Samsung, SK, Hanwha, GS, Doosan Beneficiaries
Solar Power, Opportunity to Reverse China's Low-Price Offensive
Nuclear Power, SMR Business Companies Rejoice
Defense Industry, US Defense Procurement Exports Flourish
President Yoon Suk-yeol and U.S. President Joe Biden having a small-scale summit meeting in the office of the Presidential Office building in Yongsan, Seoul, on the 21st. (Image source=Yonhap News)
[Asia Economy Reporter Moon Chaeseok] As the leaders of South Korea and the United States met to strengthen economic security and technological alliances, Korean companies gained opportunities to enhance supply chain stability and expand export routes. Following semiconductors and automobiles, cooperation has been agreed upon in profitable industries such as solar power, nuclear energy, defense industry, and aerospace, drawing attention from related sectors.
According to the industry on the 23rd, expectations are growing that sectors such as energy and defense will benefit from the outcomes of the South Korea-U.S. summit. Companies like Samsung, SK, Hanwha, GS, and Doosan are mentioned as beneficiaries.
Solar power is seen as having gained an opportunity to reverse the atmosphere that had been suffering from China's low-price offensive. South Korea had lost momentum in the market share battle, ceding leadership to China. Hanwha Solutions is attracting attention as it is investing in building a local factory in the U.S. In 2019, it operated the largest solar module factory in the U.S. in Georgia with a capacity of 1.7GW (gigawatts), and recently plans to build an additional 1.4GW module factory. Regarding polysilicon production for intermediate wafer materials, where China holds a 95% market share, Hanwha is accelerating vertical integration by acquiring the U.S. polysilicon company REC Silicon. A Hanwha representative said, "Based on this South Korea-U.S. economic alliance, we expect a positive impact on securing and expanding a stable supply chain for Hanwha Solutions' solar business, which has invested in the U.S. market for over 10 years."
In nuclear energy, synergy is expected with South Korea's domestic policy of abandoning nuclear phase-out. The two leaders signed the U.S.-led 'Third Country Small Modular Reactor (SMR) Capability Enhancement Program,' and companies entering the SMR business are welcoming this. However, some opinions suggest that since the commercialization of SMRs will not occur until at least the late 2020s, it is difficult to assign immediate significance. An industry official said, "We expect the cooperation in the SMR field, which has already started in the private sectors of both countries, to accelerate and broaden," adding, "Strengthening cooperation in overseas nuclear power plant exports will enhance competitiveness in securing orders, and it is important to concretize the business."
The defense sector cannot be overlooked either. Hanwha Aerospace, the aerospace and defense holding company of Hanwha, along with Hanwha Defense, Korea Aerospace Industries (KAI), and LIG Nex1 are cited as beneficiary companies. In defense, as the two countries agreed to promote the 'Reciprocal Defense Procurement Agreement (RDP),' export routes to the U.S. defense procurement market worth about 500 trillion won annually have opened. Upon signing the RDP, companies can be exempted from the 'Buy American Act (BAA),' which imposes a 50% price penalty unless more than 55% of parts are U.S.-made. In aerospace, since the two countries agreed to cooperate on the 'Artemis Program,' aiming to land two astronauts by 2025, and the launch of the Korean-type launch vehicle lunar probe in 2031, opportunities for corporate participation are also expected to increase.
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