South Korean President Lee Jae Myung (5-L) attends a christening ceremony for the State of Maine, a National Security Multi-mission Vessel, that South Korean shipbuilder Hanwha Ocean has built for the US Maritime Administration, at Hanwha Philly Shipyard in Philadelphia, Pennsylvania, USA. Photo by YONHAP / EPA
May 14 (Asia Today) — South Korea’s expanding shipbuilding cooperation with the United States is drawing renewed attention to the industry’s growing reliance on Chinese-made ship components, particularly among smaller domestic shipyards.
Industry officials warned Wednesday that increased use of low-cost Chinese equipment could weaken South Korea’s shipbuilding supply chain ecosystem at a time when Washington is tightening restrictions on Chinese involvement in strategic industries.
According to industry sources, many small and mid-sized South Korean shipbuilders have struggled to reduce purchases of Chinese-made components because of pricing pressure and intense competition in commercial vessel markets.
The issue emerged as a major topic during a government-hosted “K-Shipbuilding Future Vision” meeting held Tuesday in Ulsan by South Korea’s Ministry of Trade, Industry and Energy.
Park Il-dong, chief executive of engineering company DSEC, warned during the meeting that South Korea’s ship equipment industry ecosystem was at risk of collapse because of aggressive low-cost competition from Chinese manufacturers.
Large shipbuilders increase localization efforts
Industry officials said conditions differ sharply between South Korea’s major shipbuilders and smaller yards.
The country’s three largest shipbuilders – HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries – have steadily increased localization rates for high-value vessels including LNG carriers and naval ships.
Major shipyards increasingly use domestically developed core systems and components to improve supply chain stability and maintain quality standards.
An HD Hyundai Heavy Industries official said the company maintains high localization levels through in-house technology development across major shipbuilding sectors and is gradually reducing use of Chinese-made equipment.
Smaller shipyards, however, remain more dependent on lower-cost imported parts because they focus heavily on bulk carriers and smaller commercial ships where price competition is more intense.
Industry experts said Chinese-made valves, pipes and steel plates are increasingly being used to reduce costs.
Lee Jang-hyun, a professor of naval architecture and ocean engineering at Inha University, said some smaller shipyards use Chinese components for 20% to 30% of a vessel’s systems, while the figure can rise to 40% in some cases if products meet regulatory standards.
U.S. market access could face pressure
The issue has become more sensitive as South Korea seeks expanded access to the U.S. naval maintenance, repair and overhaul market and broader shipbuilding cooperation with Washington.
The United States strictly limits Chinese-made parts in military and strategic supply chains, meaning heavy dependence on Chinese equipment could complicate future access to North American markets.
Park said Chinese-made ship components are effectively barred from many U.S. and Canadian strategic shipbuilding projects.
“If domestic equipment makers collapse, the entire supply chain could weaken in the long term,” he said.
He added that the South Korean government should consider financial and tax incentives for shipyards that adopt domestically produced components.
Industry officials said the global restructuring of U.S.-China supply chains is shifting the definition of competitiveness in shipbuilding beyond production capacity alone.
“The era when shipbuilding capability itself guaranteed a competitive edge is ending,” one industry official said. “Policy support is needed to preserve the entire industrial ecosystem, including core equipment and engineering technologies.”
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260514010003933