Can HD Hyundai’s 15 Trillion Won Investment Declaration Change the Shipbuilding Industry Landscape?

Watching HD Hyundai Chairman Chung Ki-sun’s announcement at the follow-up meeting to the Korea-US tariff negotiations held at the presidential office yesterday (November 16), I was honestly a bit surprised. The sheer number of 15 trillion won is staggering, but more intriguing is the investment structure and strategic direction. Particularly, the creation of a 5 billion dollar maritime fund for the reconstruction of the US shipbuilding industry seems to be painting a very big picture.

HD Hyundai, headquartered in Ulsan, is a leading Korean heavy industry group that changed its name from Hyundai Heavy Industries Group in 2021. It currently encompasses various business areas including shipbuilding and marine, construction machinery, robotics, and energy solutions. This investment plan clearly indicates a shift towards future industries rather than merely expanding existing businesses.

Delving into the investment structure is even more interesting. Of the total 15 trillion won, 8 trillion won (53.3%) is allocated to energy and robotics, and 7 trillion won (46.7%) to shipbuilding and marine sectors. This seems to reflect HD Hyundai’s intention to transform from a traditional shipbuilder into a comprehensive technology company. The investment in renewable energy through HD Hyundai Energy Solutions and HD Hyundai Oilbank, along with the expansion of AI robotics through HD Hyundai Robotics and HD Hyundai Construction Machinery, perfectly aligns with global trends.

Personally, what catches my attention the most is the shipbuilding cooperation with the United States. The creation of a 5 billion dollar maritime fund is not just a number. This is approximately 6.7 trillion won, nearly matching HD Hyundai’s 7 trillion won investment plan in shipbuilding and marine sectors. It appears to be a strategy to match domestic and overseas investments almost 1:1, which can be considered a highly aggressive global expansion strategy.

Is the Reconstruction of the US Shipbuilding Industry an Opportunity for Korean Companies?

Looking at the current state of the US shipbuilding industry, it’s quite bleak. As of 2025, the US shipbuilding market share is less than 1% globally. With China holding over 50%, Korea about 30%, and Japan around 10%, the US has essentially become a backward nation in shipbuilding. Particularly in the merchant ship sector, it’s nearly extinct, and even its warship construction capabilities are showing limitations.

In this context, HD Hyundai’s proposed cooperation plans seem quite strategic. First is the collaboration with Huntington Ingalls Industries (headquartered in Newport News, Virginia). Huntington Ingalls is the largest defense shipyard in the US, constructing aircraft carriers and nuclear submarines. With a revenue of about 11 billion dollars as of 2024, it’s a giant company. Pursuing the joint construction of next-generation logistics support ships (NGLS) with them indicates HD Hyundai’s intention to enter the core supply chain of the US Navy.

In the merchant ship sector, collaboration with Edison Chouest Offshore (headquartered in Louisiana) is mentioned. This company is the largest merchant shipyard in the southeastern US, primarily building offshore workboats and support vessels. With an annual revenue of about 1.5 billion dollars, it’s a mid-sized company planning to jointly construct container ships and MR tankers with HD Hyundai.

Particularly intriguing is the cooperation with Anduril Industries (headquartered in Irvine, California). Anduril is an AI defense startup founded in 2017, experiencing rapid growth in recent years. Valued at 14 billion dollars as of 2024, it specializes in unmanned systems and AI-based defense systems. HD Hyundai’s design collaboration for unmanned vessels with them signifies a move beyond traditional shipbuilding into advanced defense industries.

However, there is a significant hurdle here. As Chairman Chung mentioned, due to the Jones Act and related regulations, building US ships overseas is fundamentally impossible. This is a protectionist policy established in 1920, stipulating that maritime transport within the US must use ships built in the US and operated by American crews.

Could the ICE Pact Case Be the Key to Regulatory Relaxation?

The ICE Pact case mentioned by Chairman Chung is quite significant. This agreement, signed in July 2023 between the US, Canada, and Finland, is for cooperation in building Arctic icebreakers. In October this year, President Trump allowed four US Coast Guard icebreakers to be built in Finland, an exception to the Jones Act. Finland’s Aker Arctic (headquartered in Helsinki) possesses world-class icebreaker technology, and the US recognized the limitations of relying solely on domestic technology.

Whether such exceptions could apply to Korea-US shipbuilding cooperation remains uncertain. However, the fact that the US Navy’s Chief of Naval Operations personally visited Hyundai Heavy Industries in Ulsan is quite significant. The US Navy urgently needs to expand its shipbuilding capabilities to counter China’s naval power expansion. The US Navy plans to build a fleet of 355 ships by 2045, but achieving this with current US shipyard capabilities is challenging.

In fact, looking at major US shipyards, the situation is dire. General Dynamics Bath Iron Works (located in Maine) specializes in destroyer construction but has slow production speeds, and Huntington Ingalls can only build large ships. In contrast, Korean shipbuilders, including HD Hyundai, have the capability to construct various types of ships quickly.

Observing competitor trends is even more interesting. Samsung Heavy Industries (headquartered in Geoje, Gyeongnam) has an order backlog of about 15 trillion won as of 2024, similar to HD Hyundai Heavy Industries, and Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean, headquartered in Geoje, Gyeongnam) has an order backlog of about 12 trillion won. However, in terms of entering the US market, HD Hyundai is taking the most proactive steps. Samsung Heavy Industries is focusing on the European and Middle Eastern markets, while Hanwha Ocean is concentrating on internal restructuring.

The global shipbuilding market size is estimated to be around 180 billion dollars as of 2024, with defense shipbuilding accounting for about 15-20% of that. However, the profitability of defense shipbuilding is much higher than that of merchant ships. Generally, the operating profit margin for merchant ships is around 5-8%, while defense shipbuilding can reach 15-20%. The US defense market, in particular, offers long-term contracts and stable profits, making it an attractive market for Korean shipbuilders.

HD Hyundai’s AI-based smart shipyard technology is also noteworthy. The AI ship technology demonstration center and AI-based smart shipyard planned for construction at the Daebul Industrial Complex in Jeonnam are not just for domestic business but also seem to serve as a verification of technological capabilities for US entry. Especially, the plan to link with the Haenam Solar City AI data center suggests a next-generation shipbuilding model through the convergence of shipbuilding and IT technology.

Currently, smart shipyard technology is emerging as a core competitive edge in the shipbuilding industry. While Chinese shipbuilders are increasing market share through volume, Korean shipbuilders are seeking differentiation through technology and efficiency. If HD Hyundai’s smart shipyard technology is successfully established, it will significantly aid not only in entering the US market but also in securing global competitiveness.

However, there are concerns. Whether the massive 15 trillion won investment can generate appropriate returns and whether US regulatory relaxation will actually occur remains uncertain. Considering HD Hyundai’s annual revenue of about 20 trillion won as of 2023, a 15 trillion won investment over five years is quite aggressive. Especially in the energy and robotics sectors, many areas have yet to prove their profitability, posing significant risks.

Nevertheless, I believe HD Hyundai’s investment plan signifies the future direction of the Korean shipbuilding industry. The attempt to transition from a mere shipbuilder to a comprehensive marine solutions provider is certainly meaningful, and if it can enter the vast US market, the ripple effect could be enormous. It will be interesting to see how this plan materializes and whether it can truly become a game-changer for the Korean shipbuilding industry.

This article was written after reading the HD Hyundai Chung Ki-sun “15 Trillion Investment Over 5 Years… 8 Trillion in Energy and Robotics, 7 Trillion in Shipbuilding and Marine” article, adding personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. Responsibility for investment decisions lies with the investor, and no liability is assumed for investment losses based on the content of this article.