Hanwha Systems Achieves Record High Performance... Reasons and Outlook [Yang Nakgyu's Defence Club]

First Domestic AESA Radar Developed and Delivered Last Year
Cheongung-II and Other Key Products Poised for Export Across Land, Sea, and Air Sectors

Hanwha Systems recorded its highest-ever sales and operating profit last year.

Hanwha Systems announced on the 7th that it achieved sales of 2.8037 trillion KRW and operating profit of 219.3 billion KRW based on consolidated financial statements last year, representing increases of 14.3% and 78.9% respectively compared to the previous year. Net profit also rose by 29.8% to 445.2 billion KRW, marking record highs in sales, operating profit, and net profit.

By business segment, in the defense sector last year, major projects such as ▲export of UAE Cheongung-II multifunction radar (MFR) and Poland K2 fire control system ▲4th mass production of the Tactical Information Communication Network (TICN), a core military communication system ▲2nd mass production of the next-generation military radio (TMMR) drove sales.

In the ICT sector, external projects such as Hanwha Aerospace’s next-generation enterprise resource planning (ERP) system construction and Shinhan EZ Insurance’s next-generation system construction based on financial solutions contributed to sales.

Hanwha Systems’ record performance was partly due to the active electronically scanned array (AESA) radar for fighter jets. AESA radar technology is a domestic proprietary technology that Hanwha Systems has been dedicated to since the U.S. refused to transfer core technology in 2015. At that time, only a few advanced countries including the U.S., Europe, Israel, China, and Japan possessed this technology, raising widespread concerns that developing it solely with domestic technology without overseas technology transfer would be impossible.

Hanwha Systems' AESA radar installed on the Korean fighter jet (KF-21)

However, Hanwha Systems succeeded in delivering the first prototype AESA radar last year. This achievement came four years after starting participation in AESA radar development. The company signed the first mass production contract for AESA radar for the KF-21 with the Defense Acquisition Program Administration, and it is expected to be installed on the Korean fighter jet KF-21 starting from the end of August this year.

First Domestic Technology AESA Radar Delivered

The export outlook is also bright. Last year, Hanwha Systems signed a contract with Leonardo to supply AESA radar antennas and agreed to jointly develop AESA radars for export light attack aircraft. This is the first time that AESA radar antennas developed with domestic technology are being exported overseas. Hanwha Systems expects exports of AESA radars for light attack aircraft to be possible not only to Europe, including Italy which is part of Leonardo’s supply chain, but also to the Asia-Pacific region.

In the ground sector, the medium-range surface-to-air guided missile ‘Cheongung-II’ (M-SAM2) proved to be a key product. Cheongung-II is a defense system capable of intercepting not only aircraft but also missiles. It is also called Korea’s Patriot missile. LIG Nex1 is responsible for system integration including missiles, Hanwha Aerospace produces launchers and vehicles, and Hanwha Systems manufactures the radar. If the 3.7 trillion KRW export to Iraq proceeds smoothly this year, export performance is expected to surge significantly.

Yonhap News

Cheongung-II Radar Export to Iraq Expected This Year

Industry insiders speculate that the price negotiations for the Iraq export this time could be similar to the ratios during the 2022 UAE and 2023 Saudi Arabia Cheongung-II exports. During the 2022 UAE export, Hanwha Systems’ contract size was about 1.3 trillion KRW (30% of the total). For the Saudi export, Hanwha Systems contracted for about 1.2 trillion KRW (28% of the total).

Following the Cheongung-II radar, the long-range multifunction radar (Long-Range MFR) is also included in the subsequent export product lineup. Additionally, if the ‘Anti-MLRS MFR,’ a multifunction radar capable of simultaneously detecting targets against multiple simultaneous multiple launch rocket system (MLRS) threats, is developed, it is expected to join the export lineup.

First Certification of Ship Security System in Asia

There were also significant achievements in the naval sector. Hanwha Systems decided to participate in the next-generation frigate (Ulsan-class Batch-III) combat system development project. The radar alone can perform multiple missions such as 360-degree omnidirectional detection, tracking of air and surface targets, and fire support for naval guns. Additionally, last year, Hanwha Systems received certification from the American Bureau of Shipping (ABS) for its self-developed ‘ship cyber security solution,’ the first such certification in Asia. Among the three leading shipbuilding countries?Korea, China, and Japan?this is the first case of obtaining certification for a ship cyber security solution. Hanwha Systems also developed the Condition-Based Monitoring System (CBMS) for naval propulsion systems, which diagnoses the operational status of propulsion systems in real time. Since CBMS is a technology possessed only by some advanced countries such as the U.S., Norway, and Italy, it is expected to have a significant import substitution effect.

An industry official said, "Since Trump’s election, the visibility of Korean maritime defense’s entry into the U.S. market has increased," adding, "With Hanwha Ocean’s acquisition of the U.S. Philly shipyard, Hanwha Systems now possesses an export pipeline covering land, sea, and air."