South Korea’s Defence Industry: A Rising Global Power

South Korea’s defense industry has transformed dramatically over the past two decades, evolving from a predominantly import-dependent market into a major global defense exporter and an innovation hub.

The shift, underpinned by robust government support, technological advancements, and growing geopolitical challenges, has positioned South Korea as a strategic player on the global defense stage. As international demand for sophisticated military systems rises, South Korea’s defense procurement and export strategies are shaping not only regional security but also contributing significantly to global defense ecosystems.

Evolution from Importer to Exporter

Historically, South Korea’s defense procurement centered on countering immediate threats from its northern neighbor, North Korea.

The country’s defense budget, which stood at approximately US$46.2 billion in 2021, is a testament to its long-standing emphasis on military readiness. Although the budget saw a dip to US$42.3 billion in 2022 due to various fiscal constraints, it is projected to rebound to US$45.6 billion by 2025 and is expected to grow steadily at a 2% compound annual growth rate (CAGR) to US$50.1 billion by 2030. The acquisition budget, crucial for procurement programs, is set to increase slightly from US$11.7 billion in 2026 to US$11.9 billion in 2030.

The collapse of peace talks with North Korea in mid-2020 reinforced the imperative to maintain a robust defense posture. However, South Korea’s defense sector has not merely focused on internal requirements but has also aggressively pursued global export markets. This dual focus has led to the emergence of South Korea as a major defense exporter, especially in land weapons systems like tanks, artillery, and armored vehicles.

Key Players and Landmark Contracts

South Korea’s defense industrial base is led by several major companies, including Hanwha Aerospace, Hyundai Rotem, Korea Aerospace Industries (KAI), and LIG Nex1. These firms have secured multi-billion-dollar international contracts, reflecting the increasing global trust in South Korean military technology.

Hanwha Aerospace stands out as a powerhouse in artillery and armored vehicles. It has exported over 600 K9 self-propelled howitzers worldwide, including landmark deals valued at US$720 million to Australia and US$2.4 billion to Poland and other Northern European countries. More recently, in December last year, Hanwha signed contracts worth 3.2 trillion won to supply 129 Redback vehicles to Australia and 3.45 trillion won for K9 howitzers to Poland.

In February 2025, the company further secured a 2.25 trillion won deal for Cheonmu multiple rocket launchers and guided missiles for Poland, reinforcing its European footprint. Hanwha’s success also extends to naval capabilities through Hanwha Ocean, which recently secured U.S. contracts for military support and refueling ships.

Hyundai Rotem is a key player in armored vehicles, particularly main battle tanks. The company signed a major contract with Poland in 2022 to supply 180 K2 tanks valued at approximately US$3.3 billion and is on track to secure a second contract this year.

KAI, the country’s leading aerospace firm, has exported FA-50 light fighter jets to Poland and Malaysia and continues to seek new international opportunities. LIG Nex1 has carved out a niche in electronic warfare and missile systems, with significant contracts from Saudi Arabia (4.2 trillion won) and Iraq (3.7 trillion won) in recent years.

The combined sales revenue of seven major Korean defense firms was 19.68 trillion won in 2024, reflecting a growing industrial scale.

Government Support and Strategic Export Initiatives

South Korea’s ascent in global defense markets is no accident. The government has been a critical enabler through the K-Defense Export Strategy, which provides export financing, fosters government-to-government cooperation, and establishes defense cooperation agreements worldwide. This policy ensures continuity and strong bipartisan political backing across successive administrations, providing stability that encourages foreign partners and customers.

Notably, South Korea’s defense products are designed to NATO standards, which facilitates their integration into Western military platforms. This compatibility has attracted interest from NATO members facing aging defense inventories or seeking rapid replenishment, especially in the wake of geopolitical tensions like Russia’s invasion of Ukraine.

The US$14 billion deal between South Korea and Poland in 2022—covering K2 tanks, K9 howitzers, Chunmoo rocket launchers, and FA-50 jets—illustrates how South Korea is filling critical capability gaps for NATO’s eastern flank.

Technological Innovations and Localization Efforts

Technological innovation underpins South Korea’s defense industry competitiveness. Investments have been substantial in areas such as artificial intelligence, precision-guided munitions, unmanned systems, advanced sensors, electronic warfare, and next-generation aircraft development, including the indigenous KF-21 Boramae fighter jet program.

A significant challenge, however, remains in achieving full localization of core technologies such as engines and combat system software. For example, Hanwha Aerospace successfully developed its own engine for the K9 self-propelled howitzer, previously reliant on German-made engines, to avoid export restrictions linked to foreign technology dependencies. Similarly, while South Korea independently produces Aegis-class destroyers’ weapon systems, the critical combat software remains supplied by U.S. defense contractor Lockheed Martin.

Localization is essential not only to reduce reliance on foreign approvals, often complex and time-consuming, but also to enhance export potential, as weapons containing foreign-made components require prior government permissions from the countries of origin. This limits flexibility and can pose regulatory risks.

Opportunities for Global Suppliers and Partnerships

South Korea’s evolving defense ecosystem offers rich opportunities for international suppliers. Korean firms actively seek advanced subsystems and innovative technologies in areas such as precision targeting, fire-control systems, autonomous platforms, cybersecurity, electronic warfare, and propulsion technologies.

For global suppliers, entering the South Korean market is more than a transactional opportunity. It can multiply export potential by becoming integrated into Korean platforms destined for global customers. However, success demands navigating a rigorous procurement framework involving the Defense Acquisition Program Administration (DAPA), the Agency for Defense Development (ADD), and major domestic contractors.

Local partnerships are critical. Foreign firms must align with Korean companies possessing strong government ties, technical expertise, and after-sales service capabilities. Such alliances mitigate regulatory hurdles, certification complexities, and localization expectations.

South Korea and NATO: A Strategic Partnership Beyond Membership

Although South Korea is not a NATO member, its strategic interests align closely with the Alliance. Facing ongoing threats from North Korea and situated in a complex Indo-Pacific security environment, South Korea shares NATO’s commitment to a rules-based international order.

NATO recognizes South Korea as a vital partner for industrial capacity, technological innovation, and sustainment support. The demand for rapid delivery of advanced weaponry, exposed by the Ukraine conflict, highlights South Korea’s ability to provide scalable production and maintain high performance standards. Additionally, South Korea’s advanced R&D, especially in AI, unmanned systems, and precision munitions, complements NATO’s technological modernization goals.

Moreover, South Korean firms’ MRO (maintenance, repair, and overhaul) expertise supports NATO’s operational readiness, especially for platforms like FA-50 jets and K9 howitzers deployed in allied countries.

Expanding cooperation could include formal defense industry dialogues, joint research, and training exchanges, further institutionalizing interoperability despite South Korea’s non-member status.

Economic Impact and Industry Outlook

The economic dividends of South Korea’s defense export growth are significant. Hanwha Aerospace, for example, expects operating profits to nearly double to around 1.3 trillion won this year, up from 700 billion won in 2023 and 400 billion won in 2022. Hyundai Rotem and other firms project similar profitability gains.

This profitability surge results from strong government backing, strategic global contracts, and internal industry modernization. Analysts emphasize that continued localization of core technologies and software development is crucial to sustaining export momentum.

With growing geopolitical uncertainty and expanding defense budgets worldwide, South Korea’s defense industry outlook remains robust. Its combined strengths in innovation, production scale, and global partnerships position it for further expansion in both procurement and export arenas through 2030 and beyond.

An Indispensable Partner for Allied Countries

South Korea’s defense industry is a dynamic force reshaping global defense procurement and export landscapes. Driven by a clear government strategy, substantial technological advances, and a rapidly expanding export portfolio, South Korea is not only securing its own national security but also becoming an indispensable partner for allied countries and global defense players.

For international suppliers and governments, understanding South Korea’s procurement ecosystem and forging strong local partnerships offer pathways to tap into this growing market. Beyond that, collaboration with South Korean defense firms represents a strategic opportunity to contribute to, and benefit from, the evolving security architecture bridging the Indo-Pacific and Euro-Atlantic regions.

As South Korea continues to climb the ranks of global defense exporters and innovators, it exemplifies how mid-sized powers can leverage industrial policy, technology, and diplomacy to become pivotal actors on the world stage.