Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Trump order on foreign-built US ships boosts Hanwha, but strings attached
Hanwha Ocean's shipyard in Geoje, South Gyeongsang Province / Korea Times photo by Kim Hyeong-joon
By Nam Hyun-woo
Immediate orders for Korean shipbuilder uncertain; new measure may require technology transfer to US
Hanwha Group and its shipbuilding unit Hanwha Ocean are gaining market attention after U.S. President Donald Trump on Thursday (local time) allowed foreign shipbuilders to build up to two U.S. Navy ships in their home shipyards through a national security memorandum.
The memo, which opened the door for Navy ships to be built overseas for the first time in decades, applies to foreign shipbuilders that have made “substantial and durable investments” in U.S. shipyards.
Industry officials believe Hanwha Group, which have been committing hefty investments in the U.S. shipbuilding industry, will be a likely beneficiary. However, they also note that the benefits will have to be weighed against follow-up conditions, including potential transfers of shipbuilding technology, as all vessels after the first two would have to be built in the U.S.
Hanwha Group said it is currently reviewing the details of the memorandum. Hanwha Ocean also said it is difficult to comment on the matter at this point.
According to the memo, the measure covers a foreign supplier that simultaneously builds a new shipyard in the U.S. or assumes ownership or a majority equity position in an existing shipyard in the U.S.
U.S. President Donald Trump boards Air Force One at Joint Base Andrews, Md., Aug. 7. AP-Yonhap
“As foreign shipbuilders which make substantial and durable investments into America’s shipyards and train an all-American workforce for the jobs they create, they will be temporarily permitted to build up to two ships in their parent shipyards that will be delivered (to the United States),” a fact sheet accompanying the memo read.
Hanwha acquired Philly Shipyard in Philadelphia in 2024 and has also proposed acquiring the U.S. operations of Australian shipbuilder Austal, putting it in a strong position to meet the requirement.
The memo stated that foreign shipbuilders can build three types of vessels in their home countries: surface combatants, consolidated cargo replenishment at sea tankers and roll-on/roll-off vessels.
U.S. Rep. Pramila Jayapal, center, speaks to reporters after the House of Representatives passed its version of the fiscal 2027 National Defense Authorization Act on Capitol Hill in Washington, D.C., July 22. Reuters-Yonhap
However, it remains uncertain whether the memorandum will lead to immediate orders for Hanwha, as some U.S. lawmakers oppose allowing Navy ships to be built at foreign shipyards.
The proposed National Defense Authorization Act for Fiscal Year 2027, which the U.S. House of Representatives passed on July 22, includes a provision prohibiting the use of defense funds to procure Navy ships built at foreign shipyards. The White House Office of Management and Budget opposed the restriction, saying it would limit the U.S. government’s flexibility to leverage the capabilities of allied shipyards.
Since the memorandum is based on the president’s waiver authority, it can take effect without separate congressional approval. However, uncertainty remains over how the policy will ultimately be reconciled with the House-approved legislation.
“The most significant aspect of the memorandum is that the U.S. administration has formally opened the way for Navy ships to be built outside the United States,” an industry official said. “Given the U.S. political calendar, the possibility cannot be ruled out that actual orders could proceed at a relatively rapid pace.”
If Trump’s directive is implemented, Hanwha could establish a business structure under which it builds the initial U.S. ships at its shipyard in Geoje, South Gyeongsang Province, and carries out follow-up production at Philly Shipyard.
Hanwha Philly Shipyard in Philadelphia / Courtesy of Hanwha Philly Shipyard
The market views the memo as a positive development for Hanwha, but the opportunity also comes with strings attached.
The accompanying fact sheet states that only the first two vessels under a broader shipbuilding program may be built overseas, describing the arrangement as “a bridge” while U.S. shipyards are newly constructed, acquired or modernized.
This means the expertise and technologies used to build the initial vessels would ultimately have to be transferred and put into practice in the U.S. This will likely involve the relocation of jobs, production capacity, supply chains and shipbuilding know-how to the U.S.
“The categories covered this time include warships, and the most critical technologies involved are defense-related technologies that originated from the U.S. in the first place,” another industry official said.
“What the market is more concerned about is the practical know-how and shipbuilding technologies that Korean shipbuilders have accumulated. But these are not necessarily state secrets or technologies that should not be transferred. If Korean shipbuilders can help strengthen the U.S. shipbuilding industry, that could ultimately be viewed as a win-win situation.”