South Korea offers to build five Aegis destroyers per year to help the US counter China at sea.

As reported by Chosun on March 18, 2025, South Korea’s HD Hyundai Heavy Industries (HD HHI) hosted a handover ceremony at its Ulsan headquarters for Jeongjo the Great, the lead vessel of Korea’s next-generation Aegis destroyers. During the event, HD HHI stated that it can build up to five Aegis destroyers per year for the U.S. Navy if bilateral cooperation is formalized, and that it is prepared to expand this capacity further depending on demand. The company emphasized that these Aegis destroyers are equivalent in size and performance to the U.S. Navy’s Arleigh Burke-class. This announcement comes as the United States faces structural limitations in its domestic shipbuilding sector, where the number of shipyards has declined from over 400 to fewer than 30.
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The combined output of the only U.S. shipyards currently capable of building Aegis destroyers remains below the Navy’s stated requirement of at least three Arleigh Burke-class destroyers annually, as their combined output is around 1.6 to 1.8 ships per year. (Picture source: US Navy)

South Korea’s HD Hyundai Heavy Industries is positioning itself as a strategic partner in the evolving U.S. naval shipbuilding landscape, as the United States seeks to ramp up ship production in response to China’s maritime expansion. To date, HD HHI remains the only South Korean company capable of both designing and constructing Aegis destroyers. It built five of the six such ships acquired by the South Korean Navy, including the first, Sejong the Great. It is also the only domestic shipyard with a dedicated combat system integration team capable of incorporating and testing the Aegis Combat System, one of the most complex and critical components of modern warships. More than 250 engineers at HD HHI are qualified to design and build Aegis destroyers with performance levels matching those of U.S.-built equivalents. The company claims that South Korea can construct Aegis destroyers with the same capabilities as the U.S. Navy’s Arleigh Burke class at a more competitive cost and within two-thirds of the time required by American shipyards. This statement coincides with growing discourse within American defense circles about leveraging allied shipbuilding capabilities amid the declining capacity of the domestic shipbuilding base.

HD HHI’s confidence in its potential contribution stems from the fact that its Ulsan facility is currently engaged in the simultaneous construction of 12 surface vessels, including offshore patrol vessels and corvettes for the Philippine Navy, demonstrating high throughput across both domestic and export-oriented projects. The potential opening of the U.S. naval shipbuilding market—long protected by national security laws and the Jones Act—could create significant opportunities for foreign shipyards. According to a report by Korea’s trade promotion agency KOTRA, the U.S. Navy plans to acquire 364 ships over the next three decades, requiring an annual construction rate of 12 ships. The core rationale for this expansion is to maintain parity with, or exceed, the Chinese People’s Liberation Army Navy (PLAN), which is rapidly growing in both size and technological sophistication. Experts estimate that China could field more than 400 modern surface combatants before 2030, challenging the current supremacy of the U.S. Navy.

Jeong Woo-man, Vice President of HD HHI's Special Ship Business Unit, recently emphasized that the company's dedicated destroyer dock alone can produce at least one Arleigh Burke-class equivalent vessel per year, and could expand production to five annually if cooperation with the U.S. proceeds. He further stated that HD HHI has room to increase capacity even beyond this target. The company is also considering broader engagement with the U.S. defense market through participation in the Navy’s maintenance, repair, and overhaul (MRO) efforts. It aims to win two to three MRO pilot contracts this year and intends to help develop standardized procedures for the future sustainment of U.S. naval vessels.

Equipped with the Aegis Combat System, the Arleigh Burke-class destroyers can carry out multi-mission operations, including air defense, missile defense, anti-surface warfare, anti-submarine warfare, and land attack. (Picture source: US Navy)

HD HHI's historical achievements lend further weight to its proposal. The company delivered Sejong the Great to the Republic of Korea Navy in 2008 as South Korea’s first Aegis destroyer, having also led its design. In November 2024, it delivered the lead ship of the new Jeongjo the Great-class on time, reinforcing its reputation for meeting project schedules. Construction on the second and third ships of the class continues. Earlier in 2024, HD HHI Vice Chairman Chung Ki-sun introduced the company’s naval production facilities and ongoing projects to U.S. Secretary of the Navy Carlos Del Toro, signaling an intention to deepen cooperation.

Looking ahead, HD HHI continues to scale its facilities in Ulsan, converting commercial docks into military production zones and investing in engineering capacity to meet growing international demand. As the Aegis Combat System continues to evolve—supporting the latest Standard Missile variants, integrating AN/SPY-6 radars, and increasingly serving as a platform for ballistic missile defense—the industrial base capable of supporting these platforms must evolve as well. Whether the United States opts to integrate HD HHI into its naval expansion plan remains uncertain, but the Korean firm’s readiness to participate in large-scale production offers a compelling option at a time of intensifying strategic competition.

The Aegis Combat System is an integrated naval weapons system developed by Lockheed Martin for use on U.S. Navy and allied surface combatants. The system is centered around the AN/SPY-1 passive electronically scanned array radar, the MK 99 Fire Control System, the Weapon Control System, and the Command and Decision Suite. Upgrades such as the Multi-Mission Signal Processor (MMSP), Aegis Baseline 9 and 10 software, and the AN/SPY-6 radar have expanded its capability to engage more complex threats, including maneuverable and hypersonic targets. As of early 2025, 114 Aegis-equipped ships are operational, with 72 additional vessels planned. The system is in service with six allied navies: Japan, Australia, Canada, South Korea, Spain, and Norway.

To date, HD HHI remains the only South Korean shipyard with a dedicated combat system integration team capable of incorporating and testing the Aegis Combat System, one of the most complex and critical components of modern warships.  (Picture source: HD HHI)

Equipped with the Aegis Combat System, the Arleigh Burke-class destroyers can carry out multi-mission operations, including air defense, missile defense, anti-surface warfare, anti-submarine warfare, and land attack. The system allows these destroyers to detect and engage multiple threats simultaneously, including cruise and ballistic missiles, at extended ranges and in highly contested environments. With the introduction of the latest software baselines and radars such as the AN/SPY-1D(V) and AN/SPY-6, these destroyers can now track hypersonic threats and perform simultaneous engagements using missiles like the SM-3 for exoatmospheric intercepts and SM-6 for terminal defense. Recent tests, including FTX-40 involving USS Pinckney, demonstrate that the class can virtually engage a hypersonic medium-range ballistic missile (MRBM) target, confirming the Aegis’ evolving performance against next-generation missile threats.

However, since the commissioning of the USS Arleigh Burke (DDG-51) in 1991, the production and delivery rates of Arleigh Burke-class destroyers have varied depending on U.S. Navy procurement decisions, budget allocations, and shipyard output. During the 1990s and early 2000s, the delivery rate typically ranged between two and three ships per year, supported by General Dynamics’ Bath Iron Works and Huntington Ingalls Industries’ Ingalls Shipbuilding. The highest annual delivery occurred in 2000, when five ships—DDG-85 through DDG-89—were delivered. The lowest rate was recorded in 2012, with the delivery of only one vessel, USS Michael Murphy (DDG-112), during a period when the Navy had shifted focus to the Zumwalt-class program. Production resumed in 2013 under the "IIA Restart" phase, beginning with DDG-113, followed by the "Technology Insertion" batch and the introduction of the Flight III variant. From 2018 to 2022, the Navy procured two ships per year, a rate planned to continue through 2027 under the current multi-year procurement strategy.

Despite these efforts, the combined output of General Dynamics and Huntington Ingalls Industries—the only U.S. shipyards currently capable of building Aegis destroyers—remains below the Navy’s stated requirement of at least three Arleigh Burke-class destroyers annually. Their combined output of around 1.6 to 1.8 ships per year does not align with this requirement. In contrast, South Korea's HD HHI maintains the engineering workforce and dock capacity necessary to exceed that rate. The company has stated that even under current constraints, its specialized dock for destroyers could deliver at least one ship per year compatible with U.S. Navy standards, and that this number could grow to five if a bilateral program is established.

From 2018 to 2022, the US Navy procured two Arleigh Burke-class destroyers per year, a rate planned to continue through 2027. (Picture source: US Navy)

Against this backdrop, HD HHI has expanded its efforts to penetrate the U.S. defense market. In February 2025, it partnered with Hanwha Ocean under a government-led initiative to form a “warship export one-team,” with HD HHI focusing on surface vessels and Hanwha Ocean on submarines. This strategic alignment aims to increase Korea’s competitiveness in global markets and improve the odds of successful exports to the United States. Furthermore, HD HHI has begun laying the groundwork to participate in the U.S. Navy’s MRO sector, targeting two to three demonstration projects this year. Should market access widen, it could unlock opportunities not only for major contractors but also for small- and medium-sized suppliers within South Korea’s broader naval ecosystem.

Nevertheless, HD HHI’s ambitions may face legal and political obstacles in the United States. According to 10 U.S.C. § 8679, the Department of Defense is prohibited from awarding contracts for the construction of naval vessels or major components of their hulls or superstructures in foreign shipyards, with exceptions only under a presidential waiver for national security interests. Additionally, the Merchant Marine Act of 1920, known as the Jones Act, mandates that vessels operating between U.S. ports be built in the United States, further limiting the role of foreign shipbuilders in U.S. naval construction. These legal constraints, combined with a risk-averse culture within the Navy and bureaucratic procurement processes, have contributed to delays and inefficiencies in shipbuilding.

While intended to safeguard national security and maintain a robust shipbuilding industry, these laws have also contributed to higher construction costs and limited production capacity. Over time, this has led to a decline in the number of operational shipyards and a reduced workforce, with the merchant marine workforce decreasing from approximately 50,000 in 1960 to fewer than 10,000 today. Consequently, the U.S. Navy has faced challenges in meeting its shipbuilding goals, with significant delays and cost overruns in major programs. For instance, the construction of Virginia-class submarines has experienced delays of two to three years, and the Constellation-class frigate program is five years behind schedule. These issues have been exacerbated by workforce shortages, bureaucratic inefficiencies, and a risk-averse culture within the Navy. As a result, the U.S. Navy's shipbuilding capacity has diminished, with production reaching its lowest point in 25 years—raising concerns about its ability to maintain readiness and compete with other nations, notably China.

Some voices on social media and in defense circles remain skeptical about outsourcing warship construction, but others argue that collaboration with trusted allied shipyards—particularly those in South Korea and Japan—is becoming strategically necessary. These countries possess advanced shipbuilding industries capable of producing high-quality naval vessels efficiently and at lower costs. Recent developments include South Korean shipbuilder Hanwha Ocean completing repairs on the USNS Wally Schirra, marking the first time a South Korean shipyard has conducted such work for the U.S. Navy. Additionally, U.S. Navy Secretary Carlos Del Toro has expressed openness to having foreign shipyards assemble certain U.S. Navy warship modules overseas to increase domestic production rates. These steps indicate a potential shift in policy, acknowledging that collaboration with allied shipbuilders could be essential to meeting the Navy's fleet expansion goals and countering the rapid naval advancements of strategic competitors.