Korea's shipbuilding industry is said to be showing interest in warship construction programs for countries other than the United States. That is because the global replacement demand for aging warships is estimated at about 1,000 vessels, and U.S. law prohibits building U.S. warships outside the country.
On the 7th, according to the International Institute for Strategic Studies (IISS) in the United Kingdom and Mirae Asset Securities, this year's weapons procurement budget for navies worldwide amounts to $159 billion (about 229 trillion won). The number of aging warships that need replacing in countries around the world is also estimated at more than 1,000. Global market research firm GII predicted that the global naval vessel market will grow at an average annual rate of 6.46% through 2030.
Initially, the market the shipbuilding industry pinned its hopes on was the United States. As the Donald Trump administration moved to rebuild the domestic shipbuilding sector, it was seen as opening opportunities to build U.S. Navy ships. However, under the Byrnes-Tollefson Act, enacted in the 1960s, the United States prohibits building warships outside the country.
As U.S. shipbuilding has declined, there have recently been growing calls in the United States to revise or relax this law so that Korean shipyards can build U.S. Navy vessels. But with no clarity on when any change might occur, domestic shipbuilders cannot keep relying only on the United States.
Markets outside the United States that the shipbuilding industry sees as new targets include the Middle East, Central and South America, and Southeast Asia. By type, it expects replacement demand to increase for submarines, frigates, offshore patrol vessels, deep-sea patrol ships, and replenishment ships.
Mirae Asset Securities cited major programs domestic companies can pursue starting this year, including a 60 trillion won Canadian submarine order (12 vessels), as well as Danish frigates (5 vessels; 458 billion won), Saudi frigates (5 vessels; 361.25 billion won), Saudi submarines (5 vessels; 512.68 billion won), and Thai frigates (2 vessels; 144.5 billion won).
HD Hyundai Heavy Industries has recently moved to strengthen its technology by leveraging HD Hyundai Mipo's docks and equipment, which are suitable for warship construction, after merging with HD Hyundai Mipo. HD Hyundai Heavy Industries won orders for a total of 20 naval vessels last year, including a Philippine frigate. It is also jointly developing a submarine with Peru.
Hanwha Ocean built and delivered warships ordered by Indonesia, Thailand, and Norway. It is also working to obtain a special-purpose ship construction license for the U.S. Philly Shipyard.
An industry official said, "With defense expenditure increasing worldwide, new revenue opportunities are likely to keep opening for shipbuilders," adding, "We are paying particular attention to Thailand and Saudi Arabia."