Global defense spending is set to surge as U.S. President Donald Trump signals that the world needs to defend itself without U.S. help. This shift is expected to be a major boon for South Korea’s small and medium-sized defense companies.
SNT Motiv, a leading mid-sized Korean firearms manufacturer that produces the K-series firearms used by the Korean military, including the K2 assault rifle and K15 machine gun, has seen its stock price jump 20% from 21,175 won per share on January 2 to 24,250 won on March 12. The company, which exports its K-series firearms to the Middle East and Southeast Asia, is now looking to expand into the U.S. market following the Trump administration’s return.
Data from the Korea Defense Industry Association shows that Korea had 65 small and medium-sized defense companies as of the end of 2023. These companies have seen sales and profits grow rapidly in the past few years. The combined revenue of all 65 companies rose 24% from 5.4 trillion won ($3.7 billion) in 2021 to 6.72 trillion won ($4.6 billion) in 2023, while operating profit surged 89% from 272 billion won to 515.4 billion won during the same period.
Although their growth is not as dramatic as that of the country’s 18 major defense giants, such as Hanwha Aerospace, small and medium-sized firms continue to play a critical role as the backbone of the country’s defense sector. While some of these firms manufacture complete weapon systems, around 80% serve as suppliers, providing crucial components to larger companies.
Korea’s defense giants have also reported strong growth, with total revenue increasing 28% to 13.47 trillion won in 2023 compared to 2021, and operating profit surging 193% to 1.32 trillion won, largely driven by increased arms exports to countries like Poland.
Smaller defense firms owe their success strong quality, cost, and delivery (QCD) competitiveness, which focuses on offering high-performance weapon systems and components at reasonable prices with fast delivery times to meet customer demand. This strength stems from Korea’s defense industry ecosystem, where small and medium-sized firms serve as key suppliers to larger defense contractors.
“Korea’s defense sector has a structured system of collaboration between large and small firms,” said a defense industry official, highlighting the interdependent nature of the sector. “A large defense company cannot build a weapon system alone.”
For instance, Samyang Comtech, a bulletproof ballistic armor manufacturer, supplies its products armor to major defense giants. Its armor is used in Hyundai Rotem’s K2 tank, Hanwha Aerospace’s K239 Chunmoo multiple rocket launcher, and Korea Aerospace Industries’ (KAI) Surion multi-role utility helicopter.
Other SMEs produce complete weapon systems, such as Kyung Chang Industrial (bulletproof helmets), SNT Motiv (rifles and machine guns), and Kovico (bulletproof wheeled armored vehicles).
The potential retreat of the U.S. from its traditional role as the pillar of global security is driving demand for global military spending, presenting new opportunities for Korea’s defense SMEs. Trump has sent a clear message that the U.S. will no longer bear the burden of defending other nations, prompting European allies to increase military spending.
“For countries urgently seeking to bolster their military capabilities, Korea’s defense industry, known for its rapid delivery times, can be an attractive option,” said Jang Won-joon, a professor at Jeonbuk National University. He also noted that Korea’s track record of supplying tanks and multiple rocket launchers to European countries positions it well for further expansion.
