[New York = E-Daily Correspondent Seong Joowon ] Analysts suggest that the $150 billion (approximately 199 trillion won) shipbuilding cooperation project agreed upon by South Korea and the U.S. was excluded from South Korea’s first round of strategic investments in the U.S. due to uncertainty surrounding long-term U.S. demand for ship orders. They point out that South Korean companies will find it difficult to undertake large-scale capital investments unless the U.S. government establishes a stable foundation for ordering military and commercial vessels.

James Kim, Director of the Korea Program at the Stimson Center, a think tank based in Washington, D.C., presented this analysis in a policy brief titled “Where Are the Ships? Lessons from South Korea’s First Strategic Investment in the U.S. for Shipbuilding Cooperation,” released on the 16th (local time).
Director Kim noted that while South Korea’s first strategic investment focused on energy infrastructure, such as nuclear power plants, it did not include projects related to “MASGA (Making the U.S. Shipbuilding Industry Great Again),” a South Korea-U.S. shipbuilding cooperation initiative.
He explained that the South Korean government views investment in the U.S. not merely as policy support, but as an investment from which it must recover both principal and interest. He noted that “commercial rationality,” as defined in the institutional framework governing South Korea-U.S. strategic investment, is the key criterion.
In fact, while South Korea has committed $120 billion to projects such as the construction of eight large nuclear reactors in the U.S., it has postponed its investment commitment to the Alaska liquefied natural gas (LNG) pipeline project, citing a lack of commercial viability.
Investments in nuclear power were supported by rising electricity demand driven by the proliferation of artificial intelligence (AI) data centers, as well as policy support from the U.S. government. Director Kim analyzed that if long-term demand is clear, investment decisions can be made even in the face of obstacles such as a shortage of skilled labor and supply chain vulnerabilities in the U.S.
In contrast, the U.S. shipbuilding industry lacks a stable order base. According to the annual report by shipping brokerage firm BRS cited by Director Kim, Chinese shipyards accounted for 72.3% of global new ship orders last year. South Korea accounted for 19.4%, and Japan for 6.4%.
During the same period, new commercial ship orders for U.S. shipyards totaled just 12 vessels, including two liquefied natural gas (LNG) carriers and 10 medium-sized oil tankers. In terms of cargo capacity, this represents less than 0.5% of global orders. All 12 vessels were ordered by Hanwha Shipping—a U.S. subsidiary of Hanwha Ocean(042660)—from Hanwha Philly Shipyard.
U.S. government orders for warships could present new opportunities. The U.S. Navy’s proposed budget for shipbuilding in Fiscal Year 2027 is $65.8 billion (approximately 87.3626 trillion won), a significant increase from $39 billion in 2025 and $47.4 billion in 2026. This budget supports the procurement of a total of 34 vessels, including 18 combat ships and 16 support ships.
However, the budget increase does not automatically guarantee orders for South Korean companies. Even companies like Hanwha Philippines Shipyard, which possess merchant shipbuilding facilities, must undergo facility modifications and obtain the necessary certifications to build or maintain U.S. Navy vessels. Competition with companies that have already established a foothold in the U.S. defense market is also inevitable.
Director Kim pointed out that even if the U.S. pursues the so-called “Finnish model” or “bridge strategy” of utilizing allied shipyards, it would be difficult to justify large-scale investment based solely on short-term orders for a few vessels. This is because modernizing shipyards, training skilled workers, transferring technology, and establishing local supply chains require a long-term, stable stream of orders.
As an alternative, he proposed a permanent high-level consultative body between South Korea and the U.S. The idea is for the two countries to specify the types of ships on which they can cooperate, long-term order schedules, investment scales, and terms for policy-based financing, and to evaluate project performance based on actual ship deliveries and job creation in the U.S.
Director Kim emphasized that the success or failure of investment in the U.S. shipbuilding industry ultimately depends on the commercial viability of the projects. His recommendation is that the U.S. should create favorable investment conditions through long-term orders and policy support, while South Korea should take on the role of fulfilling secured contracts within the agreed-upon deadlines and budgets. Director Kim holds a Ph.D. in Political Science from Columbia University. After working at the Asan Institute for Policy Studies and the Korea-U.S. Economic Institute (KEI), he currently teaches at Columbia University’s School of International and Public Affairs.