HD Hyundai and Hanwha clash over KDDX bid

May 26, 2026, 08:18 am

Tensions are rising in South Korea’s defense and shipbuilding industries as the rebidding deadline for the KDDX next-generation destroyer project approaches later this week, with competition intensifying between HD Hyundai Heavy Industries and Hanwha Ocean.

According to industry sources on May 25, the Defense Acquisition Program Administration (DAPA) will close bidder registration for the KDDX detailed design and lead ship construction project on May 28 and receive proposals the following day.

The first round of bidding on May 15 failed after HD Hyundai Heavy Industries declined to participate, leaving Hanwha Ocean as the sole bidder. Under South Korea’s state contract law, designated competitive bidding requires at least two participants.

KDDX is a major defense program valued at around 7 trillion won ($5.1 billion) aimed at building six 6,000-ton next-generation destroyers using domestic technology.

The project’s conceptual design was originally conducted in 2012 by Daewoo Shipbuilding & Marine Engineering, now Hanwha Ocean, while HD Hyundai Heavy Industries later joined the program and completed the basic design in 2020.

Industry observers view KDDX as far more than a standard warship construction project. The program is closely tied to future smart warship systems, naval exports and competitiveness in the U.S. Navy’s maintenance, repair and overhaul (MRO) market, making the contest a broader battle for leadership in Korea’s naval defense industry.

HD Hyundai Heavy Industries is emphasizing its experience in surface combat ship construction and its role in the project’s basic design phase. Hanwha Ocean, meanwhile, is highlighting its strengths in submarines and special-purpose vessels as well as its earlier conceptual design experience.

HD Hyundai argues that because it handled the basic design, it should naturally continue with the detailed design and construction of the lead vessel to maintain project continuity.

Typically, naval shipbuilding programs proceed through conceptual design, basic design, detailed design, lead ship construction and follow-on ship production stages.

One of the biggest issues drawing attention is HD Hyundai Heavy Industries’ decision to skip the first bidding round.

The company protested DAPA’s decision to provide basic design data to Hanwha Ocean, arguing that proprietary design know-how and technical strategies accumulated during the project were effectively transferred to a competitor.

HD Hyundai Heavy Industries filed an injunction request in court to block the release of the materials, but the request was dismissed. The company is currently pursuing an appeal.

A separate controversy involving military secret leaks has also emerged as a key variable.

Several HD Hyundai Heavy Industries employees were indicted for secretly photographing confidential naval project documents related to the KDDX conceptual design while it was still under Daewoo Shipbuilding & Marine Engineering in 2013. Some employees received final guilty verdicts between 2022 and 2023.

DAPA is currently reviewing whether to impose security-related penalty points on HD Hyundai Heavy Industries in connection with the incident.

An initial deduction of 1.8 points had been discussed, but additional internal reviews reportedly raised the possibility of another 1.2-point deduction. Industry officials noted that defense contracts are often decided by fractions of a point, meaning the penalties could become a significant disadvantage.

Still, many in the industry believe HD Hyundai Heavy Industries is likely to participate in the second round despite boycotting the first.

Analysts say the KDDX program could play a major role in future surface combat ship exports and smart naval vessel competitiveness, while experience in building the lead vessel may directly influence future follow-on ship contracts.

Jang Won-jun, a professor in the Department of Advanced Defense Studies at Jeonbuk National University, said HD Hyundai Heavy Industries may still decide to join the final bidding despite dissatisfaction over the court ruling and DAPA’s decisions.

“From HD Hyundai Heavy Industries’ perspective, this is not an easy project to give up considering the long-term competitive landscape in the special-purpose ship market,” he said.

Meanwhile, Hanwha Ocean could gain a strong advantage in future follow-on ship construction and export-oriented naval projects if it secures the lead ship contract alone.

Industry observers believe Hanwha Ocean is unlikely to back down from the challenge as it seeks to expand beyond submarines and special-purpose vessels into the surface warship market as well.

#KDDX #HD Hyundai Heavy Industries #Hanwha Ocean #Korea Defense Acquisition Program Administration #destroyer