COVID-19 update included
The content of this report will be updated with the latest scenarios based on the global COVID-19 Pandemic


Summary

South Korea, or officially called the Republic of Korea, is among the leading economies within Asia. While the relationship between South Korea and the Democratic People’s Republic of Korea (DPRK) or North Korea has traditionally been plagued by mutual distrust and a hostile defense posture, since 2017, the two countries have adopted several Confidence Building Measures (CBM) to improve relations and deescalate. However, despite their efforts, the sustainability of long-term peace in the Korean peninsula is contingent on North Korea relinquishing their nuclear weapons and only a total disarmament of the North Korean nuclear arsenal can ensure peaceful reunification or co-existence in the long-term.

Against this backdrop, it is pertinent for South Korea to continuously invest in military modernization programs and either modernize or phase out relatively aging military equipment with modern platforms capable of securing South Korean strategic interests over the next decade. In July 2018, the South Korean MND enacted a Defense Reform 2.0 initiative, which explicitly calls for cutting down the overall personnel strength of the South Korean armed forces from the current 618,000 to 522,000 troops by 2022, as well as cutting back on the top echelons of the ground forces by reducing the number of generals from 436 to just 360 by 2022. The New Defense Reform Plan also intends to make effective use of revolutionary developments in battlefield technologies and military science, with specific emphasis on artificial intelligence. As such, the South Korean DR 2.0 initiative is expected to drive a surge in defense investments over 2020-2024.

South Korea’s defense expenditure, in accordance with its GDP, remained relatively constant throughout the historic period, standing at an average of 2.4% during 2015-2019. However, South Korea’s defense expenditure as a percentage of its GDP is anticipated to increase to an average of 2.6% over the forecast period. The South Korean defense budget, which stands at about US$42.4 billion in 2019, is anticipated to grow to US$57.1 billion in 2024, reflecting a CAGR of 5.94% over the analysis period. Although revenue expenditure is expected to continue dominating South Korean defense expenditure, South Korea is set to increase its defense capital expenditure from an average of 30.6% over the historic period to an average of 32.4% over the forecast period.

During 2013-2017, South Korea was ranked 12th on the list of the highest arms exporting countries compared to 13th during 2012-2016. The country ranked 13th in terms of the top arms importing countries during 2013-2017, which is the same position held by the country during 2012-2016. However, during the period 2014-2018, South Korea imported the majority of its defense goods from the US, accounting for 50.6% of the market. The military alliance between the US and South Korea fuels its demand for US made and NATO compliant military equipment.

The report "Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024", provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

In particular, it provides an in-depth analysis of the following -

  • The South Korean defense industry market size and drivers: detailed analysis of the South Korean defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
  • Porter’s Five Force analysis of the South Korean defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Market opportunities: details of the top five defense investment opportunities over the next 10 years
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the South Korean defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis



Companies Mentioned: Korea Aerospace Industries (KAI), Hanwha Techwin, Hanwha Corporation, Hyundai Heavy Industries (HHI), Daewoo Ship Building & Marine Engineering (DSME), Huneed Technologies, STX Engine, S&T Dynamics, Poongsan Corporation, Samsung Thales, LIG NEX1, Doosan DST and Lockheed Martin Korea


Scope

  • South Korea’s defense expenditure as a percentage of its GDP is anticipated to increase to an average of 2.6% over the forecast period. The South Korean defense budget, which stands at about US$42.4 billion in 2019.
  • Between 2015 and 2019, the country’s capital expenditure allocation stood at an average of 30.6% of the total defense budget, and is expected to increase slightly to an average of 32.4% over the forecast period. Overall, South Korea is projected to spend a total of US$82.6 billion on the acquisition of military hardware between 2020 and 2024.
  • The MoD is expected to invest in Light armed helicopter, Sea-Bow naval missile intercept system, PAC-3 missile defense sysem, KSS-3 submarine, Peace Eye early warning aircraft (AEWC) and P-8A Poseidon maritime patrol aircraft.




Reasons To Buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the South Korean defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the South Korean defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.