K-Defense Industry to Capture 5% of Global Market by 2027

Military Advances Core Technologies in AI, Hypersonics, Space, and Other '8 Major Game Changers'

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] The K government held a meeting chaired by President Yoon Suk-yeol to discuss the defense industry export strategy, which has been declared a national strategic industry, and presented the goal of surpassing a 5% share of the global market by 2027.

According to the Ministry of National Defense and the Ministry of Trade, Industry and Energy on the 24th, the '2022 Defense Export Strategy Meeting' was held at Korea Aerospace Industries (KAI) in Sacheon, Gyeongnam, one of the country's leading defense companies. At the meeting, the Ministry of National Defense announced its plan to surpass a 5% share of the global defense export market by 2027 and become one of the world's top four defense exporters, presenting four core tasks to achieve this.

The Ministry of National Defense stated that to develop excellent weapon systems with international competitiveness, it will proactively secure core technologies in eight 'game changer' fields: artificial intelligence (AI), hypersonics, synthetic biology, high energy, future communications and cyber, space, unmanned and autonomous systems, and quantum physics. Additionally, it declared that the military will take the lead in 'post-sales' management to ensure that countries purchasing Korean weapons are satisfied with their quality.

This includes sharing operational know-how through joint training with the purchasing countries' militaries, providing technical education support to the purchasing countries' armed forces, and conducting pilot operations of export equipment by the Korean military to enhance the trust of purchasing countries in Korean weapon systems. The plan also includes expanding the research and development (R&D) budget to more than 10% of the defense budget by 2027 and selecting 100 promising small and medium-sized enterprises (SMEs) by 2026 for phased support.

The Ministry of Trade, Industry and Energy announced a strategy to industrialize the defense industry as an export strategic industry along with five core promotion tasks. It plans to develop 40 core materials and parts technologies, including carbon composite materials, which are key to the defense industry, and nurture 3,300 personnel annually by investing 50 billion won per year in machinery, aviation, materials, parts, and equipment sectors to cultivate the defense ecosystem.

The ministry plans to announce a competitiveness enhancement strategy next month to secure world-class technology in the carbon composite materials field and achieve a 10% market share. Furthermore, it will invest more than 1 trillion won by 2027 in civilian-military technology cooperation to promote innovative R&D, including the transfer of defense technology to the civilian sector, integration of civilian innovative technologies into defense, and development of dual-use technologies.

Considering that defense industry exports are strongly characterized by government-to-government (G2G) cooperation, the ministry stated it will strengthen customized strategies linking the defense industry with other industries such as energy, information and communications, and automobiles based on the industrial cooperation needs of target countries. Moreover, it emphasized advancing the export strategy by expanding from complete defense product exports to full-cycle system exports combining technology transfer, localization, and maintenance services, and expanding opportunities for Korean companies to participate in supply chains of export countries.

It also announced plans to activate a comprehensive support system for companies through export finance support for SMEs, expansion of KOTRA's defense leading trade offices, and strengthening the functions of the Defense Material Trade Support Center.

The Ministry of Trade, Industry and Energy plans to concretize these core promotion tasks and establish the 3rd Basic Plan for Civil-Military Technology Cooperation Projects for the period 2023?2027.

This is the first defense export strategy meeting held under the Yoon Suk-yeol administration. The meeting was attended by President Yoon, Minister of Trade, Industry and Energy Lee Chang-yang, Vice Minister of National Defense Shin Beom-cheol, Defense Acquisition Program Administration Commissioner Eom Dong-hwan, as well as top military officials including the Chiefs of Staff of the Army, Navy, Air Force, and the Marine Corps Commandant, along with representatives from 60 defense companies, indicating the significance of the meeting.

The Ministry of National Defense explained, "The participation of key government, military, and industry officials is to discuss measures to develop the defense industry into an advanced strategic industry under the president's will and to work together in public-private-military cooperation to become one of the world's top four defense export powers."

Korea's defense export amount was about 3 billion dollars annually until 2020, but surged to 17 billion dollars (approximately 22.58 trillion won) this year, marking a record high. From 2017 to 2021, Korea ranked 8th with a 2.8% share of the global export market.