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Hyundai Heavy, Mipo to merge as defense vessel demand rises

Published: 27 Aug. 2025, 19:24 Updated: 27 Aug. 2025, 19:43

An aerial view of shipyards of HD Hyundai Heavy Industries, above, and HD Hyundai Mipo [HD HYUNDAI]

Shipyards HD Hyundai Heavy Industries and HD Hyundai Mipo will merge as demand for naval defense vessels rises globally.

The HD Hyundai affiliates say on Wednesday the move is to prepare for the Korea-U.S. shipbuilding initiative, called MASGA — short for “Make American Shipbuilding Great Again” — while analysts expect the companies to expand into emerging defense markets in Southeast Asia.

HD Korea Shipbuilding & Offshore Engineering (KSOE), the intermediate holding company for HD Hyundai’s shipbuilding units, announced that both boards approved the merger plan.

HD Hyundai Heavy will remain the surviving entity and absorb Hyundai Mipo. Shareholders of Hyundai Mipo will receive 0.4 shares of Hyundai Heavy for each share they hold.

The companies plan to complete the merger by December, pending shareholder approval and regulatory review.

KSOE said the merger would allow the companies to pool resources and strengthen global competitiveness.

“We will strengthen our global market position and maximize future growth opportunities, becoming a global leader in both MASGA and K-defense,” the company said in a statement.

A ship under construction is seen at HD Hyundai Heavy Industries' shipyard in Dong District, Ulsan, on July 31. [YONHAP]

The merger is expected to significantly raise Hyundai Heavy's market share.

Hyundai Heavy secured 2.73 million gross tons of orders last year, accounting for 14.7 percent of the domestic market, according to the Korea Offshore & Shipbuilding Association, a nonprofit aimed at promoting the interests of Korean shipyards.

Hyundai Mipo secured 1.8 million gross tons, or 9.6 percent. Combined, their market share would rise to 24.3 percent.

If Hyundai Heavy recovers to past market share levels of 27 percent in 2022 and 33 percent in 2023, the merged company could exceed 40 percent, surpassing rival Hanwha Ocean at 24.6 percent.

Synergies are also expected. Hyundai Heavy specializes in large liquefied natural gas carriers and container ships, while Hyundai Mipo has strengths in medium-sized container ships, chemical tankers and car carriers.

“Merging medium- and large-sized shipbuilders gives us an advantage in expanding markets and strengthening our portfolio," a KSOE official said.

The merger is also expected to boost defense capabilities. Hyundai Heavy has built 106 naval vessels — more than any other domestic builder — including destroyers, frigates, submarines and patrol boats.

With Hyundai Mipo's docks, it will also gain capacity for mid-sized warships.

Janes, a military journal based in Britain, estimates that the global market for new warship contracts over the next decade will reach about 2,100 vessels, worth $360 billion.

A view of the export dock at HD Hyundai Mipo in Dong District, Ulsan, on Aug. 25 [NEWS1]

KSOE said Hyundai Mipo's dock facilities will be used for defense exports.

“Hyundai Mipo has the capacity to build 70 vessels annually, but has been operating at about 45. We will use two of its docks for global defense exports, including to the United States,” the company said.

Yang Jong-seo, a senior researcher at the Export-Import Bank of Korea, said Korea could eventually win exceptions to U.S. rules that currently ban the construction of U.S. warships abroad.

“Although Korea cannot build U.S. warships immediately because of the Byrnes-Tollefson Amendment, there is a chance of regulatory exceptions in the long term," Yang said.

"The merger is also aimed at Southeast Asia, where demand for mid-sized warships is growing due to tensions with China,” he added.

The merged Hyundai Heavy plans to establish an investment unit in Singapore by December to oversee operations in Southeast Asia.

It will manage existing sites — HD Hyundai Vietnam Shipbuilding, HD Hyundai Heavy Industries Philippines and a unit tentatively named HD Hyundai Vina — and seek new opportunities.

"It was difficult to manage individual shipyards in Southeast Asia from Korea, so they set up a command center in Singapore," an industry insider said.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM HYO-SEONG [[email protected]]