Hyundai consolidates shipbuilding units as US defense ties deepen

Cropped photo of HD Hyundai Heavy Industries site up and HD Hyundai Mipo shipyard Courtesy of HD Hyundai Heavy Industries — Shipyards of HD Hyundai Heavy Industries (upper photo) and HD Hyundai Mipo/ Courtesy of HD Hyundai Heavy Industries

SEOUL, August 27 (AJP) - HD Hyundai Heavy Industries and HD Hyundai Mipo Dockyard said Wednesday they would merge by the end of the year, creating South Korea’s largest shipbuilder as the country seeks to expand its role in global naval modernization and deepen cooperation with the United States.

The boards of both firms and their parent company, HD Korea Shipbuilding & Offshore Engineering, approved the consolidation, which will fold Mipo into Hyundai Heavy. Shareholders and regulators must still sign off, but the companies expect the transaction to close in December.

The combination unites the world’s biggest commercial shipbuilder with a leading mid-sized yard, a move Hyundai executives say will yield economies of scale, sharper technological capabilities and stronger competitiveness against consolidated rivals in China and Japan.

The merged entity will lean heavily into the global defense boom.

Hyundai Heavy is already South Korea’s top naval shipbuilder, with a track record in destroyers, submarines and export contracts, while Mipo brings dry-dock capacity and facilities that are suited for warship projects. Together, the companies have set a target of 10 trillion won, or $7.15 billion, in annual defense revenue by 2035.

The merger comes just days after HD Hyundai signed a memorandum of understanding on maritime investment with U.S. counterparts, part of a $150 billion initiative dubbed “Make American Shipbuilding Great Again,” or MASGA.

The effort underscores Seoul’s growing role as Washington’s shipbuilding partner at a time when global navies are racing to modernize fleets.

Hyundai executives also framed the consolidation as a way to accelerate development in specialized vessels such as icebreakers — tied to the Alaska liquefied natural gas project — and to scale up investment in green propulsion systems across vessel sizes.

By pooling research, they said, the combined company could cut costs and shorten development timelines.

To further streamline its global operations, HD Korea Shipbuilding & Offshore Engineering plans to establish an overseas investment arm in Singapore in December.

The new unit will oversee Hyundai’s shipyards in Vietnam and the Philippines, and spearhead international expansion in bulk carriers and tankers, where Chinese competitors have been capturing market share.

Kim Dong-young davekim0807@ajupress.com