WITH CATACLYSMIC events such as Russia’s invasion of Ukraine, North Korea’s nuclear threats, and ongoing tensions between the United States and China, the global security landscape is becoming increasingly volatile. Many countries’ desire to defend their strategic interests has led to a booming global military-industrial complex, of which Korea is gradually establishing itself as a central supplier. Although lacking the proven track record of some of its competitors, Korea’s defense industry has made significant strides in recent years. Such progress has prompted this deep dive into its history, notable successes, and prospects. 

From humble beginnings to a technological powerhouse

   Korea’s indigenous arms production is a policy that harkens back to the 1970s, enacted for three major purposes. The first was a belief that self-sufficiency was key in reducing the threat of weaponized interdependence, wherein foreign arms suppliers could exploit Korea’s reliance on them for political or military leverage. The second was to strengthen Korea’s regional military and political status through fast, reliable arms buildup. Lastly, arms development was seen as a means to spur industrialization and stimulate a then-destitute economy[1]. The 1970s saw the establishment of the Agency of Defense Development (ADD) to facilitate research and development of military technology. Indigenous production began with relatively simple goods such as small arms, ordnance, and uniforms, with the most notable success being the license production of Colt’s M16 assault rifle from the United States. The 1980s saw a boom in local shipbuilding, and with it a dramatic uptick in domestic warship production. Small surface combatants like the Ulsan-class frigate[2] and Donghae-class corvette[3] were some notable new entries to the fleet, with both being Korea’s first domestically produced warships in their respective categories. 

   The 1990s heralded an increase in license production of foreign weapons; a process that had begun with M16s the previous decade. The F-16 multirole fighter jet began local production as the KF-16, while Samsung started delivering UH-60 Blackhawk helicopters to the Korean armed forces. Locally developed weapons based on foreign technology also gained traction, with one example being the K1-88 main battle tank, derived from the prototype U.S. M1 Abrams. With ample technological know-how obtained from license production and reverse engineering, the 2000s and 2010s marked a push for wholly indigenous weapon systems. The KDX-III air defense destroyers[4], K2 main battle tank, and KF-21 fighter jet all began development during this period and were designed from the ground-up with mostly local components. Arms exports also began growing significantly, with the valuation rocketing from $250 million in 2006 to $3.2 billion in 2017[5]. 

   This trend of increasing foreign exports has been steadily continuing into the 2020s, with Korea being ranked as the fastest-growing top 15 arms exporter in the world from 2017 to 2021[6]. 2022 saw a record $13.7 billion deal with Poland to supply 980 K2 tanks, 672 K9 self-propelled howitzers, and 48 FA-50 fighter jets[7]. Also of note was the $1.7 billion agreement with Egypt for K9 howitzers, with the same platforms also being sold to Finland and Norway. 2023 saw Hanwha netting a $5 billion deal with Australia for AS21 Redback infantry fighting vehicles[8], beating out a longtime industry leader in Germany’s Rheinmetall[9]. 

Korea’s defense industry in 2023

   Korea’s defense production is centered around private companies, which themselves are part of larger chae-bols[10]. Research and development, on the other hand, is conducted primarily by the government’s national ADD. Korea is currently the world’s 8th largest arms exporter, having recorded a staggering 177% increase from 2016 to 2021[11]. It is also the 3rd largest supplier of weapons to North Atlantic Treaty Organization (NATO) member states, taking up a 4.9% share of aggregate purchases. Only the United States and France, two defense-industrial powerhouses with decades of arms export experience, are ahead. 

   Hanwha Aerospace Co., Ltd. is the largest defense contractor in Korea, following a merger with subsidiary Hanwha Defense in November 2022. Its most notable product is the K9 self-propelled howitzer, a tried-and-tested artillery platform capable of delivering precision strikes up to 60 km. The K9 boasts the most successful export portfolio in class, currently in service with India, Finland, Estonia, Norway, Poland and others[6]. Other key products include the Redback infantry fighting vehicle and Chun-moo rocket artillery system, with the former scheduled to commence delivery to Australia in 2027[12]. Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering Co., Ltd., is another Hanwha subsidiary with a significant footprint in the defense industry. Its exports include frigates to Thailand based on Korea’s KDX-I destroyer and Tide-class tankers for the United Kingdom. 

   Korea Aerospace Industries Ltd. (KAI) spearheads the Korean defense industry’s aeronautical development. Its T-50 supersonic jet can be flexibly configured as a light fighter aircraft or trainer, and has been sold to the Philippines, Iraq, Indonesia, and Thailand. The far more advanced KF-21 fighter has also garnered interest from multiple foreign buyers. Hyundai is another major player, with its subsidiary Hyundai Heavy Industries having delivered a variant of the Incheon-class frigate to the Philippines and an auxiliary support ship for the Royal New Zealand Navy. Hyundai Rotem’s K2 main battle tank is considered to be among the most capable in the world thanks to its advanced sensors, maneuverability, and future development potential. Hundreds of K2s have been sold to Poland, while it has also served as a base for Türkiye’s Altay tank project. 

Factors behind the rapid growth

   According to Richard Bitzinger, a senior fellow at Nanyang Technological University’s Military Transformations Program, there are two main factors that underpin the rapid growth of Korea’s defense industry in general. The first is foreign technological assistance. This was initially enabled by the United States’ Nixon Doctrine, which reduced direct U.S. defense aid to Korea while freeing up the transfer of technology[1]. This provided Korean researchers with ample U.S. weapons, such as the M16 rifle and F-16 fighter jet, to produce locally and reverse engineer. The battery of technology and production know-how gained from analyzing such weapons allowed Korea to rapidly catch up to recent advancements. This in turn enabled an evolution from merely assembling foreign weapons in local factories, to designing indigenous ones from the ground up using key components sourced from abroad. Because these weapons are locally designed, they are well suited to Korea’s doctrine and serve to cultivate domestic industry, while the presence of cutting-edge Western components makes them more capable than those of any potential adversary. For instance, the KSS-III submarine and KDX-III air defense destroyer would not have been possible without the reverse engineering of German submarines and sophisticated air defense radar from the United States. 

   The second factor specified by Bitzinger is the harmony between Korea’s industrialization and defense technology development. Ever since the 1970s, the advancement of general heavy industry and arms development have complemented each other fruitfully. Industrialization built up the technological foundation and raw materials necessary for arms development, while arms development proved to be a fertile area of application for new processes and generated profits for more industrialization. Such synergy generated by both sectors has enabled them to reinforce each other and advance together. Korea’s commercial shipbuilding industry, steel mills, and automotive manufacturers all saw tremendous growth thanks to their contribution to the nation’s military endeavors. 

   Korea’s mounting successes in arms exports are fueled by a more diverse set of factors. Firstly, Korean weapons are comparable in performance to those from the West but are considerably cheaper in price. The K2 tank costs $5.5 million less than Germany’s Leopard 2A7, while being broadly equal in terms of capability[13]. Such cost-effectiveness allows buyers to procure a large amount of quality equipment, all within the confines of their limited defense budgets. The second factor is rapid weapon delivery. Thanks to the close relationship between the Korean government and defense contractors, the government often rearranges domestic orders to prioritize those placed from abroad[14]. In addition, the production capability of certain Korean companies far exceeds that of European competitors, according to a European industry executive[14]. These two elements combine to drastically slash lead time, exemplified by Koran tanks and howitzers arriving in Poland mere months after the contract was signed[14]. This is in stark contrast to Germany, which has yet to deliver 44 Leopard 2 tanks ordered by Hungary in 2018[14]. 

   Third, Korean weapons are widely adaptable, thanks to their high compatibility with NATO standards. NATO militaries abide by strict standardization agreements (STANAG) in order to maximize interoperability and minimize logistical hassle. All NATO militaries field rifles that fire 5.56 or 7.62mm rounds, NATO tanks use 120mm smoothbore guns, and NATO armored vehicles are rated according to STANAG armor protection standards[15]. Korean weapon systems’ STANAG compatibility thus ensures that they can be conveniently integrated and operate seamlessly with allied forces. Finally, local production is a major incentive for buyers. Most Korean defense contractors allow the customer to license produce whatever they purchase, thus supporting local employment and expediting delivery. Countries such as India, Egypt, Poland, and Australia will be producing a significant portion of their orders in local factories[16]. 

Towards becoming an industry leader

   The prospects for Korea’s defense industry are largely positive. With President Yoon vowing to push Korea into becoming a top four global weapons supplier alongside the United States, Russia, and France, continued government support is almost guaranteed. Korean defense contractors’ share prices and revenue are steadily climbing, foreshadowing the continued development of an already strong technological and industrial base. Indeed, the value of Hanwha Aerospace stocks has risen by an astounding 66% since the start of 2023[17]. The ongoing war in Ukraine and mounting tensions between the United States and China will only incentivize countries to build up arms. This, combined with European countries’ growing need to replace weapons donated to Ukraine, will likely translate to an ever-increasing demand for Korean weapons in the future. 

   However, inherent weaknesses must be addressed for the Korean defense industry to advance. For one, indigenous technology is not fully mature, with Korean weapons still relying on key foreign components to function. The K2 tank utilizes a German gun, while the KF-21 is powered by engines made by the United States. Thus, the production and sale of domestic weapons could be hampered by foreign suppliers’ production woes, or reluctance to sell to a potential industry competitor. Bang Jong-goan, a professor at Seoul National University’s Future Innovation Institute, stresses diversification centered around smaller, more specialized companies as a means to bolster Korea’s supply chains by lessening reliance on foreign countries or a select group of large conglomerates. In addition, Bang emphasizes the need to indigenize core technologies by allocating a higher budget toward research and development[5]. Lack of differentiation is another issue. All Korean weapon systems have equally capable foreign alternatives. Such market saturation could lead to a loss of competitiveness in the future, revealing the need to carve out a unique market niche that nobody else caters to. Ideally, this would be done by establishing dominance in key subcomponents, necessitating even competitors to use Korean equipment as part of their systems. A prime example is U.S. company Lockheed Martin Corp., which supplies Aegis air defense combat systems for Australian, Canadian, Spanish, Korean, and Japanese warships in addition to American ones. Meanwhile, customers’ reluctance to change is one other hurdle for Korean defense exports. Norway, a longtime operator of the Leopard 2 tank, recently selected the German Leopard 2A7 over the K2 despite similar performance. Likewise Western weapons are still integral to NATO countries, who may be unwilling to adopt entirely new systems with their own unique supply chains and logistical networks. Finally, arms deals are inevitably accompanied by potential diplomatic consequences. Korea is no exception, with its arms exports to the United Arab Emirates and Egypt coming under scrutiny by European allies sensitive to human rights violations[18]. 

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   The Korean defense industry has experienced multiple quantum leaps through its relatively short existence, evolving from a mere license producer of foreign weapons to the world’s eighth largest arms exporter. Such success has been underpinned by blistering technological advancement, which itself is a product of domestic industrialization efforts and foreign assistance. Yet there is still room for growth, and with multiple ongoing conflicts plus more brewing on the horizon, the market has never been richer. Should greater indigenization, diversification, and the securing of loyal customers be achieved, it is not difficult to imagine a future in which Korea’s defense industry giants are standing shoulder to shoulder with the West’s finest. 

[1] South Korea’s Defense Industry at the Crossroads

[2] Frigate: A type of warship usually tasked with coastal defense and anti-submarine warfare

[3] Corvette: A small warship mainly intended for coastal defense

[4] Destroyer: A large, fast, long-range warship specialized in defending fleets from submarine or air attack

[5] The JoongAng

[6] Stockholm International Peace Research Institute

[7] Foreign Policy

[8] Infantry fighting vehicle: An armored vehicle that ferries infantry into battle while providing fire support

[9] Defense News

[10] Chae-bol: A large business conglomerate owned by a wealthy family

[11] Politico

[12] Australian Defense Force

[13] Defence24

[14] Reuters

[15] NATO

[16] The Defense Post

[17] CNBC

[18] East Asia Forum