Defense industry likely to maintain export momentum amid tensions in Europe, Asia: experts
Defense Minister Ahn Gyu-back, second from left, and his Polish counterpart, Wladyslaw Kosiniak-Kamysz, second from right, attend a signing ceremony to supply additional K2 tanks to Poland in Gliwice, Poland, Aug. 1. Courtesy of the Ministry of National Defense
Korea's defense industry is expected to continue enjoying strong exports for some time, industry officials said Tuesday, citing continued geopolitical uncertainties and growing demand for deterrence capabilities amid the ongoing Russia-Ukraine war and sprawling tensions in Asia.
Such an outlook comes despite international efforts to bring an end to the Ukraine war.
"In my personal view, even if there is a cease-fire or peace agreement, I don't think the overall arms buildup in Europe will decrease," an official from a major Korean defense firm told Yonhap News Agency on condition of anonymity. "We do not export to Ukraine or Russia, but we are monitoring the situation carefully."
An official at a different defense company said the firm was also closely monitoring the overall situation, pointing to ongoing shifts in the global security landscape.
"We need to look at how the geopolitical landscape is changing. From a business perspective, we will continue to watch these shifts closely and capture new opportunities," the official said, also asking to be unnamed.
The official added that his company was continuously "exploring cooperation with major European defense firms."
A separate industry source from another firm said the rise in overall global demand for advanced weapons systems may even accelerate.
"Personally, I think the global defense market will grow even larger, potentially providing an opportunity for the Korean defense industry," the company official said.
She noted that the Ukraine war has made countries "recognize the importance of preserving their own security."
"I predict governments will strengthen research and development in areas that can help them prepare for future battlefields, such as those involving unmanned and automated warfare," the official added.
Korea has rapidly expanded its footprint in the global defense market in recent years amid geopolitical risks stemming from the intensifying rivalry between the United States and China, as well as security instability in Europe and the Middle East.
According to data compiled by the Stockholm International Peace Research Institute, the country ranked 10th in global arms exports between 2020 and 2024.
Notably, earlier this month, Korea successfully signed a $6.5 billion deal with Poland to export a second batch of K2 tanks from Hyundai Rotem, marking the largest-ever export contract won by a Korean defense contractor.
On his election campaign trail, President Lee Jae Myung pledged to foster defense exports as a major economic driver for the country, promising to turn Korea into one of the world's top four defense powerhouses during his presidential term if elected.
Ahn Sang-nam, head of the defense industry promotion division at the Korea Defense Industry Association (KDIA), said the sense of insecurity in Europe was unlikely to fade even if the conflict in Ukraine subsides.
"In my personal opinion, it will not have a major direct impact on Korean defense exports. Russia continues to pose a threat not only to Ukraine but to the Baltic region at large, and there is a growing perception that each country needs to take charge of its own security," he said.
"Our weapons systems are highly suited for regions that truly need them, so I believe Korea's defense exports will continue their upward momentum for the time being," he added.
Such an outlook is backed by strong earnings in the sector.
According to industry data, the combined operating profit of the country's top five defense firms — Hanwha Aerospace, LIG Nex1, Korea Aerospace Industries Co., Hanwha Systems and Hyundai Rotem — surged 161 percent on-year to 2.34 trillion won ($1.69 billion) in the first half of this year, reaching 80 percent of their annual earnings in 2024.
In February, Seok Jong-gun, minister of the Defense Acquisition Program Administration, anticipated that, including projects rolled over from last year, Korea is poised to post its largest-ever defense export results in 2025.
Despite the overall positive outlook for the sector, Ahn said it was "difficult for the industry to guarantee its success in the following decade," stressing the need to continue investments in the field to generate future growth engines.