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Hanwha offers to build ground weapons in Canada to help submarine megadeal bid

Published: 30 Apr. 2026, 18:03

Flavio Volpe, the president of the Automotive Parts Manufacturers' Association in Canada, left, Son Jae-il, the CEO of Hanwha Aerospace, center, and Jung Seung-kyun, the vice president at Hanwha Ocean, pose for a photo after signing an MOU in Ontario, Canada, on April 29. [HANWHA AEROSPACE]

Hanwha Group is offering to bring production of Hanwha Aerospace's ground weapons to Canada to help its fellow subsidiary, Hanwha Ocean, win a 60 trillion won ($40.4 billion) megadeal to build submarines for the Canadian Navy.

Hanwha Aerospace and Hanwha Ocean signed a memorandum of understanding (MOU) with the Automotive Parts Manufacturers’ Association of Canada in Ontario on Wednesday to establish a joint venture for the production of military and special-purpose vehicles, Hanwha Aerospace announced Thursday.

The joint venture is a strategic move to support Hanwha Ocean’s bid for the Canadian Patrol Submarine Project (CPSP). The joint venture will be established if Hanwha Ocean secures the CPSP contract.

The new entity, should it be established, plans to actively use locally sourced components and materials, such as Canadian steel and aluminum, and hire a large number of local workers. The new entity's business scope is expected to extend beyond military vehicles to include specialized vehicles for Arctic resource development, with the longer-term goal of exporting products to allied nations.

A point of interest would be whether Hanwha Aerospace will produce the K9 self-propelled howitzer locally — first reported by foreign media — through the joint venture.

A K9 self-propelled howitzer [HANWHA AEROSPACE]

Consulting firm Samjong KPMG estimated that Hanwha Group’s investment in Canada is expected to generate an average of about 22,500 full-time jobs annually and add a cumulative 94.1 billion Canadian dollars ($69 billion) to Canada's GDP between 2026 and 2044.

Hanwha Ocean is competing closely with Germany’s ThyssenKrupp Marine Systems for the CPSP project, which aims to acquire up to 12 diesel submarines.

Hanwha Group aims to expand its proposal beyond submarines by locally developing and producing ground weapon systems required by the Canadian Army through the MOU.

“This partnership marks a starting point for advancing together into the global market by combining Canada’s manufacturing capabilities with Hanwha’s defense technologies,” Hanwha Aerospace CEO Son Jae-il stated. “We will contribute not only to strengthening Canada’s defense capabilities, but also to building a sustainable industrial ecosystem.”

Hanwha Aerospace's Chunmoo multiple rocket launchers [HANWHA AEROSPACE]

Hanwha Aerospace reported first-quarter operating profit of 638.9 billion won, up 20.6 percent on year, the company announced Thursday. Revenue rose 5 percent to 5.8 trillion won.

The increase in operating profit was largely driven by strong performance from its subsidiary Hanwha Ocean. The shipbuilder posted an operating profit of 441.1 billion won with an operating margin of 13.7 percent, supported by a higher share of high-value vessels such as liquefied natural gas carriers.

The aerospace division posted an operating profit of 22.6 billion won, up about 528 percent from 3.6 billion won a year earlier.

Its core ground defense segment posted revenue of 1.22 trillion won and operating profit of 208.7 billion won, with operating profit down 31 percent on year because reduced export volumes were reflected in the first quarter.

A Hanwha Aerospace logo is seen in this illustration taken on July 26, 2025. [REUTERS/YONHAP]

The company expects a full-fledged earnings rebound to begin in the second quarter. The ground defense segment’s order backlog reached a record 39.7 trillion won in the first quarter. The backlog includes new contracts, such as a 1.3 trillion won deal signed in January to export the Chunmoo multiple-launch rocket system to Norway.

“Performance improvements are expected from the second quarter as shipments to Australia and Egypt begin to be reflected," a Hanwha Aerospace source said. " An even stronger gain is possible in the remaining half of the year."

Additional orders are also possible as more countries increase their defense spending. The Chunmoo system shows strong potential in Europe, with new contracts expected within the year, while further orders for the K9 self-propelled howitzer are also anticipated.

Expectations for Korea’s defense industry remain high amid growing geopolitical tensions. Hyundai Rotem reported operating profit of 224.2 billion won on Friday, up 10.5 percent on year, while additional orders are expected this year from countries including Peru and Iraq.

Defense companies LIG Defense & Aerospace, formerly LIG Nex1, and Korea Aerospace Industries are also set to release their earnings next Thursday. Industry observers expect their performance to gain momentum from the second quarter, supported by systems such as the medium-range surface-to-air missile system Cheongung-II. and the KF-21 fighter jet, which recently entered mass production.

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 KO SEUNG-PYO [[email protected]]