South Korean shipbuilders are rapidly expanding their influence in the South American naval defense market. HD Hyundai Heavy Industries is using Peru as a bridgehead to enter Argentina’s submarine program, while Hanwha Ocean is squarely targeting Chile’s fleet modernization projects. Both companies are putting local production and technology transfer at the forefront, creating a competitive dynamic with traditional European defense heavyweights.
According to shipbuilding industry sources and South American media reports on the 12th, HD Hyundai Heavy Industries is pursuing the export of its self-designed 1,500-ton HDS-1500 submarine to the Argentine Navy. The strategy aims to leverage the company’s co-development experience with Peru to expand into the Argentine market.
Argentina has been grappling with a submarine capability gap since the sinking of a German-built submarine in 2017. The navy has initiated a procurement process to restore its submarine force, with local defense analysts arguing that up to five to six attack submarines are needed.
While Argentina’s submarine acquisition plan remains in its early stages, global defense companies including HD Hyundai Heavy Industries have already joined the competition. France’s Naval Group has proposed its Scorpène-class, Germany’s TKMS has offered the Type 214 and Type 209 NG, Sweden’s Saab is pitching the C71-class, and Spain’s Navantia has put forward its S-80-class.
The HDS-1500 that HD Hyundai Heavy Industries is seeking to export is a diesel-electric propulsion, export-oriented medium-sized submarine. A key strength is its high level of automation, which allows operation with a minimum crew of 25 personnel. The company has presented Argentina with a package that leverages the MRO (maintenance, repair, and overhaul) and parts supply chain infrastructure being established in Peru to provide regular depot-level maintenance and system upgrades. Given that naval vessels are typically operated for over 30 years, MRO capabilities for sustaining performance and extending service life are critically important.
HD Hyundai Heavy Industries is executing a strategy of using Peru as a hub for targeting the broader Latin American market. The plan centers on Peru’s state-owned SIMA shipyard, aiming to build a regional hub for ship construction and MRO while fostering a local industrial ecosystem.
Cooperation with Peru began with surface vessels and is now expanding to submarines. In April 2024, HD Hyundai Heavy Industries signed a $462.9 million (approximately 650 billion won) contract with SIMA to jointly build four surface vessels locally, including frigates, offshore patrol vessels, and landing ships. This represents the largest defense export deal ever secured by a South Korean company in Latin America. The Peruvian Navy also has plans to order an additional 11 surface vessels, raising expectations for further contract wins by HD Hyundai Heavy Industries.
Last December, the company secured a project with the Peruvian Navy and SIMA to co-develop two next-generation submarines. Peru has one of the longest histories of submarine operations in South America, and the core objective of this program is to replace aging German-built submarines that have been in service since the 1970s. HD Hyundai Heavy Industries designed the 1,500-ton HDS-MGP medium submarine based on the HDS-1500 platform, incorporating the Peruvian Navy’s operational requirements. Basic design is complete, and the company plans to sign a contract for the lead vessel (Hull 1) within the year following detailed design work.
“We are developing the submarine with a customized design that reflects the operational environment of deep-sea areas exceeding 3,000 meters in depth and the Peruvian Navy’s operational experience,” an HD Hyundai Heavy Industries official said.
Hanwha Ocean is simultaneously pursuing submarine and frigate exports to the Chilean Navy. Chile is currently proceeding with a program to replace two aging German-built submarines nearing retirement out of its current fleet of four. Hanwha Ocean has reportedly proposed its 2,000-ton Ocean 2000 submarine, developed specifically for international markets. This diesel-electric propulsion model is a mid-tier offering with stronger price competitiveness compared to the 3,000-ton KSS-III.
Hanwha Ocean is also targeting Chile’s multi-purpose frigate construction program with its 4,000-ton Ocean 4500 frigate. Chile is moving forward with a plan to sequentially replace its eight existing frigates, which were acquired second-hand from countries including the United Kingdom, the Netherlands, and Australia.
Hanwha Ocean is known to have submitted a comprehensive proposal aligned with the Chilean government’s naval modernization strategy, encompassing joint ship design, local construction, technology transfer, shipyard modernization, local workforce training, and parts supply chain development. Hanwha Ocean President Jung In-sub accompanied President Lee Jae-myung on his state visit to Chile last month to discuss cooperation plans on the ground.
South American nations are accelerating efforts to strengthen their naval defense capabilities in line with fleet modernization goals. In this market, a localization strategy encompassing local production and technology transfer is viewed as a key differentiator for South Korean shipbuilders against their European competitors. The moves by HD Hyundai Heavy Industries and Hanwha Ocean are interpreted as part of a long-term strategy to expand the horizon of defense exports across Latin America, going beyond one-off sales.