Austal, an Australian shipbuilder which owns and operates naval shipyards in the US through its local subsidiary, Austal USA. Headquartered in Mobile, Alabama, Austal USA possesses the foundation upon which Hanwha could potentially establish a robust US-based submarine business.
In addition to building a variety of surface vessels for the US Navy (USN) and the US Coast Guard (USCG), Austal USA is a key supplier to the Virginia-class and Columbia-class submarine programs, producing command-and-control system modules and electronic deck modules. In order to support its submarine business, Austal USA is currently building a brand new 369,600-square-foot Module Fabrication and Outfitting Facility in Mobile, which is purpose-built for submarine work, equipped with the specialized tooling, quality assurance systems, and security infrastructure required for classified naval programs.
Simply, Austal is uniquely valuable for Hanwha’s ambitions and South Korea’s nuclear submarine program. Compared to building the necessary capabilities from scratch at Philly Shipyard, acquiring Austal may help Hanwha shorten the timeline.
Unfortunately for Hanwha, the path towards acquiring Austal has been an arduous one.
Circling Austal
The Austal acquisition saga began in September 2023, when Hanwha first approached the Australian shipbuilder with an unsolicited takeover bid valued at approximately USD 673 million. Austal’s board rejected the proposal, citing concerns over whether regulatory approvals could be obtained. Over the following months, Hanwha revised its offer multiple times, reportedly exceeding USD 700 million. However, negotiations collapsed in late 2024 over what Hanwha described as “wholly unreasonable conditions,” which was Austal’s insistence on a USD 5 million termination fee that could be invoked if the board determined regulatory approval was unlikely.
Rather than abandoning the effort, Hanwha went silent as it prepared for a more aggressive strategy. In March 2025, Hanwha Systems and Hanwha Aerospace — working through an Australian joint venture — acquired 9.9% of Austal shares through open-market purchases for approximately USD 117 million, instantly becoming the second-largest shareholder after Tattarang Ventures’ 19.6% stake. Simultaneously, Hanwha entered a total return swap (TRS) agreement for an additional 9.9% stake and applied to Australia’s Foreign Investment Review Board (FIRB) to increase its holdings in Austal to 19.9%.
A breakthrough came in June 2025, when the US Committee on Foreign Investment (CFIUS) granted clearance for Hanwha to acquire up to 100% of Austal, finding “no unresolved national security concerns.” This approval marked a critical milestone, signaling Washington’s support for South Korean investment in US naval shipbuilding industrial base. However, Austal publicly questioned the scope of this approval, requesting written confirmation and claiming discrepancies between what Hanwha announced and what was actually granted.
That said, as of November 10, 2025, Australian approval remains pending, as FIRB has yet to rule on Hanwha’s application, with the process delayed beyond the initially expected September timeline.
AUKUS Complications?
South Korea isn’t the only one in the Indo-Pacific with a budding nuclear submarine program. Austal already participates in AUKUS, which could introduce both opportunity and complexity for Hanwha’s acquisition ambitions. The program is explicitly designed around the trilateral Australia-UK-US partnership and involves sharing of naval nuclear propulsion technology under the Exchange of Naval Nuclear Propulsion Information Agreement (ENNPIA). Bringing a fourth country’s defense conglomerate into the supply chain could raise questions about technology transfer restrictions and security protocols.
The most fundamental concern will be whether South Korean ownership would disqualify Austal from continued AUKUS participation. However, CFIUS’ approval for Hanwha to acquire up to 100% of Austal strongly suggests US officials have determined that appropriate security arrangements can mitigate such concerns.
The nature of Austal’s AUKUS work may make such arrangements more feasible. Under AUKUS, Austal fabricates command-and-control systems and electronic deck modules rather than complete boats or nuclear propulsion systems. These modules require sophisticated precision manufacturing but don’t involve nuclear reactor technology. This distinction creates a natural boundary, as the most sensitive nuclear propulsion information would remain within the established AUKUS framework, while South Korean manufacturing expertise could enhance module production capacity without compromising core technology protection.
This separation matters because AUKUS faces severe industrial capacity constraints. The US submarine industrial base currently struggles to deliver two Virginia-class boats annually, far short of the 2.3 boats per year needed to meet both USN requirements and AUKUS commitments to Australia. Module production represents a critical bottleneck that Hanwha’s advanced manufacturing capabilities could help alleviate. With the US desperately in need of greater submarine production capacity, South Korean investment through Austal could offer a pragmatic solution.
In addition, South Korea’s own nuclear submarine program creates strategic alignment rather than conflict. With Washington having approved Seoul’s pursuit of nuclear-powered submarines, South Korean involvement in AUKUS module production becomes less anomalous. Both programs serve Indo-Pacific deterrence objectives and involve close US partnership. The key distinction is that South Korea would participate as a manufacturing contributor rather than a treaty partner with access to naval nuclear propulsion technology.
The broader question is whether AUKUS’ strategic logic accommodates South Korean involvement. The program’s explicit trilateral structure suggests exclusivity, but its severe capacity constraints demand pragmatism. If South Korean manufacturing capabilities can accelerate AUKUS timelines without compromising nuclear propulsion technology protection, both strategic imperatives can be satisfied. The real test will be whether security arrangements can maintain clear boundaries between what South Korean personnel can access and what must remain restricted to the three AUKUS partners.
Looking Ahead
Hanwha’s acquisition of Austal could help secure a more practical pathway for South Korea to build nuclear submarines in the US without having to bet everything on Philly Shipyard’s timely transformation. However, if the acquisition efforts fall apart, Hanwha will likely face the sobering reality that submarine construction in Philly Shipyard may take far longer and cost far more. That is, if Philly Shipyard could be transformed to such an extent at all — something that remains far from certain.
This article is the fourth installment in my continuing series on South Korea’s nuclear submarine program. The first article, ‘Washington Says ‘Yes’ to South Korean Nuclear Submarines,’ examined the political and diplomatic shift that made the program possible. The second, ‘In Defense of South Korea’s Nuclear Submarine Program,’ outlined the legal and strategic rationale for Seoul’s pursuit of nuclear propulsion within the bounds of the NPT. The third, ‘S. Korea Already Deep Into Nuclear Submarine Design,’ explored the quiet progress underway within South Korea’s defense-industrial base. Together, these pieces trace how a once-taboo idea has evolved into one of the most consequential defense projects in South Korea’s modern history.