Hanwha Group, Birth of a Mega Defense Company... Major Business Restructuring Undertaken (Comprehensive)

Hanwha Aerospace Merges with Hanwha Corporation Defense and Hanwha Defense
Hanwha Corporation Acquires Hanwha Precision Machinery... Expanding into Secondary Battery and Semiconductor Equipment Sectors

[Asia Economy Reporter Oh Hyung-gil] Hanwha Group has launched a major business restructuring.

By integrating its defense sector, it has created a mega defense company and is expanding synergies in future businesses such as energy, secondary battery materials, semiconductor equipment, and renewable energy infrastructure.

On the 29th, Hanwha Group announced that it will restructure its business to strengthen global competitiveness by integrating its defense affiliates and having its holding company, Hanwha Co., Ltd., acquire the construction business division.

First, Hanwha Group's defense business, which had been dispersed across three companies, will be consolidated into Hanwha Aerospace. Hanwha Aerospace will acquire the defense division spun off from Hanwha Co., Ltd., and absorb its 100% subsidiary Hanwha Defense, reborn as a comprehensive defense company.

Combining Hanwha Aerospace, a specialist in aviation and space, Hanwha's defense division with technologies in space launch vehicle fuel, navigation devices, ammunition, and laser anti-aircraft weapons, and Hanwha Defense with technologies such as the K9 self-propelled howitzer, remote firing control systems, lithium battery systems for submarines, and the 5th generation armored combat vehicle Redback, the plan is to become a "Korean Lockheed Martin" covering all areas of defense.

Additionally, by integrating global business capabilities to enhance overseas export competitiveness, the group aims to grow into a "Top 10 Global Defense" company by 2030.

Furthermore, Hanwha Co., Ltd. will acquire Hanwha Precision Machinery and combine it with Hanwha Momentum Division. This is interpreted as a move to fully launch the secondary battery process equipment business and establish a foundation for the semiconductor process equipment business.

Hanwha Global Division is also focusing its capabilities on materials. In March, Hanwha Global invested approximately 140 billion KRW to acquire a 12% stake in the U.S. company REC Silicon, which produces polysilicon for solar and semiconductor use and specialty gases, laying the foundation for eco-friendly energy and materials businesses. It plans to expand high value-added materials businesses such as secondary batteries and semiconductors.

Hanwha also merged its subsidiary Hanwha Construction. Hanwha Co., Ltd. plans to expand its current mass production equipment business for solar cells and modules to include parts and equipment for eco-friendly energy such as wind power.

Hanwha Construction, which consecutively completed the 90MW Yangyang Suri Wind Power Complex, the 76MW Gyeongbuk Yeongyang Wind Power Complex, and the 25MW Jeju Sumang Wind Power Complex last year, is expected to greatly contribute its technology and infrastructure to this plan. Hanwha Co., Ltd. explained that by merging its 100% subsidiary Hanwha Construction, it can reduce transaction costs between affiliates and cut redundant tasks, thereby lowering expenses.

Hanwha Co., Ltd. expects that this business restructuring will also improve market evaluations of the company. With the addition of Hanwha Construction, which recorded sales of about 2.6 trillion KRW and operating profit exceeding 100 billion KRW last year, sales and operating profit are expected to increase significantly immediately.

Also, with Hanwha Aerospace acquiring Hanwha Co., Ltd.'s defense division and merging Hanwha Defense, the value of Hanwha Co., Ltd.'s stake in Hanwha Aerospace (33.95% ownership) is expected to grow.

Ok Kyung-seok, CEO of Hanwha Momentum, said, "We are focusing on the combination of Hanwha Momentum's equipment technology and Hanwha Precision Machinery's precision control and software technology," adding, "We expect the speed of applying smart solutions such as automation and unmanned systems in the production process of eco-friendly energy and semiconductor process equipment to accelerate."