S. Korea's arms industry faces strategic setbacks despite export boom

· UPI

April 26 (Asia Today) -- South Korea's defense industry is facing mounting challenges in global markets despite record-breaking exports, as a series of failed bids highlights limits beyond technological capability, experts say.

Industry specialists argue that political, diplomatic and financial factors - rather than product performance - are increasingly determining outcomes in major international defense contracts, raising concerns about the sustainability of the country's rapid growth in arms exports.

Recent setbacks have underscored the issue.

A consortium between Lockheed Martin and Korea Aerospace Industries withdrew from the U.S. Navy's Undergraduate Jet Training System program, a project valued at about 60 trillion won ($40 billion). The withdrawal followed changes in requirements that removed the need for carrier landing capability - a key strength of the T-50 trainer - effectively favoring Boeing on price competitiveness.

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The consortium also faced challenges meeting U.S. domestic sourcing requirements under the "Buy American Act," further weakening its position. Analysts say the outcome reflects domestic political considerations and protection of local industry.

South Korea has also faced setbacks in other regions. In Australia's frigate program, Korean bidders lost to Japan's Mitsubishi Heavy Industries, backed by strong government support. In India's submarine project, Germany's ThyssenKrupp Marine Systems secured an advantage with financing and technology transfer proposals. In Poland's ORKA submarine program, South Korea's Hanwha Ocean struggled amid NATO-aligned procurement dynamics.

Experts say these cases reflect "strategic defeats" rather than shortcomings in technology.

Calls are growing for a fundamental overhaul of the Defense Acquisition Program Administration, which oversees procurement. Originally designed to ensure efficient and transparent acquisition for domestic military needs, the agency is now seen as ill-suited to the demands of a globalized defense market.

Specialists argue that defense research and development must integrate military requirements with industrial impact and export competitiveness from the earliest stages. Emerging sectors such as artificial intelligence, drones and space technologies require unified civil-military management across the full lifecycle from development to export.

They also emphasize the need to combine defense exports with diplomacy and policy financing. Unlike conventional trade, arms deals are government-to-government agreements that often include financial packages and industrial cooperation. Experts say the procurement agency should serve as a central hub linking foreign affairs, industry and finance ministries.

Japan's growing presence in global arms markets has added urgency to these concerns. Following its relaxation of export restrictions, Tokyo has secured major contracts and is expanding its influence through integrated packages that include equipment, training and maintenance.

Analysts warn that without a unified national "control tower," South Korea risks losing ground in key markets. They argue that the procurement agency should be empowered to coordinate defense R&D, industrial policy and export strategy at a national level.

Proposals also include strengthening on-the-ground intelligence by deploying defense technology experts to diplomatic missions in key partner countries, enabling faster responses to shifting political conditions and procurement requirements.

South Korea's defense industry, often praised for its cost-effectiveness and rapid delivery, now faces a turning point, experts say. As global competitors deploy coordinated political and economic strategies, Seoul must adapt or risk falling behind.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260426010008111