South Korea’s Defense Industry Is No Longer Just About Making Shells Well—But It Still Hesitates When It Comes to Engines
From the outside, defense always looks pretty much the same: tanks, self-propelled howitzers, missiles. But once you get inside, the parts of the business where the money really sticks are far more layered than most people think. It starts with materials and components like engines and transmissions, moves through core systems such as fire control and guidance, scales up with deliveries of finished weapons, and then keeps generating revenue for years through MRO and upgrades. Exports and partnerships expand the whole playing field. The real competitive edge of Korea’s defense industry today is its ability to bundle and sell weapons that have already proven themselves in the market—the K9 self-propelled howitzer, Cheongung-II, and the Hyunmoo family—across multiple parts of the value chain.
That said, this is not something to misunderstand. There are clearly areas Korea still cannot do well. The gap in aircraft gas turbine engines is 5, and stealth is also a 5. This is not a matter of “just trying a little harder.” On the other hand, for the K2 tank powerpack, wheeled armored vehicles, the K9 self-propelled howitzer, Cheongung-II, and ballistic and interceptor missiles, the gap is 1 or less. In these areas, Korea is no longer really in catch-up mode—it is, in effect, running alongside the leaders. You can feel it too, right? It’s all defense, but the weight class is completely different.
The money keeps flowing far longer after delivery than from the one-off sale
The defense value chain is not simply an industry that “sells finished weapons.” Margins are added at the materials and components stage, technological barriers are built around core systems, revenue scales sharply with finished weapons, and lifecycles are extended through MRO and upgrades. Exports and partnerships create real value not as one-off contracts, but when they lead to follow-on volumes and local cooperation frameworks.
Even if this industry’s cash flow starts with orders for finished weapons, the real quality of earnings is ultimately determined by MRO, upgrades, and the localization of core systems. If you control the engine and transmission, as with the K2 tank powerpack, your bargaining power changes completely. Systems like Cheongung-II and L-SAM do not just sell interceptors—they also sell system integration capability. In other words, they are not just selling products; they are selling an entire framework.
| Stage | Description | Detailed Areas |
|---|---|---|
| Materials/Components | Materials and key components required to manufacture defense equipment | Specialty steel/armor materials, propellants/explosives, warheads/fuzes, electronic components, optics/sensors, composites/lightweight materials, etc. |
| Core Systems | Core systems and equipment within weapon systems (AI battlefield systems, AESA radar, etc.) | Fire-control systems, guidance/navigation equipment, AESA radar, electronic warfare (EW), C4I/battlefield management, engines/propulsion systems, etc. |
| Finished Weapons | Complete weapon systems and platforms (KF-21, K2/K9, L-SAM, etc.) | Tanks/armored vehicles, self-propelled howitzers/artillery, missiles/guided weapons, naval vessels/submarines, aircraft/helicopters, unmanned aerial vehicles (UAVs), etc. |
| MRO/Upgrades | Maintenance, repair, and performance upgrades | Field maintenance, depot maintenance, performance upgrades, parts reproduction, technical support/PBL |
| Exports/Partnerships | Defense exports and international cooperation (Poland/Saudi Arabia/UAE/Australia, etc.) | Direct exports, technology transfer (ToT), offsets, international joint development, defense finance |
| Support Services | R&D, testing and evaluation, cyber, military space | R&D, testing and evaluation, simulation/AI training, education and training, cyber/electronic security, military space (reconnaissance satellites/SAR), etc. |
What Korea does well is world-class—but the weak links are glaring
You have to be careful about throwing around the word “localization” in defense. Some areas are already competitive in the global market, while in others, the key choke points are still in someone else’s hands. The numbers are brutally clear. Within the same industry, you have fields with a gap of 1 or less coexisting with fields where the gap is 5.
Korea’s defense technology map is crystal clear: strong in ground systems and guided weapons, weak in aircraft engines and stealth. The K2 tank powerpack is built around Hyundai Rotem, HD Hyundai Infracore, and SNT Dynamics; wheeled armored vehicles around Hyundai Rotem and Hanwha Aerospace; the K9 self-propelled howitzer around Hanwha Aerospace; Cheongung-II around LIG Nex1 and Hanwha Systems; and ballistic/interceptor missiles such as the Hyunmoo series and L-SAM around LIG Nex1 and Hanwha Aerospace. That lineup is no accident. It tells you exactly where Korea can make money.
On the flip side, aircraft gas turbine engines and stealth both show a gap of 5. That is dangerous. Even if you can build the platform, if you do not control the heart of it, it never fully becomes your game. APS, UGVs, and precision-guidance kits still show a gap of 2. That is actually more awkward. It is not that Korea cannot do them at all, but these are the areas where the market can still ask, “Do we really need to use the Korean one?” Frankly, the real issue going forward is not making another simple declaration of localization. It is about bundling the strong areas into integrated system packages, while drawing a hard line on how far Korea will go on its own in the weak ones.
Table below: Domestic and global TRL (technology readiness level 1–9) by technology, and key companies
| Technology | Domestic | Global | Status | Key companies | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mobility (tanks and armored vehicles) | ||||||||||||||||||||||||||||||||||
| K2 tank powerpack (engine and transmission) | 8 | 8 | Solid · Gap 0 | Hyundai Rotem, HD Hyundai Infracore, SNT Dynamics | ||||||||||||||||||||||||||||||
| This is the bundle of components that amounts to the tank’s “heart and legs.” A 1,500-horsepower-class diesel engine and the transmission that delivers that power to the tracks are packaged together as the “powerpack.” To make a 55-ton tank run at 70 km/h, the engine and transmission have to work in extremely precise sync, especially on durability. Korea localized the engine early, but struggled for years to validate the durability of a transmission that could handle high torque while shifting smoothly, so the initial batches used German units. In 2025, the domestic transmission passed cumulative endurance testing, and full-scale mass-production application is now underway, including for export models bound for Poland. Full localization of the powerpack is a symbolic milestone in defense self-reliance: both engine and transmission built on Korean technology. | ||||||||||||||||||||||||||||||||||
| Active Protection System (APS) | 6 | 8 | Catching up · Gap 2 | Hanwha Systems, Hyundai Rotem, LIG Nex1 | ||||||||||||||||||||||||||||||
| Instead of relying on thick armor to absorb incoming anti-tank missiles and RPGs, this is an “active” defense system that detects the threat first with radar and fires an interceptor to destroy it in the air. In boxing terms, it is not about taking the punch—it is about swatting it away mid-flight. Because detection, launch, and interception all have to happen in roughly 0.1 seconds, the core technologies are ultra-fast radar, real-time computation, and rapid interceptor deployment. Israel’s Trophy is the combat-proven leader, while Korea is developing a Korean-style APS under the lead of the Agency for Defense Development. The hard part is safety: fragments can easily end up hitting friendly troops or nearby infantry, so fail-safe design and malfunction prevention are major engineering challenges. | ||||||||||||||||||||||||||||||||||
| Wheeled armored vehicle | 8 | 8 | Solid · Gap 0 | Hyundai Rotem, Hanwha Aerospace | ||||||||||||||||||||||||||||||
| These are armored vehicles that run on rubber tires rather than tracks, with the K808 (8x8) and K806 (6x6) as representative models. Compared with tracked armored vehicles, they are faster on roads and offer better fuel efficiency and maintainability, making them well suited for rapidly transporting troops. They use run-flat tires that can keep moving even if some wheels are punctured by gunfire, along with V-shaped hull bottoms designed to disperse mine blast pressure and improve survivability. As demand rises for urban warfare and security operations, the global market for wheeled armored vehicles is expanding. | ||||||||||||||||||||||||||||||||||
| Unmanned Ground Vehicle (UGV) | 5 | 7 | Catching up · Gap 2 | Hyundai Rotem, Hanwha Aerospace | ||||||||||||||||||||||||||||||
| This is a military vehicle that moves without a human onboard, either by remote control or autonomous driving. It takes on dangerous missions such as reconnaissance, logistics transport, casualty evacuation, and fire support in place of soldiers, reducing loss of life. The core challenge is autonomous-driving AI that can navigate rough off-road terrain with no lane markings, avoid obstacles on its own, and continue the mission even if communications are cut. Hyundai Rotem’s multipurpose unmanned vehicle is currently in military pilot operation, and the concept is evolving into the ground component of MUM-T, where manned and unmanned combat vehicles fight as a team. | ||||||||||||||||||||||||||||||||||
| Firepower and precision guidance (self-propelled artillery, missiles, guided weapons) | ||||||||||||||||||||||||||||||||||
| K9 self-propelled howitzer | 9 | 9 | Solid · Gap 0 | Hanwha Aerospace | ||||||||||||||||||||||||||||||
| This is a large artillery system that moves and fires on its own. Unlike towed artillery that has to be hauled by a truck, it relocates directly on tracks, fires, and then immediately moves again—shoot-and-scoot—to avoid enemy counterbattery fire. Its strengths are fire-control automation that can autoload and fire 155 mm shells at a rate of more than six rounds per minute out to roughly 40 km, and reliability that holds up under harsh conditions. The follow-on K9A2 model is being upgraded with fully automated shell loading to push the rate of fire even higher. | ||||||||||||||||||||||||||||||||||
| Cheongung-II (medium-range surface-to-air guided weapon) | 8 | 8 | Solid · Gap 0 | LIG Nex1, Hanwha Systems | ||||||||||||||||||||||||||||||
| This is Korea’s indigenous medium-range air-defense missile designed to intercept incoming enemy aircraft and ballistic missiles. Right after vertically launching from the launcher, it uses side thrusters—jets of gas fired sideways—to snap-turn toward the target. That “launch in place, then turn” method (cold launch plus side-thrust control) allows it to respond immediately to threats from any direction in 360 degrees. A multifunction radar tracks the target and guides the missile through the terminal phase to impact. It is effectively Korea’s answer to Patriot, with ballistic missile interception capability being the key feature of Cheongung-II. | ||||||||||||||||||||||||||||||||||
| Ballistic and interceptor missiles such as the Hyunmoo series and L-SAM | 8 | 8 | Solid · Gap 0 | LIG Nex1, Hanwha Aerospace | ||||||||||||||||||||||||||||||
| These are Korea’s main missile families for precision strikes on fixed targets or intercepting enemy missiles. The Hyunmoo series includes both ballistic missiles that arc outside the atmosphere before falling back, and cruise missiles that fly low along terrain to evade radar. By combining GPS and inertial navigation, they can hit within a few meters of the target. L-SAM, the long-range surface-to-air guided weapon whose development was completed in 2024, is the upper-tier shield of Korea Air and Missile Defense (KAMD), intercepting enemy ballistic missiles at altitudes of 50–60 km through hit-to-kill impact. Only a handful of countries can independently design and produce missiles in this class. | ||||||||||||||||||||||||||||||||||
| Precision-guidance kits (guided artillery shells and glide-guided munitions) | 6 | 8 | Catching up · Gap 2 | LIG Nex1, Hanwha Aerospace, Poongsan | ||||||||||||||||||||||||||||||
| These are components that turn artillery shells and bombs—which would otherwise follow a ballistic arc and scatter—into precision weapons by adding control fins and satellite navigation. Instead of buying expensive new missiles, militaries can upgrade existing stockpiles of conventional munitions into “smart rounds,” dramatically improving accuracy at relatively low cost. Glide-guided munitions are dropped from aircraft and then use wings to glide tens of kilometers, striking targets from safe stand-off distances outside enemy air-defense range. The Ukraine war has proven the cost-effectiveness of precision-guidance kits such as the U.S. JDAM, and global demand is rising. | ||||||||||||||||||||||||||||||||||
| Aviation and unmanned systems (fighters, drones, engines) | ||||||||||||||||||||||||||||||||||
| KF-21 Boramae (indigenous fighter) | 7 | 8 | Solid · Gap 1 | Korea Aerospace Industries (KAI), Hanwha Aerospace, Hanwha Systems | ||||||||||||||||||||||||||||||
| This is Korea’s independently developed 4.5-generation supersonic fighter. Korea has completed the airframe design, flight-control software that governs the aircraft by computer, and weapons integration with domestic technology, and since its first flight in 2022, the prototypes have successfully completed test flights. It is not a full stealth fifth-generation fighter, but the fact that it has raised the domestic share of core components such as the indigenous AESA radar is highly meaningful because it secures autonomy in operation and future upgrades. The first mass-production contract was signed in 2024, with initial production aircraft to be delivered and fielded from 2026, followed by weapons testing and additional production. | ||||||||||||||||||||||||||||||||||
| Aircraft gas turbine engine | 4 | 9 | Weak · Gap 5 | Hanwha Aerospace | ||||||||||||||||||||||||||||||
| This is the jet engine that propels a fighter aircraft. The critical component is the turbine blade, which has to spin at ultra-high speed without melting in flames hotter than 1,500°C. That requires extremely difficult know-how in high-temperature alloy materials, single-crystal precision casting, and cooling design, which is why only a handful of countries—the U.S., U.K., France, Russia, and a few others—can build them independently. Korea is currently at the stage of licensed assembly and production of U.S. GE engines through Hanwha Aerospace. It has extensive experience manufacturing components, but still does not possess the core technology to design a complete engine from scratch. The government is pursuing independent development of a 15,000-pound-class fighter engine as a long-term national project. | ||||||||||||||||||||||||||||||||||
| Unmanned systems and MUM-T | 6 | 8 | Catching up · Gap 2 | Korea Aerospace Industries (KAI), Korean Air, LIG Nex1 | ||||||||||||||||||||||||||||||
| This category covers aircraft that conduct reconnaissance, surveillance, or strikes without a pilot onboard, as well as the concept of teaming them with manned aircraft in combat. Medium-altitude UAVs stay aloft for long periods at high altitude, using cameras, radar, and SAR to monitor the enemy and transmit data in real time via satellite. The key development directions are autonomous flight that continues the mission even if communications are cut, and swarming—launching multiple low-cost drones as coordinated groups. More recently, full-scale development has begun on “loyal wingman” unmanned aircraft that escort manned fighters such as the KF-21, conduct reconnaissance, and take on dangerous missions in their place. | ||||||||||||||||||||||||||||||||||
| Stealth (low observability) technology | 4 | 9 | Weak · Gap 5 | Korea Aerospace Industries (KAI), Agency for Defense Development (ADD) | ||||||||||||||||||||||||||||||
| This is the technology that makes an aircraft “hard to see” on enemy radar. The airframe surface and edges are shaped at angled geometries so incoming radar waves are deflected away from the emitter rather than reflected back, while special coatings and materials—radar-absorbing materials, or RAM—absorb electromagnetic energy and convert it into heat, reducing the returning radar cross section (RCS). Weapons mounted externally make the aircraft easier to detect, so true stealth also requires internal weapons bays. Maintenance and management of the coatings are difficult as well, and the U.S. remains overwhelmingly ahead. Korea is still in the early stage, with ADD and KAI leading preliminary research into stealth shaping and materials. | ||||||||||||||||||||||||||||||||||
| ISR and electronic warfare (radar, EO/IR, EW) | ||||||||||||||||||||||||||||||||||
| AESA radar | 7 | 9 | Catching up · Gap 2 | Hanwha Systems, LIG Nex1 | ||||||||||||||||||||||||||||||
| An AESA (active electronically scanned array) radar does not rotate its antenna with a motor. Instead, thousands of tiny transmit/receive modules densely packed across a flat surface finely adjust the phase—the timing of the wave—of the signals they emit, electronically steering the beam almost instantaneously. Because there is no physical rotation, the beam can be redirected to multiple directions almost immediately, enabling simultaneous search and tracking. It also keeps working even if some modules fail, and it is harder for the enemy to detect. The key technologies are gallium nitride (GaN) semiconductor devices inside the T/R modules, along with integration, cooling, and signal-processing technologies that tie the system together. Hanwha Systems and others have developed an indigenous AESA for the KF-21 and are now conducting aircraft integration and flight testing. | ||||||||||||||||||||||||||||||||||
| EO/IR (electro-optical and infrared surveillance equipment) | 6 | 8 | Catching up · Gap 2 | Hanwha Systems, LIG Nex1 | ||||||||||||||||||||||||||||||
| This is surveillance and targeting equipment that uses high-magnification cameras (EO) during the day and IR sensors at night or through smoke to detect the infrared heat emitted by all objects. It converts the slight temperature differences of people, vehicles, and engines relative to their surroundings—blackbody radiation—into images, allowing operators to identify shapes even in pitch-black darkness with no visible light. The system also includes stabilized gimbals to keep the image from shaking, and fusion technology that overlays optical and infrared imagery. That said, high-performance infrared detector elements—the key components that determine image clarity—still partly depend on imports. | ||||||||||||||||||||||||||||||||||
| Electronic warfare (EW) systems | 6 | 8 | Catching up · Gap 2 | LIG Nex1, Hanwha Systems | ||||||||||||||||||||||||||||||
| This is the invisible electromagnetic fight: disrupting enemy radar, communications, and missiles with radio waves while protecting friendly forces. It works by blasting strong noise or false signals onto enemy radar frequencies to confuse their displays (jamming), imitating missile-guidance signals to lure missiles off course (deception), and at the same time listening in on enemy emissions to identify what weapons are where before the fight begins (electronic support). The core is the software and threat library that can instantly identify a threat from among countless signals and automatically select the most effective countermeasure. | ||||||||||||||||||||||||||||||||||
| Reconnaissance satellites and SAR (imaging radar) | 6 | 8 | Catching up · Gap 2 | Hanwha Systems, Korea Aerospace Industries (KAI), Satrec Initiative | ||||||||||||||||||||||||||||||
| These are reconnaissance satellites that monitor the Korean Peninsula and surrounding areas from orbit. Ordinary optical cameras are useless in clouds or at night, but SAR (imaging radar) works by having the satellite transmit its own radio waves and then using a computer to synthesize the reflected signals returning from the ground into image-like maps of terrain and facilities. That means it can see through clouds and darkness, day and night. A single large satellite can only revisit the same spot a few times a day, but if you launch dozens of small, low-cost satellites as a constellation, you can revisit the same location every 30 minutes to an hour and track enemy movement with near-continuous coverage. Following the military reconnaissance satellite program (Project 425), Korea is now pushing ahead with a microsatellite constellation program. | ||||||||||||||||||||||||||||||||||
| Naval and underwater (surface combatants, submarines, sonar) | ||||||||||||||||||||||||||||||||||
| Aegis destroyer and combat management system (CMS) | 7 | 8 | Solid · Gap 1 | HD Hyundai Heavy Industries, Hanwha Ocean, Hanwha Systems | ||||||||||||||||||||||||||||||
This is a large air-defense surface combatant capable of simultaneously detecting, tracking, and intercepting dozens of air and sea targets. The combat management system (CMS),Technology Roadmap
South Korea’s No. 1 hasn’t changed—and that means somethingIt gets even more interesting when you look at how the top spot has evolved over time. Globally, No. 1 has remained Lockheed Martin throughout 1990s~2008, 2009~2016, 2017~2019, 2020~2024, and from 2025 to the present. In Korea, the leader was Hanwha in 1990s~2008 and 2009~2016, and Hanwha Aerospace from 2017~2019 through today. The name changed, but the core didn’t.
The history of Korea’s defense industry is a story of how a consistent axis running from Hanwha to Hanwha Aerospace never gave up industrial leadership. This is not simply because it got bigger. It means the company kept holding the center through ground systems, firepower systems, links to the missile-related ecosystem, and the ability to assemble export-ready packages. In industries where the domestic No. 1 changes frequently, the structure is usually unstable. Defense was not like that. That said, you also have to keep in view the fact that the global No. 1 is still Lockheed Martin. Just because Korea has clearly established areas of strength does not mean the top-tier hierarchy is about to flip overnight. That is especially true if weak spots like aircraft engines and stealth remain unresolved. Korea’s position today is this: “a strong player in specific weapons systems and in ground-based and guided weapons.” That’s good. But it is not a full-spectrum hegemon. You need to know exactly where that line is if you want to avoid mistakes. For the next set of numbers, watch whether the blanks are shrinking—not just whether the order backlog is growingWhat matters going forward is not just headline order news. We need to see how long already-strong product lines—such as the K2 tank powerpack, K9 self-propelled howitzer, Cheongung-II, and the Hyunmoo series and L-SAM—can sustain momentum through exports, partnerships, MRO, and upgrades. Even when selling the same platform, the quality of the business changes depending on whether it comes with follow-on logistics support and whether it leads into upgrade programs. The next level for Korea’s defense industry will be determined less by finished weapon sales and more by how well it can bundle core systems, maintenance, and upgrades together. The risks are also clear. The gap score of 5 in aircraft gas turbine engines and stealth is not just an empty box. It is a hole that defines the upper limit of the entire industry. Even the gap score of 2 in APS, UGVs, and precision-guidance kits is not something to be complacent about. If progress is slow in these areas, even the strong platforms could eventually lose out in package competition. There is no need to sugarcoat it. Korea’s defense industry is already strong. But if it hardens into a structure where only the strong get stronger, the ceiling on growth may come into view sooner than expected. ※ This article is an analysis compiled from public data and industry materials, and some figures and assessments are estimates. It is not intended as a direct basis for investment decisions. Written: June 2026. Ealexandro | ||||||||||||||||||||||||||||||||||
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