"K-Shipbuilding Gains Access to U.S. Naval Ship Market"…Samil PwC Releases Strategic Report

As global maritime supremacy is rapidly shifting amid fierce competition between the United States and China, a new analysis suggests that the U.S. Navy’s expansion strategy is opening up fresh growth opportunities for the Korean shipbuilding industry. On August 14, Samil PwC announced the release of a report titled "Opportunities for K-Shipbuilding Amid the U.S.-China Power Struggle."

The report emphasizes that the Korean shipbuilding sector could enter the U.S. naval ship market by leveraging the MASGA (Make American Shipbuilding Great Again) Fund. According to the report, "Although the U.S. government has decided to significantly expand its naval power to counter the rapid growth of China’s navy, it is facing challenges in meeting demand due to declining productivity and aging facilities in its domestic shipbuilding industry." The report further notes, "The U.S. Navy’s ship acquisition plan calls for 364 vessels by 2054, but it is nearly impossible to achieve this target relying solely on local shipyards."

In July, the United States and South Korea agreed during tariff negotiations to jointly establish the MASGA Fund, valued at $150 billion. The MASGA Fund is a strategic project that aims to establish production bases in the U.S. using Korean capital and technology, thereby bypassing strict U.S. legal constraints while also creating jobs and revitalizing local economies within the United States.

According to the report, for non-combat vessels such as logistics support ships, Korean companies could immediately enter the U.S. market by directly operating shipyards and independently constructing and delivering these vessels. The approach has already been validated in the U.S. through cases of foreign shipyards building non-combat support ships, such as ammunition supply vessels.

For medium-sized combat ships, such as frigates (FFG class) and medium landing ships (LSM), the report suggests that Korean companies could gradually enter the market by securing local production bases and jointly building hulls and blocks with American partners. However, the report points out that Korean shipbuilders currently lack shared platforms similar to the specifications required by the U.S., which remains a challenge to overcome.

The Aegis destroyer is a core asset in the U.S. Navy with high demand, and Korea’s King Jeongjo-class destroyer is structurally the most similar platform to U.S. destroyers in terms of hull size and radar configuration. Even if complete overseas construction is not possible, the report highlights the potential for multi-layered cooperation through joint block-module production, performance upgrades, and the supply of key components.

The report advises that "a mid- to long-term approach is effective, involving the strengthening of strategic partnerships with existing U.S. shipbuilders, continuous monitoring of policy and regulatory changes, and risk diversification." It also recommends that Korean companies expand local production bases (through direct entry or construction of new yards) to secure political and industrial support by creating local jobs and tax revenue. Given the sensitive nature of the technology involved, the report stresses the necessity of establishing strict technology security and quality management systems that meet U.S. government standards, and actively utilizing retired U.S. military personnel and local experts to enhance credibility.

The report recommends a portfolio strategy of securing business leadership from the outset through customized design and joint development, while gradually expanding from ship types with lower entry barriers. It also suggests accelerating the localization of steel and key components to meet Buy American requirements and strengthening supply chain competitiveness by facilitating the entry of Korean equipment suppliers into the U.S. market.

Kim Taesung, leader (partner) of the Defense Industry Center at Samil PwC, stated, "With the establishment of the MASGA Fund, the Korean shipbuilding industry can now strategically bypass the legal barriers that have previously prevented entry into the U.S. naval ship market, by setting up 'Korean-style production bases within the United States.' If domestic companies swiftly invest and secure local production bases in the U.S., they will be able to take a leading role in the future U.S. naval ship market."

This content was produced with the assistance of AI translation services.