Gulf buyers slow South Korea’s defense export push

$20 billion target for 2025 under pressure as major Middle East contracts pushed to next year

South Korea is unlikely to meet its ambitious $20 billion defense export target for 2025, as major Middle Eastern buyers delay weapons procurement decisions despite a recent uptick in global interest in Korean arms, including a new order for K2 tanks from Poland in the first half of the year.

According to industry sources, Korea’s defense exports have been in decline since peaking at a record $17.3 billion in 2022. Sales fell to $13.5 billion in 2023 and dropped further to $9.5 billion in 2024, raising concerns that the industry’s once-rapid growth is losing momentum.

A K2 Black Panther tank manufactured by Hyundai Rotem and currently operated by the Polish military./Polish Ministry of Defense

Companies remain uncertain about key deals that were expected to carry over from last year. Defense officials and executives had placed high hopes on contracts with Middle Eastern countries, but governments in the region are now postponing key decisions into 2026.

Saudi Arabia had been negotiating a $1 billion deal for ground-based weapons systems with South Korea but has yet to finalize any agreement. “We understand the additional export contract for the Cheongung-II medium-range surface-to-air missile system has also been pushed back to next year,” said one industry official.

Another Middle Eastern country, which has previously purchased Korean missiles and aircraft, has also delayed a deal worth an estimated $5 billion. Talks continue, but no final decision has been reached.

By contrast, prospects in Europe are improving. Romania’s Ministry of Defense announced in June that it aims to sign a €2.5 billion ($2.7 billion) contract this year for 246 next-generation infantry fighting vehicles (IFVs). Hanwha Aerospace, the South Korean defense manufacturer, is currently competing with its Redback IFV, which is compatible with its K9 self-propelled howitzer system.

An industry insider emphasized that the delays were not due to competitive failures: “These countries are not turning to other suppliers. They are simply deferring procurement decisions. What we need now is coordinated diplomatic support to maintain momentum and interest in Korean systems.”

Despite the setbacks, some analysts remain optimistic that the $20 billion export target is still within reach. A flurry of large-scale deals in the second half of the year could tip the balance in Seoul’s favor.

In late June, Hyundai Rotem secured a second export contract for K2 tanks with Poland. While the final figures are expected to be disclosed upon formal signing, the deal is projected to be worth between $6 billion and $6.5 billion—potentially making it the largest single arms export in South Korea’s history, and accounting for nearly a third of the annual target.

Korea Aerospace Industries (KAI) also signed a new contract with the Philippine government last month to deliver 12 additional FA-50 light attack aircraft, in a deal worth 975.3 billion won ($700 million). KAI separately reached an 83 billion-won agreement with Indonesia to extend the service life of KT-1B basic trainer aircraft.

Hanwha Aerospace earlier this year secured a deal to export its K9 howitzers to India, while Hanwha Ocean continues to win steady contracts to provide maintenance, repair, and overhaul (MRO) services for U.S. Navy ships.