TAIPEI: South Korea, better known for making tiny electronic devices than lethal weapons, has set its sights on taking fourth spot in the global defence market. That target is in reach, but it’ll need to lean even more heavily on its tech prowess.
When Ukraine’s stock of munitions last year started to fall low as Russia’s invasion ground on, it turned to allies for more. That meant Western partners including the US.
Yet not even the world’s largest military power has an infinite supply. Enter South Korea, which started shipping thousands of artillery shells to replenish US stockpiles – rather than directly to Ukraine – to avoid the appearance of taking sides.
Decades of facing down North Korea, which is close to becoming a nuclear power, has forced Seoul to slowly build its own capabilities instead of relying heavily on the US. From self-sufficiency and stockpiling, South Korea has morphed into a global exporter.
The war in Eastern Europe helped South Korea more than double weapons sales last year, not only to the US and Ukraine, but to neighbouring countries which increasingly fear Russia’s aggression. Last year, Hyundai Rotem and Hanwha Defense Systems sealed deals with Poland totalling US$5.8 billion to sell tanks and howitzers.
A GLOBAL WEAPONS SUPPLIER
The key to breaking into the top ranks will be to focus on the skillsets that make South Korea unique among rivals. It’s the home to global leaders in memory and storage chips, displays and smartphones.
These don’t seem like weapons-related businesses, but the changing face of military conflict and the increasing importance of technology in everything from handguns to drones and missiles makes them a good foundation for future growth.
Related:
Making the most of having a hostile neighbour: South Korea’s rise to major global exporter of arms
Commentary: Why Hamas' deadly surprise attack on Israel matters to Singapore
Among the items being rushed from the US to Israel at the outbreak of conflict with Hamas were smart bombs. What makes these munitions different is the circuits inside, and South Korea has been at the forefront of development and manufacturing of these miniature systems.
Most of the sensors and chips needed in advanced weapons can be found in the devices and components made by the likes of Samsung, SK Hynix and LG.
South Korea ranked ninth in major global arms exports from 2018 to 2022, according to the Stockholm International Peace Research Institute. Its 74 per cent growth from the prior five-year period was among the fastest in the world.
Those Polish deals add to recent sales of howitzer artillery to Egypt, Estonia, Finland and Norway, as well as ships to Peru, making South Korea a truly global weapons supplier. It will need to leapfrog the UK, Italy, Germany and China if it’s to reach President Yoon Suk Yeol’s goal of hitting fourth spot.
To date, its largest market is in its own backyard. Overall, Asia and Oceania accounted for 63 per cent of the nation’s exports in the five-year period from 2018 to 2022, according to SIPRI. The Philippines, India, Thailand and Indonesia are its key customers.
“A growing perception of China as a threat is the main driver of arms imports” in the region, leading to the highest level of procurement in 30 years, an amount likely to stay high for at least the next five years, SIPRI wrote.
Related:
Commentary: Xi and Putin's no-limits partnership is becoming a one-sided affair
Commentary: Israel-Hamas conflict – key takeaways for Singapore amid seismic shifts in the Middle East
COMBINING WEAPONS AND TECHNOLOGY
Artillery has been the mainstay of Seoul’s arms exports for the past two decades. New challenges from Pyongyang should be the impetus for further combining weapons and technology, and carving out a bigger niche for itself.
In December, five drones from North Korea crossed into South Korea’s airspace, where they hung around for hours while Seoul unsuccessfully scrambled to intercept them. Among the responses to this, and other threats, was a pledge in April to boost military research and development spending to 10 per cent of the national defense budget within five years, from 8 per cent in 2021.
It’s now building a South Korean version of Israel’s Iron Dome for defense against North Korean rockets, while local companies have developed radar, laser-guidance and infrared tracking systems for use in air, land and sea deployments.
Korea Aerospace Industries – a venture between the Daewoo, Hyundai and Samsung conglomerates – in February won a deal to sell 18 of its FA-50 light combat jets to Malaysia for US$920 million, a contract that could expand to 36 jets.
The Philippines has chosen Hyundai to supply frigates and patrol ships for a total cost of more than US$900 million, and Thailand has turned to South Korea for both frigates and training aircraft, the International Institute for Strategic Studies noted in September.
All told, South Korean companies have signed more than US$8 billion in deals to supply complex defence systems including submarines and jet fighters for customers in Southeast Asia, according to IISS.
More needs to be done. The sector still leans heavily on foreign knowhow, including imported technology used in missile and guidance systems. Engines for its indigenous fighter jet come from the US.
This struggle is not insurmountable. As recently as 20 years ago, South Korea was neck and neck with the US, Japan and Taiwan in semiconductors and electronics – now it has caught up and surpassed most of them. Its next step will be to take that technological momentum and apply it to the global arms industry, one where there’ll always be demand.