Korea Aerospace Industries (KAI) and Hanwha Systems are engaged in a fierce competition for a synthetic aperture radar (SAR) satellite project valued at 1 trillion won. As Hanwha Group's intent to acquire KAI becomes more apparent, a tense atmosphere is developing between the two companies.
According to industry sources on September 14, the government is set to issue large-scale SAR satellite contracts this month. The Agency for Defense Development (ADD) initiated the bidding process for a 567.1 billion won project to develop a 'small satellite system SAR cluster' earlier this month, followed by the Aerospace Administration's multipurpose satellite No. 8 project, which is valued at around 400 billion won.
SAR technology involves sending radio waves from a satellite to the ground and analyzing the reflected signals to create images. This technology is highly useful for military surveillance, reconnaissance, and disaster monitoring, as it can observe the ground in adverse weather conditions and at night.
The competition between KAI and Hanwha Systems is heating up. Recently, Hanwha Group secured over 15% of KAI's shares, becoming the second-largest shareholder, while KAI has expressed a strong commitment to not fall behind Hanwha in the satellite business.
Particular attention is focused on the small satellite system project. This initiative aims to deploy 40 SAR satellites in low Earth orbit to establish a joint military-civilian satellite network that closely monitors the Korean Peninsula and surrounding waters. The project has attracted significant industry interest since the beginning of the year.
On September 7, ADD held a briefing at the Daejeon Military-Civil Cooperation Promotion Center to announce the start of the 'small satellite system SAR cluster development' project. KAI and Hanwha Systems, both developing SAR satellites, will participate in the project in a competitive bidding format.
KAI will leverage over 30 years of accumulated expertise in satellite systems. Since participating in the development of the first multipurpose satellite in 1994, KAI has built its technical capabilities across the entire process from design to manufacturing, assembly, and testing of subsequent satellites.
Hanwha Systems, on the other hand, boasts strong experience in developing and operating small SAR satellites. In December 2023, it launched the first domestically developed small SAR satellite by a private company and has since demonstrated its technological prowess by releasing satellite images.
Both companies are preparing for the demand for mass production of small satellites by establishing their own space centers.
The industry's focus on securing the small satellite project is driven by the potential for market growth. Unlike large satellites, which typically operate for over 10 years, small satellites have a lifespan of only 2 to 3 years, necessitating continuous replacement and creating ongoing demand for production and launches.
According to market research firm MarketsandMarkets, the South Korean small satellite market is expected to grow from $80.1 million in 2025 to $169 million by 2030, representing a growth rate of approximately 33%. This growth is anticipated to be driven by the government's expansion of space projects and increasing national security demands.
Following the small satellite project, the multipurpose satellite No. 8 initiative will also commence soon. According to the Public Procurement Service's announcement of the large project bidding plan for September, the multipurpose satellite No. 8 project is valued at 406.2 billion won, including 142.8 billion won for the main body development and 263.4 billion won for the payload development.
The multipurpose satellite No. 8 is a next-generation SAR satellite system being developed as a successor to No. 6. The project aims to establish a formation of four satellites, including one main satellite and three small companion satellites, to secure high-resolution and wide-area observation capabilities.
One industry insider noted, "While it is difficult to predict the outcome of the projects, Hanwha Systems may have an advantage in the small satellite sector due to its independent development experience, while KAI, with years of accumulated technical expertise, may excel in the medium to large satellite sector. The results of the technical and price evaluations are expected to clarify the project participants by the end of next month or early November."
* This article has been translated by AI.
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