A Jang Bogo-class submarine built by Hanwha OceanHANWHA OCEAN
Korea's failed bid for Canada's submarine contract is unlikely to end cooperation between its two major naval shipbuilders — HD Hyundai Heavy Industries (HD HHI) and Hanwha Ocean — who are set to enter bidding in Saudi Arabia's naval modernization program reportedly worth more than 8 trillion won ($5.5 billion).
HD HHI has tentatively been assigned to bid for the frigate contract, while Hanwha Ocean will pursue the submarine portion of the Saudi project, according to the shipbuilding industry on Wednesday. The two Korean shipbuilders are likely to compete against European shipbuilders.
“The two companies have reached a broad understanding to participate by focusing on their respective strengths,” an industry representative said.
Saudi Arabia is mulling over the purchase of five 6,000-ton frigates valued at roughly 3 trillion won and four to six submarines worth around 5 trillion won. The winning bidders could be selected as early as this year.
Industry sources expect leading European naval shipbuilders, including Germany’s TKMS, France's Naval Group, Spain's Navantia and Italy's Fincantieri, to compete for the contracts.
Success in Saudi Arabia is expected to hinge not only on vessel performance but also on bidders' contributions to the local defense industry, much as it was a key factor for Canada’s submarine procurement program.
A HD Hyundai Heavy Industries-built frigate, which was later sold to the PhilippinesHD HYUNDAI HEAVY INDUSTRIES
HD Hyundai has put considerable effort into strengthening its foothold in Saudi Arabia by establishing the International Maritime Industries shipyard through a joint venture with Saudi Aramco and other local partners. More recently, it signed a memorandum of understanding with Saudi marine engine company Makeen to expand cooperation on naval vessel projects.
Hanwha has also stepped up its local presence.
Hanwha Ocean, Hanwha Aerospace and Hanwha Systems used the World Defense Show 2026 in Riyadh in February to showcase an integrated defense portfolio covering land, naval and air systems. Hanwha also signed memorandums of understanding with local energy and defense technology companies.
Competition for overseas naval contracts is expected to intensify across Southeast Asia and Europe.
“Large-scale projects like those in Canada and Saudi Arabia can be pursued as 'Team Korea,' but in smaller programs, the companies will inevitably have to compete against each other,” another industry source said.
Thailand's next-generation 4,000-ton frigate program will be the first battleground. HD HHI and Hanwha Ocean are both vying to build the lead vessel, worth roughly 800 billion won, ahead of follow-on orders that could significantly increase the project's value. Thai media have reported that the winning bidder has already been selected and could be announced later this month.
HD HHI has highlighted a plan to achieve a 40 percent local construction rate, while Hanwha Ocean has emphasized its previous experience building vessels for the Royal Thai Navy.
Greece is also planning to acquire four next-generation submarines to replace its aging fleet. The market presents a formidable challenge for Korean shipbuilders, given the longstanding dominance of Europe-based defense contractors. Although the tender has yet to take shape, Germany's TKMS and Sweden's Saab are widely seen as leading contenders.
The Dosan Ahn Chang-ho submarine is seen at a port in Changwon, South Gyeongsang, on March 25.NEWS1
As Greece requires ships to be built domestically, both HD Hyundai and Hanwha Ocean have signed memorandums of understanding with local shipyards.
Korean shipbuilders are likely to compete for overseas naval contracts, as submarine procurement programs are also expected in the Philippines and Egypt.
“The government should play the role of mediator by encouraging the companies to capitalize on their respective strengths — HD Hyundai's strength in surface warships and Hanwha Ocean's edge in submarines — when pursuing overseas deals,” Moon Keun-sik, a retired Korean Navy colonel and special professor at Hanyang University's Graduate School of Public Policy, said.
“Although Korea fell short in Canada's submarine competition, its shipbuilding technology has earned international recognition. Korean companies are fully capable of competing globally against European rivals that are struggling with order backlogs.”
BY NAM YOON-SEO, KO SUK-HYUN [lee.soojung1@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
