As the three major shipbuilders (Samsung Heavy Industries, Hanwha Ocean, HD Hyundai Heavy Industries) roll out their second-quarter results, attention is turning to new revenue streams that will drive future growth. The three companies are seeking new growth engines beyond their traditional focus on merchant ships and offshore projects. Approaching the U.S.-Korea shipbuilding cooperation project MASGA as a mid- to long-term business opportunity, they are pushing differentiated businesses that highlight each company's strengths.
Samsung Heavy Industries and HD Hyundai Heavy Industries have tapped next-generation businesses amid a boom in the data center industry, a core infrastructure of the AI era: Samsung Heavy Industries for building offshore floating data centers and HD Hyundai Heavy Industries for supplying data center engines. Hanwha Ocean is going all in on expanding warship exports to capture rising overseas defense demand.
According to the shipbuilding and securities industries on the 29th, Samsung Heavy Industries' second-quarter revenue rose 20.4% from a year earlier to 3.2307 trillion won. Operating profit for the same period increased 58.7% to 325 billion won.
Operating profit fell short of the securities market consensus (average estimate) due to a one-off expense from a change in the method of calculating severance pay tied to performance bonuses, but excluding that, the results were largely seen as in line with forecasts.
In the shipbuilding and securities industries, attention is on Samsung Heavy Industries' chances of winning orders in the second half for building offshore floating data centers. Samsung Heavy Industries is targeting commercial operation of a floating data center in the second quarter of 2028. At a recent earnings briefing, the company was said to have reiterated the possibility of securing orders for up to two floating data centers within the year.
A floating data center places a land-based data center on a marine structure at sea. Its advantages include not needing to secure large tracts of land and being able to use seawater to cool the data center. Initially, the company is considering installing floating data centers along industrial complexes' coastlines where excess power can be used.
After Samsung Group signed a letter of intent with OpenAI for AI infrastructure cooperation last year, Samsung Heavy Industries has accelerated preparations to design and build floating data centers. It is working with Lloyd's Register in the United Kingdom and Capital, a Greek shipowner, among others. It is also moving to preempt the market by expanding business development and technical cooperation with M3, a U.S. floating data center developer, and Supermicro, an AI server specialist.
Jeong Yeon-seung, an NH Investment & Securities analyst, said, "Once built, floating data centers can be supplied to various regions by repeatedly applying the same design, making them a new revenue source."
Hanwha Ocean delivered an earnings surprise in the second quarter as high-margin merchant ships such as liquefied natural gas (LNG) carriers accounted for a larger share of revenue.
Hanwha Ocean's second-quarter revenue rose 65.2% from a year earlier to 5.4432 trillion won. Operating profit for the same period jumped 98.0% to 736.1 billion won. It easily beat the securities market operating profit consensus of about 534 billion won. A lump-sum booking of revenue from a Brazilian offshore plant also buoyed results.
While focusing on merchant ships, Hanwha Ocean is making an all-out push to resume exports of warships (submarines and surface ships) from its special ship division. After winning an order for one frigate from Thailand in 2013, Hanwha Ocean recorded no warship export orders for more than 10 years. Recently, however, leveraging its experience bidding for submarine orders in Poland and Canada, it has been actively pursuing warship exports.
Thai media have mentioned that Hanwha Ocean is highly likely to win the Royal Thai Navy's next frigate procurement project. The Bhumibol Adulyadej, delivered in 2018 after the 2013 frigate order, is currently operating as the Royal Thai Navy's flagship, which is said to have been viewed favorably. The initial budget for procuring one frigate this time is about 800 billion won, and if three additional ships of the same class are ordered later, the total project cost is estimated at about 4 trillion won.
Hanwha Ocean is also pursuing warship exports to Europe, Africa, the Middle East and South America. Greece is considering replacing four submarines, and Saudi Arabia is reviewing the procurement of frigates and submarines.
At its second-quarter earnings briefing, Hanwha Ocean was said to have noted that it is in talks to export submarines to Europe, Africa and Asia.
HD Hyundai Heavy Industries' quarterly operating profit topped 1 trillion won for the first time in the second quarter this year. Revenue rose 52.3% from a year earlier to 6.3136 trillion won. Operating profit for the same period increased 120.7% to 1.0357 trillion won.
After posting 905.4 billion won in operating profit in the first quarter, it entered the 1 trillion won range for the first time in the second quarter. It also beat the securities market consensus, which had been around 997 billion won. The gains are attributed to large merchant ships, including high-priced LNG carriers ordered in 2023–2024, being booked in earnings in earnest.
In the shipbuilding and securities industries, data center engine supply is cited as a growth driver for HD Hyundai Heavy Industries. Data centers require massive electricity because large-scale servers and cooling systems must run 24 hours a day.
HD Hyundai Heavy Industries has entered the power generation market for data centers by repurposing marine medium-speed engines (four-stroke engines rotating roughly 300–1,000 times per minute) used for ship propulsion and onboard power. Installing a power plant based on four-stroke medium-speed gas engines at a data center site allows on-site power generation and use, independent of the grid.
In April, HD Hyundai Heavy Industries signed a contract to supply 33 units of its H54GV four-stroke medium-speed gas engine to U.S. energy infrastructure developer AEG through 2030. With the engine division's utilization exceeding 100%, the company is reportedly reviewing facility expansion to increase four-stroke engine production capacity.
Lee Jae-hyeok, an LS Securities analyst, said, "The global AI investment boom is creating new opportunities for shipbuilding," and added, "As four-stroke medium-speed engines rapidly emerge as a practical solution to AI data centers' power shortages, HD Hyundai Heavy Industries is expanding into the onshore power market."