Hanwha Group is accelerating its efforts to penetrate the U.S. ground and maritime defense markets, with the K9 self-propelled howitzer and the Philadelphia shipyard at the forefront. The goal is to increase market share in the world's largest defense market by making substantial investments in local production facilities. Hanwha Group also established a corporation (Hanwha Global Defense) last month in Washington D.C. to oversee overseas operations for three defense affiliates, starting a reorganization of local operations.
According to the defense industry on the 10th, Hanwha Aerospace (Hanwha Aero) is competing with Germany's Rheinmetall, the UK's BAE Systems, the U.S.'s General Dynamics Land Systems, and Israel's Elbit Systems to participate in the U.S. Army's self-propelled howitzer modernization (SPH-M) project. The U.S. Army is pursuing artillery system modernization to secure ground firepower superiority.
The U.S. Army transitioned to the SPH-M project after the extended range cannon artillery (ERCA) project, which developed the M1299 self-propelled howitzer with a firing range of 70 km, was suspended last year due to barrel wear issues. They plan to select and adopt one of the already commercialized 155 mm self-propelled howitzers from both domestic and international sources, instead of developing a new one.
Hanwha Aerospace is bidding with the K9A2, the second upgrade of the K9 self-propelled howitzer. The K9, a tracked self-propelled howitzer, is operated in 10 countries worldwide, including Korea, and is cited as having built significant reliability, which is considered its strongest competitive edge. The U.S. Army aims to deploy the new self-propelled howitzer by 2030 after performance tests and competitive evaluations.
An industry insider noted, "Considering the technical requirement compliance, the timely delivery reputation of Korean defense companies, and diplomatic security relations, there's a significant possibility that the K9 self-propelled howitzer may be selected."
Hanwha Aerospace is also pursuing the establishment of a production plant in the U.S. for 155 mm artillery propellant charges (gunpowder that pushes shells forward within the barrel). The plan is to manufacture the raw gunpowder and propellant in a local U.S. factory.
Hanwha Aerospace plans to invest around 1.3 trillion won from funds raised through rights issues and other means in establishing a plant for 155 mm artillery propellant charges in the U.S. The plant site is expected to be finalized by the third quarter, with construction starting in the first quarter of next year.
Last year, Hanwha Group established a foothold to enter the U.S. warship construction market through the Philadelphia shipyard, acquired for $100 million (approximately 135 billion won). The shipyard, acquired by Hanwha Ocean and Hanwha Systems, is expected to play a key role in the Strategic Commercial Fleet construction plan of the Trump Administration.
Hanwha Group set a goal to increase its shipbuilding capacity from the current 1 to 1.5 vessels per year to 10 vessels by expanding local manpower and facility investments. Initially, the focus is on increasing merchant ship production, followed by an expansion to include warships, to reach an annual construction capability of up to 10 vessels.
To enter the U.S. naval shipbuilding market, efforts to acquire management rights in Austal, an Australian shipbuilding and defense corporation that owns two shipyards in the U.S., are underway. This is because the Philadelphia shipyard alone has limitations for constructing new combat ships like warships.
After a failed merger and acquisition (M&A) attempt last year, Hanwha Systems and Hanwha Aerospace began engaging in management by acquiring about 20% of shares in Austal last March. Austal builds surface vessels, logistics support ships, and littoral combat ships at its two shipyards in Mobile, Alabama, and San Diego, California. The interest in acquiring Austal is also attributed to the AUKUS alliance, where Australia, the U.S., and the UK are pursuing submarine construction.
Hanwha views the use of Austal's capabilities in the U.S. for combat ship construction as a means to create synergy with the Philadelphia shipyard. However, since Austal's current board opposes Hanwha Group Vice Chairman Kim Dong-gwan's entry into the board, it is expected that it will take more time for management participation.