South Korea’s defense industry is eyeing growth as the Australia-UK-US security alliance, AUKUS, is reportedly considering Korea as a potential partner for the joint development of advanced military technology. This development could open doors for the defense industry to expand into the Five Eyes intelligence sharing alliance markets, comprised of the U.S., U.K., Australia, Canada, and New Zealand, beyond exporting to emerging defense markets in Eastern Europe and the Middle East.
Announced in 2021 to counter China’s influence in the Indo-Pacific region, AUKUS has two main pillars: Pillar 1 involves providing Australia with nuclear-powered submarines armed with conventional weapons, and Pillar 2 focuses on the joint development of advanced military technology. The U.S. National Security Council said on April 9. that AUKUS is exploring the addition of new partners, including South Korea, Canada, and New Zealand, noting their potential to contribute unique strengths to Pillar 2.
While it is only a possibility at this point, the defense industry sees joining the AUKUS in any form could boost defense exports, as it would broaden the concept of so-called “allied nations.” Pillar 2 of the alliance focuses on the collaborative development of advanced military technologies in eight areas, including artificial intelligence (AI), quantum computing, cybersecurity, and hypersonic missiles.
Korea’s defense sector, dubbed “K-Defense”, has been gearing up to acquire foreign defense companies and enter the US defense maintenance and repair (MRO) market.
Hanwha Ocean recently made a 900 billion won bid to acquire Australian shipbuilding group Austal, but the shipbuilder rejected the offer before due diligence, saying that it was unlikely that the Australian federal government would accept the transfer of its management rights to a foreign entity. But Hanwha Ocean remains optimistic. Backed by favorable legal assessments from global law firms, the company believes the likelihood of Australian authorities rejecting the deal is low. The possibility of joining AUKUS could also increase the chances of a successful acquisition in the long run.
Korea’s potential AUKUS participation is also promising for the defense sector in securing international market orders. Hanwha Ocean and HD Hyundai are actively competing for a lucrative contract to build 11 frigates for Australia, a project also sought by firms from Germany, Japan, and Spain. The companies believe Korea’s prospective role in AUKUS could improve their standing in this competition.
