After Hanwha Ocean and HD Hyundai Heavy Industries failed to win Canada's submarine order, shipbuilding and securities industry watchers say it has become uncertain whether the two companies can hit their 2030 revenue targets for special-purpose vessels (warships). Hanwha Ocean set its 2030 special-purpose vessel revenue target at 4 trillion won, and HD Hyundai Heavy Industries set 7 trillion won, figures said to reflect their chances in Canada's submarine program, which totals 60 trillion won. Among Korea's three major shipbuilders, Samsung Heavy Industries does not build new warships.
Although Hanwha Ocean and HD Hyundai Heavy Industries have successively lost out on orders for Australian destroyers, Polish submarines and Canadian submarines over the past two years, they have begun seeking new opportunities across Southeast Asia, India, the Middle East, Latin America and Europe, leveraging their bid experience and heightened recognition in the global naval defense market. Through the Korea-U.S. MASGA shipbuilding cooperation project, they are also preparing a long-term goal of building U.S. warships.
◇ Hopes were high for Canada… "2030 defense revenue targets likely to be lowered"
On the 22nd, according to the shipbuilding and securities industries, Hanwha Ocean has set a 2030 revenue target for special-purpose vessels at 4 trillion won. That is more than triple the 2025 level (130 billion won).
In Aug. 2023, Hanwha Ocean announced a rights offering of 2 trillion won and said it would invest 900 billion won of that in special-purpose vessels, including expanding submarine and surface ship construction facilities. After building a fourth special-purpose vessel plant last year, it also set an additional goal of achieving 5 trillion won in revenue in the special-purpose segment by 2035.
HD Hyundai Heavy Industries is said to have set its special-purpose vessel revenue target at 7 trillion won for 2030 and 10 trillion won for 2035. Last year, HD Hyundai Heavy Industries' special-purpose vessel revenue was about 110 billion won.
Last year, as it announced plans to merge with HD Hyundai Mipo, HD Hyundai Heavy Industries unveiled a vision to expand its naval defense business. It aims to increase overseas warship orders by combining Hyundai Heavy Industries' warship construction technology with Hyundai Mipo's production infrastructure.
However, with Germany's TKMS selected as the preferred bidder for Canada's submarine program, some say both companies may find it difficult to meet their 2030 revenue targets. Kang Kyung-tae, an analyst at Korea Investment & Securities Co., said, "Canada's patrol submarine construction program was a key revenue source for meeting the 2030 warship revenue targets, so with the failed bid, Hanwha Ocean and HD Hyundai Heavy Industries will have no choice but to lower their defense revenue goals."
◇ Throwing down the gauntlet in warship programs worldwide… the pinnacle is the United States
Hanwha Ocean and HD Hyundai Heavy Industries are targeting warship procurement programs underway in countries around the world to expand naval defense exports. The earliest order results expected within the year are in Southeast Asia and South America.
In Southeast Asia, Thailand and the Philippines are pursuing warship procurement. For the Royal Thai Navy's next frigate acquisition of one ship, Hanwha Ocean and HD Hyundai Heavy Industries are competing as leading contenders.
Hanwha Ocean exported a frigate to Thailand in 2018, when it was Daewoo Shipbuilding & Marine Engineering. The current project is worth 17.5 billion baht (about 800 billion won), and if it wins, it is widely expected to have a strong chance of additionally securing three more ships anticipated as follow-on orders.
In Latin America, HD Hyundai Heavy Industries is pushing to export next-generation submarines to Peru. In December last year, it signed a joint development contract with the Peruvian Navy and state-run SIMA Shipyard to secure two new submarines and recently completed basic design. It aims to sign a lead-ship construction contract within the year after detailed design.
The push to export submarines to Peru is based on cooperation that followed surface ship exports in 2024. After winning a contract in 2024 to export a total of four vessels—frigates, offshore patrol vessels and landing ships—to Peru, HD Hyundai Heavy Industries has been jointly building them at SIMA Shipyard since last year. The submarines are also expected to be jointly built at SIMA Shipyard.
An HD Hyundai Heavy Industries official said, "By jointly building in Peru, we can establish a Latin American production base and use that to find opportunities to export warships."
In the Middle East, Saudi Arabia is pursuing a project to acquire four to six frigates next year. Under "Vision 2030," Saudi Arabia is modernizing its navy and is also said to be considering securing submarine capabilities after 2030. HD Hyundai Heavy Industries is seeking to participate in Saudi warship projects, building on its cooperation as a founding partner of Saudi shipbuilding and offshore plant company IMI.
Hanwha Ocean and HD Hyundai Heavy Industries are also seeking order opportunities in European warship programs in Greece, Portugal, Croatia and Estonia. In Morocco, a strategic chokepoint in North Africa facing Europe, Hanwha Ocean is being mentioned as a candidate in the country's submarine acquisition program.
For both Hanwha Ocean and HD Hyundai Heavy Industries, the market they are focusing on most is the United States. In line with U.S. President Donald Trump's plan to strengthen naval power, they are making the U.S. warship construction program their top priority.
At the G7 summit last month, after President Trump asked President Lee Jae-myung whether it would be possible to build 10 warships, the U.S. Navy is said to have sent requests for information (RFIs) on combat ships and oilers to Korea's three major shipbuilders, prompting discussion of various ways Korea could participate in U.S. warship programs.
However, with the U.S. midterm elections coming in Nov., some say it will be hard to expect meaningful results this year given the American political environment. Jung Yeon-seung, an analyst at NH Investment & Securities, said, "Considering the U.S. midterm election schedule, it is difficult to expect a meaningful allocation of warship volumes to Korean shipbuilders within the year," adding, "Bilateral cooperation should be viewed in the long term."