In the neighborhood where I grew up, a fighter jet would sometimes tear across the sky. The sound always arrived later than the aircraft, so by the time you looked up, the plane was already far away. It never occurred to me back then to wonder where that machine was made or who it was sold to. The chains we have seen so far have mostly been stories about where value pools. This chain asks something a little different. How many customers are there. Weapons.
The K9 self-propelled howitzer, the K2 tank, and the homegrown KF-21 fighter. For a long time, the chain behind these machines carried one very peculiar condition: there was exactly one customer. The only buyer for the weapons Korea's defense companies made was the Korean government — more precisely, DAPA, the Defense Acquisition Program Administration. The quantity one country's military needs is fixed, and there is a single window that buys it. A market where the monopoly sits on the buying side, not the selling side — a monopsony. So the price, too, was largely set by the government. If the spirits market we saw earlier was a monopoly on the selling side where the government set the price, defense was a monopoly on the buying side where the government likewise held the price. The directions were opposite; the conclusion — the company cannot name its own price — was the same.
The Year the Door Opened
Then, over the past few years, a door onto the world swung wide open in this chain. As wars and tensions dragged on across the globe, country after country rushed to buy weapons, and Korean arms — which could be made quickly and in volume — absorbed that demand.
| K-Defense (2025) | Value |
|---|
| Combined revenue of the Big Four | About 40 trillion won (first time past 40 trillion) |
| Defense export orders (contract basis) | About $15.4 billion (+60.4%) |
| Signature contract | Poland, second K2 tank batch, about 9 trillion won |
When the customer count went from one to many, the character of the chain changed wholesale. Companies that used to build only the quantities one country's military allotted them now take orders from Poland, from the Middle East, from India. Selling at home meant conforming to a government-set price; in the export market, the price turns on how fast, and how reliably, the weapon arrives. It was around this time that the four companies' combined operating margin climbed into double digits. The junior partner that had spent decades watching only the government finally gained, with the world as its courtyard, the room to name a price.
As an aside, the phrase "the price of a weapon" still sits a little strangely with me. So much for a howitzer, so much for a tank — we say it the way we would quote the price of a refrigerator, but when you consider what the thing does, the word "price" slips somewhere along the way. On the books, though, it is in the end an export, and in this chapter I have decided to follow the language of the books.
Where Is the Courtyard Moving?
Here, a question this book has been sharpening all through Part 3 comes into focus. Until now, whenever I looked at a wall, I asked who built it, whether it had a door, how high the threshold was. Defense forces one more question onto the list. Is the courtyard inside this wall growing or shrinking — and toward whom is it moving? Cement's courtyard has dried up; the battery courtyard has shifted from electric vehicles to storage systems; the defense courtyard has widened from home to the world. Behind the same wall, a company can be master or servant depending on where the courtyard moves.
Of course, nobody knows how long this courtyard will keep widening. When wars subside, so do orders. A wall that stands leaning on an expanding courtyard must always keep in mind the day the courtyard narrows again. Even so, at this moment, the sight of a chain that had one customer gaining the world as its customer is the most dramatic demonstration there is of how much force the movement of a courtyard carries.
The People Who Don't Leave
| Company | Employees | Average annual pay | Average tenure | Revenue per employee | Operating profit per employee |
|---|
| Hanwha Aerospace (standalone) | 8,168 | 124 million won | 13.1 years | About 1.17 billion won | About 250 million won |
| KAI | 5,241 | About 120 million won | 13.7 years | About 710 million won | About 51 million won |
| LIG Nex1 | 5,382 | About 110 million won | 10.4 years | About 800 million won | About 59 million won |
| Hyundai Rotem | 4,541 | About 120 million won | 11.3 years | About 1.29 billion won | About 220 million won |
* Per-employee figures are rough estimates: FY2025 results divided by disclosed headcount. Hanwha Aerospace's consolidated statements sweep in Hanwha Ocean and others, so it is calculated on a standalone basis (revenue of 9,525.1 billion won, operating profit of 2,022.6 billion won); the other three companies are consolidated. All four companies' pay reflects bonuses from the export boom years. At LIG Nex1, 59% of employees are R&D personnel.
When the customers multiplied, the pay envelope was the first to know. The four companies' average pay sits side by side at around 120 million won. Until a few years ago, defense passed for a stable but modestly paid neighborhood; in the space of two years, pay jumped some 20% and the terrain changed. It was around then that LIG Nex1's envelope crossed 100 million won for the first time in its history. Tenure of ten to fourteen years — the patience of the single-customer era, accumulated year on year, with the envelope of the many-customer era now laid on top. This is how the expansion of a courtyard registers on people's wages before it registers on the financial statements. Still, as I fold up the table, I pause to think. On the day the wars subside and the courtyard narrows again, at which of the two speeds will the thickness of this envelope revert? The people with thirteen years of tenure may already know the answer, having lived through it once before.
But there is also the exact opposite case. A giant chain whose customers are scattered all over the world — and which still cannot name its price at all. A place that was long a pillar of Korean industry and is now passing through its longest winter. The next journey heads for petrochemicals.
This piece is part of the "Korea Value Chain" series and is an original work. It is an analysis based on public data and industry sources; some figures and assessments are estimates. It is not intended as a direct basis for investment decisions.
By Alexandro Lee · July 2026
댓글
댓글 쓰기