South Korea’s leading shipbuilders, HD Hyundai Heavy Industries (HD HHI) and Hanwha Ocean, have agreed to collaborate in the global warship market, setting aside their long-standing rivalry in overseas defense contracts.
The Defense Acquisition Program Administration (DAPA) announced on Feb. 25 that the two companies signed a memorandum of understanding (MOU) at its headquarters in Gwacheon, committing to a unified approach in international naval exports. Under the agreement, the government and industry will coordinate efforts as a single team, with HD HHI focusing on surface vessel exports while Hanwha Ocean takes the lead in submarine sales. Both firms will support each other to strengthen their global competitiveness.
The decision follows their failure to secure a key contract for Australia’s multi-billion-dollar frigate program last year. Despite being considered strong contenders, both companies were outperformed by Japan and Germany, which presented unified bids in collaboration with their domestic partners. Previously, HD HHI and Hanwha Ocean were embroiled in intense competition, including legal disputes over the bidding process for South Korea’s next-generation destroyer program, KDDX. Their rivalry extended to Australia’s frigate bid, where each submitted separate proposals—neither of which advanced to the final shortlist. In contrast, Japan’s Mitsubishi Heavy Industries led a coordinated bid with Mitsui E&S providing support, underscoring a more strategic approach.
With global demand for naval vessels rising—including Canada’s planned 60 trillion won ($42 billion) submarine procurement program and U.S. requests for warship construction support—the two companies opted for cooperation over continued competition in international markets. However, the agreement applies exclusively to overseas sales, with domestic competition expected to remain fierce under DAPA’s oversight of South Korean Navy contracts.
The KDDX program, valued at 7.8 trillion won ($5.4 billion), remains a key battleground. Hanwha Ocean secured the conceptual design phase, while HD HHI won the basic design contract. The final selection for detailed design and lead ship construction is expected as early as April.
