[New York = E-Daily Correspondent Seong Joowon ] While HANWHA AEROSPACE has secured its first major contract in the U.S. Army’s wheeled self-propelled howitzer program, establishing a foothold in the world’s largest defense market, analysts say the company must significantly expand local production and its supply chain in the U.S. to ensure long-term success. Analysts also note that the success of its U.S. operations will be a key factor in justifying HANWHA AEROSPACE’s recently soaring market value.

Juliana Liu, a columnist for Bloomberg Opinion’s Asia team, made this argument in a column titled “HANWHA AEROSPACE Has Work to Do After US Army Win” published on the 3rd (local time). Liu, who covers strategy and management at Asian companies, previously served as senior business editor for CNN Asia and as a reporter for the BBC and Reuters.
Liu described HANWHA AEROSPACE’s recent U.S. Army contract as a “surprise win.” HANWHA AEROSPACE(012450) Hanwha Defense USA, a U.S. subsidiary of HANWHA AEROSPACE, was selected last month as the contractor for the prototype development phase of the U.S. Army’s Mobile Tactical Cannon (MTC) program. The U.S. Army plans to receive six prototype wheeled self-propelled howitzers initially and test up to 18 units, including an option for an additional 12. The total cumulative value of the contract is up to $262.9 million (approximately 356.55 billion won).
What is important is not the contract itself, but what comes after it. Columnist Ryu assessed that this contract serves as a stepping stone that could lead to a future U.S. Army procurement project worth $7 billion (approximately 9.5 trillion won). If Hanwha secures the final contract, it could mark a turning point in the company’s full-scale entry into the world’s largest defense market, which has long been dominated by U.S. and European firms.

“U.S. Supply Chain

Share

Must Be Raised to at Least 50%”

Columnist Ryu placed the greatest emphasis on localization. Currently, about 40% of the supply chain for Hanwha’s K9 self-propelled howitzers is sourced from

the United States

. He argued that to establish itself as a major supplier to the U.S. Department of Defense, Hanwha must increase this share to at least 50% and build a U.S.-based supply chain that does not rely excessively on South Korea’s manufacturing competitiveness. He explained that this would also help reduce the risk of political backlash or tariffs related to the “Buy American” policy.
Hanwha(000880)He viewed it positively that Hanwha is already implementing this strategy overseas. In Poland, based on a contract for 700 K9s, the company is promoting technology transfer and local component production, and is also establishing a joint venture with a local defense firm to produce guided missiles. In Romania, Hanwha is constructing its first European production plant with the goal of raising the localization rate to as high as 80 percent.
Hanwha is also pursuing localization in the United States. The company has recently begun establishing a stable production base in the U.S., including leasing a production facility in Alabama. HANWHA AEROSPACE also stated last month, upon announcing the MTC contract, that it “will build a stable production base in the U.S. through a differentiated localization strategy.”
However, columnist Ryu also offered the paradoxical advice that localization should not be rushed. This is because the core competitive edge that allowed South Korean defense companies to expand their orders against Western competitors was not only proven weapons and competitive pricing but also their rapid production and delivery capabilities. He argued that while nurturing U.S. suppliers and the local workforce, South Korean manufacturers must not lose the efficiency unique to their manufacturing sector, and that it will take time for U.S. production capabilities to mature.

U.S. Localization and Policy Uncertainty Also Pose Variables

Policy uncertainty under the Trump administration was also cited as a risk factor. Columnist Ryu pointed out that replicating the industrial ecosystem established in Korea in the U.S. is no easy task, citing last year’s incident at the Georgia battery plant operated by HyundaiMotor(005380) andLG Energy Solution(373220), where hundreds of Korean workers were detained during an immigration raid.
The column predicted that if Hanwha succeeds in the U.S., the ripple effects would extend beyond the U.S. Army. Hanwha Ocean(042660)has already acquired a shipyard in Philadelphia and entered the U.S. Navy ship maintenance and repair business. Analysts Eric Joo and George Ferguson of Bloomberg Intelligence (BI) noted that success in the U.S. market could increase the likelihood of Hanwha securing weapons contracts in other North Atlantic Treaty Organization (NATO) member countries.
In fact, Hanwha’s push into the U.S. market is gaining momentum. Brent Ingraham, the U.S. Army’s Assistant Secretary for Acquisition, Logistics, and Technology, visited HANWHA AEROSPACE’s Changwon plant on the 26th of last month to personally inspect production facilities and automated processes for wheeled and tracked K9 howitzers, Cheonmu systems, and other equipment. He also discussed plans for South Korea-U.S. defense cooperation aimed at modernizing the U.S. Army with Hanwha officials.

Soaring Stock Price: The U.S. Market Is the Litmus Test

From an investor’s perspective, the last point stands out the most. Columnist Ryu pointed out that as HANWHA AEROSPACE’s stock price has surged alongside the expansion of overseas sales, its valuation has significantly exceeded historical levels. The assessment is that to justify the high expectations reflected in the current stock price, the company needs to tap into new markets and secure larger orders, and that ultimately winning long-term contracts with the U.S. Army will play a crucial role.
Therefore, the significance of the current contract—worth up to $262.9 million—is viewed as far greater than its face value. Amid military tensions with North Korea, South Korean defense companies have expanded their presence in the global market by rapidly filling Europe’s weapons shortages following the war in Ukraine, leveraging production capabilities built up over decades. Hanwha’s challenge now is to transfer that competitiveness to the U.S.
Columnist Ryu emphasized that Hanwha must establish local production capabilities in the U.S. without losing the strengths of the South Korean defense industry that have drawn U.S. attention. It is assessed that winning the U.S. Army’s MTC contract is not the finish line for entering the U.S. market, but rather the beginning of a full-scale test.