8 Apr 2024
In recent years, South Korea’s defense industry has been making significant strides in the global arms market. While it remains uncertain if this trend will continue, there is speculation that South Korea could potentially become one of the top four or five arms exporters by the end of the decade. Here the aim is to provide a short overview of the current status of the South Korean defense industry, as well as offer insights into its development roadmap for the foreseeable future.
Recent deals in the Middle East and Eastern Europe have been signed, including Saudi Arabia’s purchase of 3.2 billion USD worth of Chungung II Medium Surface-to-Air Missiles last November, Australia’s finalization of a deal for 129 Redback Infantry Fighting Vehicles (7 billion USD) last December, and Romania’s likely finalization of a deal worth 6-8 billion USD for 300-500 K2 Main Battle Tanks in the coming months. The second phase of a mega-deal with Poland on K-2 MBT, K-9 Self-propelled Howitzer, Chunmu Multi-Launch Rocket System, FA50 Light Jet Fighter, and ballistic/cruise missiles has been positively negotiated and is set to be concluded this year. South Korean manufacturers have started to diversify their export portfolio from six to twelve major weapon systems and from four to twelve importing countries in 2023. The South Korean defense industry is indeed truly going global.
In this context, the South Korean government is trying to utilize these dual-use tech industries for upgrading its ten cutting-edge military technologies with a massive R&D subsidy of up to 2 billion USD by 2027. Its ambitious goal is to crack into the top 7 technologically advanced country group to catch up with the US, Russia, France, Germany, the UK, Italy, and Israel. The designated technologies are artificial intelligence, quantum, space, energy, advanced materials, cyber network, manned and unmanned teaming (MUM-T), censor-electrooptic-infrared (EO/IR), gas turbine engine, and weapons of mass destruction response. Its national industrial strategy is clear, seeking a more comprehensive and technologically integrated defense industry to catch up with the top dogs and eventually reach the level of Western European counterparts. As these ten technologies demonstrate, the primary roadmap is to accelerate two-way synergic interactions between military and civilian technologies beyond the conventional level of dual-use technology principle, as done by other top weapons producers such as the United States, Russia, France, China, and Israel. South Korea’s defense industry currently lacks cutting-edge technology like as C4ISR, synthetic aperture radar (SAR), avionics, MUM-T, gas turbine jet engines, submissible submarine nuclear (SSN), and military satellite systems, among others. These are the primary targets in the foreseeable future.
Second, Daejeon City, the largest city in central South Korea, is another important location in the defense industrial sector. This city and its surrounding region are home to numerous main and subsidiary military offices, as well as educational facilities, in addition to the Agency for Defense Development (ADD), a government-affiliated R&D institute that has invented and provided most critical weapons technologies during the last five decades. Last year, the Defense Acquisition Program Administration (DAPA) transferred its headquarter to Daejeon City, too. It is the second “Defense Industry Innovation Cluster” region, which receives financial and legal support from the central government to stimulate the manufacturing and sale of new high-tech weapons systems such as drones, EO/IR, satellite, and MUM-T. And the other two provinces—North Kyungsang and South Chungcheong—are jumping on the booming industrial bandwagon with their local industrial policies, too.
As such, the South Korean defense industry expands globally and locally, while also making achievements on the economic and technological frontlines. We are unsure whether South Korea will evolve into a truly top weapons designer, manufacturer, and exporter on par with the top non-US countries in this industry—France, Germany, Italy, and Israel—as claimed by the current Yoon Suk-yeol government’s ambitious plan of “occupying 5%of global arms market and ascending to the no.4 global arms exporter by 2027”. Nonetheless, the near-future roadmap from the public, private, and public-private partnership perspectives appears solid. Of course, the devil is always in the details, and the development of South Korean defense industry may face critical flashpoints when it comes to domestic policy execution and coordination, shifting global security structures, and fiercer competition among non-US leading weapons producers such as France and Italy that have gained most in filling the hole left by their tainted Russian peers’ precipitous fall.
www.ispionline.it
South Korean Defense Industry Goes Global, and Local Too: An Econo-Tech Approach
With exponential growth in arms exports and strategic partnerships, South Korea aims to solidify its position among the top arms exporters by 2030.
In recent years, South Korea’s defense industry has been making significant strides in the global arms market. While it remains uncertain if this trend will continue, there is speculation that South Korea could potentially become one of the top four or five arms exporters by the end of the decade. Here the aim is to provide a short overview of the current status of the South Korean defense industry, as well as offer insights into its development roadmap for the foreseeable future.
Defense Industrial Boom: Current Status in 2024
The defense industry in South Korea has been flourishing in recent years, with impressive growth in the global arms market. This has caught the attention of security decision-makers, policy communities, and the defense industry actors of major countries around the world. South Korea’s position as a defense industrial powerhouse is backed up by real numbers, with arms exports continually increasing from 2-3 billion USD range in the late 2010s, to 7.3 billion USD in 2021, 17.3 billion USD in 2022, and 14 billion USD in 2023. It is expected to continue growing and reach 20 billion in 2024.Recent deals in the Middle East and Eastern Europe have been signed, including Saudi Arabia’s purchase of 3.2 billion USD worth of Chungung II Medium Surface-to-Air Missiles last November, Australia’s finalization of a deal for 129 Redback Infantry Fighting Vehicles (7 billion USD) last December, and Romania’s likely finalization of a deal worth 6-8 billion USD for 300-500 K2 Main Battle Tanks in the coming months. The second phase of a mega-deal with Poland on K-2 MBT, K-9 Self-propelled Howitzer, Chunmu Multi-Launch Rocket System, FA50 Light Jet Fighter, and ballistic/cruise missiles has been positively negotiated and is set to be concluded this year. South Korean manufacturers have started to diversify their export portfolio from six to twelve major weapon systems and from four to twelve importing countries in 2023. The South Korean defense industry is indeed truly going global.
Domestic Economic Gains and the Next Growth Engine
Global, but local too. Its impact on the domestic economy has been significant. The Korean people are proud of their defense industry, known as “K-Bangsan,” which not only serves their national pride as a “global pivotal state” (a concept dear to the foreign policy of the current conservative presidency of Yoon Suk-yeol) and the political belief in their growing military capacity against North Korea or China and Russia, but it is also an emerging industrial sector underpinning future economic growth. The booming defense industry contributes greatly to the Korean economy from various perspectives. Firstly, it creates high-quality jobs in struggling manufacturing sectors. The rapid growth of defense exports in 2022 alone produced at least 130,000 new jobs, creating about 34 billion USD in terms of production inducement effect on other related industries. The central government has been aggressive in promoting arms exports to boost South Korean economic growth and industrial diversification in high-tech industrial structures, which are dominated by a few key sectors such as semiconductors, batteries, and automobiles. In particular, its semiconductor industry, led by Samsung Electronics and SK Hynix, accounts for up to 20% of South Korean exports in recent years. In this context, the defense industry across land, sea, aerospace, and electronic weapons systems is a perfect alternative encompassing the most advanced technological R&D and traditional manufacturing production, as it creates enormous effects of production inducement across the key industrial sectors.Government Industrial Policy and Technological Focus
The defense sector is working in tandem with other important high-tech sectors like semiconductors, electronics, information and communication, automotive, aircraft, shipbuilding, and chemicals. The central government has committed to increasing the amount of research and development subsidies, particularly to support small and medium-sized businesses including high-tech civilian start-ups, in order to hasten localization in the vital material, component, and equipment sectors. Over the next ten years, this industrial policy seeks to build a more advanced and robust industrial ecosystem to support the increasing exports of weapons. The latest policy initiative to support the “Maintenance, Repair, and Overhaul (MRO)” sector validates South Korea’s medium-term defense industrial strategy. For example, by focusing on the US’s MRO policy shift to the regional sustainment framework, South Korea hopes to gain a foothold in the extremely competitive American armaments market. Similarly, this industry evolves into producing a more advanced and adaptable armaments system that can be customized to the requirements of the importing nations beyond only providing them with those that are made specifically for the South Korean military. The first step was made by the aforementioned ‘Redback’ infantry fighting vehicle case, which built a prototype specifically for Australian needs. In light of this, a set of appropriate combat concepts and tactics to effectively operate the weapons in respective importing countries and regions are also required.In this context, the South Korean government is trying to utilize these dual-use tech industries for upgrading its ten cutting-edge military technologies with a massive R&D subsidy of up to 2 billion USD by 2027. Its ambitious goal is to crack into the top 7 technologically advanced country group to catch up with the US, Russia, France, Germany, the UK, Italy, and Israel. The designated technologies are artificial intelligence, quantum, space, energy, advanced materials, cyber network, manned and unmanned teaming (MUM-T), censor-electrooptic-infrared (EO/IR), gas turbine engine, and weapons of mass destruction response. Its national industrial strategy is clear, seeking a more comprehensive and technologically integrated defense industry to catch up with the top dogs and eventually reach the level of Western European counterparts. As these ten technologies demonstrate, the primary roadmap is to accelerate two-way synergic interactions between military and civilian technologies beyond the conventional level of dual-use technology principle, as done by other top weapons producers such as the United States, Russia, France, China, and Israel. South Korea’s defense industry currently lacks cutting-edge technology like as C4ISR, synthetic aperture radar (SAR), avionics, MUM-T, gas turbine jet engines, submissible submarine nuclear (SSN), and military satellite systems, among others. These are the primary targets in the foreseeable future.
Governmental Joint Efforts: Central and Local Collaboration
Several local administrations are following through. South Kyungsang Province, Daejeon City, North Kyungsang Province, and South Chungcheong Province are important places in this regard. First, South Kyungsang Province has the most concentrated defense industry in South Korea. Changwon City and its surrounding territory are the Mecca of the South Korean military industry, producing practically every weapon system, including MBTs, Self-Propelled Howitzers, navy ships and submarines, small arms weapon systems, engines, and parts, among others. Major manufacturers including Hanwha Aerospace, Hyundai Rotem, Hanwha Ocean, and STX Engine are based there. Sacheon City is home to Korean Aerospace Industries (KAI), which manufactures aerospace weapons such as jet fighters, space launch vehicles, and satellites. The provincial government responded to the central government’s industrial policy with its own package of 1.4 billion USD under the “South Kyungsang Province’s Defense Industrial Development Plan” from 2023 to 2027.Second, Daejeon City, the largest city in central South Korea, is another important location in the defense industrial sector. This city and its surrounding region are home to numerous main and subsidiary military offices, as well as educational facilities, in addition to the Agency for Defense Development (ADD), a government-affiliated R&D institute that has invented and provided most critical weapons technologies during the last five decades. Last year, the Defense Acquisition Program Administration (DAPA) transferred its headquarter to Daejeon City, too. It is the second “Defense Industry Innovation Cluster” region, which receives financial and legal support from the central government to stimulate the manufacturing and sale of new high-tech weapons systems such as drones, EO/IR, satellite, and MUM-T. And the other two provinces—North Kyungsang and South Chungcheong—are jumping on the booming industrial bandwagon with their local industrial policies, too.
As such, the South Korean defense industry expands globally and locally, while also making achievements on the economic and technological frontlines. We are unsure whether South Korea will evolve into a truly top weapons designer, manufacturer, and exporter on par with the top non-US countries in this industry—France, Germany, Italy, and Israel—as claimed by the current Yoon Suk-yeol government’s ambitious plan of “occupying 5%of global arms market and ascending to the no.4 global arms exporter by 2027”. Nonetheless, the near-future roadmap from the public, private, and public-private partnership perspectives appears solid. Of course, the devil is always in the details, and the development of South Korean defense industry may face critical flashpoints when it comes to domestic policy execution and coordination, shifting global security structures, and fiercer competition among non-US leading weapons producers such as France and Italy that have gained most in filling the hole left by their tainted Russian peers’ precipitous fall.
South Korean Defense Industry Goes Global, and Local Too: An Econo-Tech Approach | ISPI
With exponential growth in arms exports and strategic partnerships, South Korea aims to solidify its position among the top arms exporters.
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