World-class ships and new supersonic jets mark the quiet rise of a new defense industry powerhouse in Asia

• South Korea's defense industry has seen meteoric growth in recent years.
• Countries are spending more on defense, and Seoul's affordable, high-quality hardware is in demand.
• South Korea's president has said that he wants to make it the world's fourth-largest arms exporter.

A growing sense of instability in the year since Russia attacked Ukraine has prompted multiple countries to increase their defense spending, and the global defense industry is now set to break records in sales and growth.

No country is better positioned to benefit from this than South Korea. Its defense sector has seen meteoric grown in recent years, setting records for foreign sales in both 2021 and 2022.

2023 is also shaping up to be a good year for South Korea's defense industry. Twenty-nine South Korean companies participated in this year's International Defence Exhibition in Abu Dhabi in February. Among developments there was a $920 million deal with Malaysia for 18 FA-50s, a light combat aircraft that has attracted interest around the world.

The sales are the result of a half-century of rapid development that has vaulted South Korea from having no defense industry at all to being one of the world's largest arms exporters.

Meteoric growth

South Korea's quest for a domestic defense industry began in 1968, after several particularly aggressive actions by North Korea and a shift in US defense policy convinced then-President Park Chung-hee that the country needed its own suppliers.

South Korea's defense industry was originally tailored to meet the country's own needs, and Seoul assisted its growth with subsidies and other incentives. It also required foreign companies that wanted to sell defense products to South Korea to either build them at least partially in the country or incorporate South Korean-made components.

South Korea's industry slowly began exporting to foreign countries in 1977, and by 2016, it was the 13th-largest defense exporter in the world, according to the Stockholm International Peace Research Institute.

As South Korea's defense products increased in quality, so too did its exports. In 2020, SIPRI designated South Korea the largest of the world's four major emerging arms suppliers, accounting for 1.5% of all global arms transfers between 2010 and 2019.

As of 2021, the most recent year for which data is available, South Korea is the world's eighth-largest defense exporter, accounting for 2.8% of all arms exports between 2017 and 2021. The volume of South Korea's exports increased a staggering 177% over the 2012-2016 period — a bigger increase than those seen by any of the other top 10 largest arms exporters during that period, according to SIPRI.

South Korea's defense exports amounted to roughly $3 billion in 2020. Those sales increased to $7.2 billion in 2021 and more than doubled to an estimated $17 billion in 2022.

A quality alternative

South Korea's rise in the defense-export rankings reflects a desire to shift the defense industry's focus from the domestic market to international buyers.

One reason the shift has been so successful is that South Korea can sell quality products at lower prices than the world's biggest arms suppliers. South Korean arms also give foreign buyers another option for high-quality material, often with fewer strings attached.

For example, in January 2022, South Korea signed a contract to sell the UAE its Cheongung II KM-SAM surface-to-air missiles. The UAE likely agreed to the $3.5 billion deal, then a record for Seoul, at least in part to mitigate the impact of a potential US decision to pause arms sales again in the future.

South Korea topped that record in August, when Poland signed a $5.8 billion contract for 180 K2 main battle tanks and 212 K9 howitzers. That hardware, to be delivered over the next several years, is part of a larger multibillion-dollar agreement in which Poland will acquire 980 K2s, 648 K9s, and 48 FA-50s.

In October, Poland made another order for 288 K239 Chunmoo self-propelled rocket-artillery systems after it became clear that the US could not fulfill Warsaw's request for 500 High Mobility Artillery Rocket Systems amid the war in Ukraine.

South Korean firms have burnished their appeal with a record of rapid deliveries. The UAE received its first KM-SAMs within a year of buying them, and Poland received its first 24 K9s and 10 K2s in December. (Poland is still waiting on delivery of the 366 Abrams tanks it has ordered from the US over the past year.)

Exports and products

Naval vessels are a major part of South Korea's defense exports, making up 47% of the total volume in 2019, according to SIPRI.

South Korea itself has sought to build a world-class navy for years. South Korean firms have designed and built frigates, diesel-electric submarines, patrol vessels, and replenishment ships for foreign customers. Seoul regularly trades the title of world's largest shipbuilder with China. (South Korean shipbuilders have also designed vessels for foreign buyers to build on their own.)

The South Korean defense industry's most anticipated product might be the KF-21 Boramae, a multi-role combat jet optimized for air-superiority missions.

The KF-21 is South Korea's first domestically developed supersonic aircraft, and while it doesn't have the advanced stealth features of fifth- or sixth-generation aircraft, such as radar-absorbent coating, the KF-21's angular airframe gives it a low radar cross-section and thus stealthy characteristics.

The KF-21 is both a technological and diplomatic milestone for Seoul. It is a joint development project with Indonesia, which is providing 20% of the funding in exchange for technology transfers and 50 aircraft. Similar joint efforts produced the F-35 and are being used to develop even more advanced jets.

Four of six planned KF-21 prototypes have been produced, including a two-seat variant. The first test flight was in July, followed by the first supersonic flight test in January. South Korea hopes to begin mass production in 2026 and field 120 aircraft by 2032.

South Korea wants to export the fighter, and analysts say it could compete with China's fourth- and fifth-generation jets for sales. Poland has already expressed interest in joining the program.

Future

South Korean leaders have made it a priority to increase their country's share of the world's defense market.

At a meeting with defense CEOs in November, South Korean President Yoon Suk-yeol called their industry "the country's future growth driver and the backbone of other industries of advanced technologies."

South Korea "should secure its technological competitiveness to develop weapon systems that can be a game-changer in future warfare," Yoon said, adding that the research-and-development environment should be improved "to establish an ecosystem that the country's defense industry can transform into an export-oriented business."

Yoon has said that he wants to make South Korea the world's fourth-largest arms exporter, which would put it behind only France, Russia, and the US, based on SIPRI data through 2021.

Achieving that will require South Korea to overcome several issues, including a worker shortage and a heavy reliance on foreign components, like jet engines and naval propulsion systems, that could hinder efforts to sell hardware to third parties.

With tensions rising on the Korean Peninsula, Seoul will also have to think harder about how it divides resources between its military exports and its own pressing military needs.