Will US Vessels and Warships Be Built in Korea? Remaining Challenges Ahead

US-Korea Fact Sheet Mentions Possibility of Building US Warships in Korea
Legal Reforms and Dock Shortages Must Be Addressed
Facility Expansion Expected Depending on Long-Term Orders and Investment Structure

With the formalization of cooperation between South Korea and the United States in the shipbuilding sector, the domestic shipbuilding industry now faces practical challenges regarding how to design actual business models. The United States, under the Jones Act, permits only US-built vessels for domestic cargo transport, and separate security and facility requirements apply to the construction of naval ships or nuclear-powered submarines. There have also been concerns about insufficient domestic docks, leading to analyses that institutional improvements and facility investments must be pursued in parallel for South Korea to build US vessels or warships domestically.

The Joint Fact Sheet (JFS) announced on November 14 explicitly states for the first time that US vessels and warships can be built at Korean shipyards. The two countries will collaborate in areas such as modernization of US shipyards, maintenance, repair and overhaul (MRO), workforce development, and strengthening supply chain resilience. Kim Jeong-Kag, Minister of Trade, Industry and Energy, signed the "US-Korea Strategic Investment MOU" worth a total of 350 billion dollars (approximately 514 trillion won) with US Secretary of Commerce Howard Lutnick on the same day, stating, "150 billion dollars will be allocated for shipbuilding cooperation investment," and "all profits generated in this sector will be attributed to Korean companies." The funds can be executed through various means, including private investment, guarantees, and ship financing. Government support is also possible for projects approved by the investment committee.

Kim Jeong-Kag, Minister of Trade, Industry and Energy, is briefing on the US-Korea tariff negotiation fact sheet and the memorandum of understanding on strategic investment at the Government Seoul Office in Jongno-gu, Seoul on November 14, 2025. Photo by Jo Yongjun

The industry has entered a stage of reviewing constraints and preparedness in anticipation of the potential expansion of domestic construction and maintenance of US vessels and warships. While the technical capability for construction has already been secured, the supply of docks and securing long-term orders are cited as key variables for practical implementation.

Hanwha Ocean is currently carrying out its fourth maintenance project for US military logistics support ships. Kim Daesik, Executive Vice President in charge of Special Ship MRO Business at Hanwha Ocean, stated, "Although demand for maintenance is increasing, it is a reality that there are not many docks in Korea capable of accommodating US military logistics support ships," adding, "Large shipyards already have their commercial shipbuilding schedules filled, and mid-sized and small shipyards may not have docks suitable for the size of these vessels." He further commented, "If long-term contracts become possible, it will enable volume forecasting, which would allow for discussions on facility expansion and automation investments."

Regarding joint construction of warships, legal and institutional requirements are key considerations. Chun Jeongsu, Executive Vice President of the Special Ship Business Division at HD Hyundai Heavy Industries, said, "With the production capacity of the US shipbuilding industry being limited, cooperation with Korean shipyards is under discussion," and added, "HD Hyundai Heavy Industries has already signed a business agreement with the US shipbuilder Huntington Ingalls Industries (HII) for joint projects related to warships." He emphasized, "Specific production methods and schedules will require legal and institutional review."

On September 23 last year, the US Navy Virginia-class nuclear-powered submarine USS Vermont (SSN-792, 7,800 tons) docked at the Busan Naval Operations Command Busan Operational Base in Nam-gu, Busan. Photo by Yonhap News Agency

According to the government, the United States first establishes an "investment purpose company (investment SPV)" to manage the entire project and then forms separate "project purpose companies (project SPVs)" for each individual project. The investment purpose company aggregates the profits from all projects to repay the principal and interest of the Korean investment. An "integrated risk management system" is applied, allowing losses from specific projects to be offset by profits from others.

The domestic shipbuilding industry plans to discuss detailed cooperation models focusing on the possibility of building US vessels and warships in Korea, expanding MRO, securing docks, and investing in automation and specialized facilities.

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