Hanwha Group stressed strengthening the "space and aviation" sector based on cooperation with Korea Aerospace Industries (KAI) after buying 4.99% equity, but competition is expected to continue in immediate projects. In the microsatellite synthetic aperture radar (SAR) reconnaissance satellite (under 150 kg) program launching with the goal of a Korea-style Starlink, the Hanwha Group side declined a cooperative framework. Attention is on how the two companies will continue both cooperation and competition across various projects going forward.
On the 17th, according to the military and the defense industry, the Defense Acquisition Program Administration (DAPA) sounded out Hanwha Systems and KAI late last year on whether multiple corporations would participate in the microsatellite reconnaissance system development project.
At the time, KAI supported multiple corporations participating, but Hanwha Systems was understood to have expressed opposition. The two corporations had signaled interest in joining the project early on. In the end, DAPA and other organizing bodies reportedly settled on a final policy to select a single contractor for this microsatellite reconnaissance program.
The microsatellite reconnaissance system development project is expected to be announced around Oct., with the key task of selecting a developer for satellites to be launched five times starting at the end of this year, eight per batch. The government and others aim through this project to shorten the revisit cycle to the Korean Peninsula to 20–30 minutes by having microsatellite reconnaissance assets assist the military's reconnaissance satellites that currently revisit every two hours. Launches for the first to third batches will be via SpaceX, and from the fourth batch they will be mounted on the Korean launch vehicle (KSLV-II).
Some in the industry have argued for selecting multiple contractors, saying a "new space" ecosystem led by the private sector should be built—from satellite manufacturing to launch—to bolster competitiveness in the space industry.
In particular, the need to spread risk stood out. Forty satellites must be manufactured, launched and maintained in a short period, and there is risk if a single company handles everything. This is also why cutting expense is seen as key, such as by using commercial parts that also go into automobiles rather than space-only components.
An industry source said, "Microsatellites have relatively shorter lifespans than conventional satellites and should be used consumably. Stable supply is the key," and added, "To build the fundamentals of the domestic space industry and expand the ecosystem, there is a need to break away from the existing practice of concentrating orders with one company."
Hanwha Group's emphasis on selecting a single contractor stems from its judgment that its in-house capabilities are sufficient. A Hanwha Systems official said, "For microsatellite reconnaissance, fast response is needed, and production through operation should proceed consistently through a responsible contractor," and noted, "In mass production as well, it is important to have an environment where multiple processes are performed sequentially in one space." The Jeju Space Center, which Hanwha Systems completed in Dec. last year, can mass-produce 100 SAR satellites annually.
This contrasts with Hanwha highlighting cooperation with KAI in aerospace fields such as satellites when it officially announced the equity purchase the previous day. Hanwha said the previous day, "Advanced development of the next-generation space industry ecosystem is urgent," and added, "We will build space infrastructure covering from low Earth orbit to medium- and large-size satellites by cooperating on launch vehicles and satellites." Hanwha Systems said that day, "Buying KAI equity does not mean we will not compete," and added, "Matters for cooperation and areas for competition are separate."
Hanwha Aerospace said in a business report the previous day that it bought 4.41% equity in KAI in Oct. last year. Its subsidiary Hanwha Systems also bought 0.58% equity in KAI in Nov. last year, bringing Hanwha Group's KAI equity holding to 4.99%.
In the industry, the view is that pursuing both cooperation and competition stems from the struggle for leadership in space business. With Hanwha Aerospace receiving transfer of Nuri rocket development technology from the Korea Aerospace Research Institute and Hanwha Systems' capabilities in satellite development and operations, securing the microsatellite reconnaissance project is important for the group to seize the "new space" era. A defense industry source said, "After Hanwha secures the project first, it may bring in other corporations as partner companies."
Given Hanwha's moves to cooperate while securing control, some view the KAI equity purchase as a step toward an acquisition. In particular, Hanwha Group bought only 4.99% through affiliates. Under current law, exceeding 5% requires immediate disclosure at the time of the excess purchase. A business community source said, "If it had been an equity investment for strategic cooperation, there would be no reason to keep it private," and added, "With Hanwha buying about 5%, it is true that acquiring KAI has become more burdensome for other corporations."