This year, domestic defense companies that have advanced into the global market are expected to focus more on targeting developing countries in Southeast Asia, Latin America, and the Middle East next year. If the United States raises trade barriers with the inauguration of Donald Trump's second administration, Europe is likely to follow suit. It is anticipated that domestic defense companies will capture export opportunities by diversifying their export regions and items to countries with high demand for military modernization and weapon expansion.
According to the defense industry on the 18th, LIG Nex1 opened its sixth overseas branch in Kuala Lumpur, Malaysia, on the 6th. This is the second in Southeast Asia, following Indonesia. Even amidst a state of emergency, CEO Shin Ik-hyun attended and announced plans for cooperation with local defense companies.
Currently, Malaysia is pushing to introduce LIG Nex1's medium-range ship-to-air missile Haegung (K-SAAM) in line with its goal of enhancing naval power. It is reported that the Malaysian Navy is likely to equip three LMS vessels being constructed by Turkey with Haegung. Observers suggest that CEO Shin's visit to Malaysia was largely motivated by securing the export of Haegung. LIG Nex1 is also pushing for the export of the medium-range surface-to-air guided weapon system Cheongung (KM-SAM) to Malaysia. In Indonesia, the order volume for radios to be delivered by next year is around 100 billion won.
A source in the defense industry noted, 'Southeast Asian countries have a high demand for strengthening defense capabilities to counter China's claims of sovereignty in the South China Sea.'
LIG Nex1 also secured a contract worth 60 billion won to supply shipborne equipment to the Peruvian Navy last month. This marks the first achievement in the Latin American market. Equipment developed by LIG Nex1, including combat systems, electronic warfare, and data links, will be installed on vessels being built by HD Hyundai Heavy Industries at the state-owned SIMA shipyard in Peru.
The domestic ballistic missile defense system Cheongung-II (M-SAM) exported by LIG Nex1 to three Middle Eastern countries is expected to be reflected in sales starting next year. LIG Nex1 signed supply contracts for Cheongung-II worth 3.7 trillion won with the United Arab Emirates (UAE) in 2022, 4.25 trillion won with Saudi Arabia in 2023, and 3.7 trillion won with Iraq this year. Following an increase in the export proportion from 16% last year to around 26% this year as of the third quarter, it is anticipated that the proportion of exports will rise further when sales of Cheongung-II in the Middle East are fully reflected next year. LIG Nex1 expects to surpass 3 trillion won in first sales this year.
Korea Aerospace Industries (KAI) is also accelerating the expansion of export regions and product diversification. KAI has deployed the Korean Utility Helicopter Surion (KUH-1) in actual operations this year and has begun mass production of the Light Armed Helicopter (LAH), aiming for its first exports to Iraq and the UAE. The export contract size for Surion to the Middle East is estimated at around 1.7 trillion won.
Korea Aerospace Industries' sales are expected to surpass 4 trillion won next year, with outlooks suggesting that new export contracts will follow. The export contract for the multipurpose fighter FA-50, signed with Poland and Malaysia from 2022 to 2023, is expected to be fully reflected in this year's performance, and exports to the Philippines are also reportedly imminent. Discussions for additional FA-50 exports to Malaysia are ongoing, and exports to Egypt are also being pursued. KAI is exploring a plan to export FA-50s and the Korean Next Generation Fighter KF-21 to Peru following the recent summit between South Korea and Peru.
The defense industry perceives that the Russia-Ukraine war is likely entering a ceasefire phase following the inauguration of Trump's second administration. If President-elect Trump pushes forward with policies emphasizing America First, Europe is also expected to raise barriers through the blockading of defense by increasing the proportion of regional weapon purchases. However, there are also predictions that European countries, having exhausted old weapons, might choose South Korean defense products during the process of securing stocks.