Prime Minister Mark Carney climbs down a ladder into a submarine during a tour of the Hanwha Ocean Shipyard in Geoje Island, South Korea, in October last year.Adrian Wyld/The Canadian Press
South Korean President Lee Jae-myung vowed to support the country’s defence industry after a consortium led by Hanwha Ocean failed to win a key Canadian submarine procurement project.
In a statement, Mr. Lee said South Korea’s “world class” defence industry was “a core industry for national competitiveness.”
“Although we did not achieve the expected results in the recent Canadian submarine project, I believe we have once again clearly demonstrated our potential to the international community,” he added.
Following a 10-month battle between the Hanwha consortium and Germany’s TKMS for the Canadian contract, Prime Minister Mark Carney announced Monday that Ottawa had decided to go with the German company, which also supplies more than a third of the NATO alliance.
Canada picks Germany’s TKMS over South Korea’s Hanwha to build submarine fleet
The desire for interoperability with other members of the North Atlantic Treaty Organization was widely seen in South Korea as the deciding factor, and may serve to smooth over any sense of being snubbed by Canada, which has been working to cultivate a closer relationship with Seoul.
In a statement, Hanwha said it was “not able to overcome the barrier posed by the NATO alliance, despite making all-out efforts backed by the government’s full support, the outstanding performance of our submarines and the Navy’s successful experience operating submarines.”
Shares in Hanwha dropped more than 20 per cent in early trading Tuesday.
Mr. Carney said the South Korean defence company would be the “reserve supplier” should negotiations with TKMS prove unsuccessful. The prime minister said he spoke to Mr. Lee ahead of the announcement Monday, noting South Korea and Germany were both “critical strategic partners to Canada in this new world.”
“I can see this is a disappointment” for South Korea, Mr. Carney said. “We are moving forward with the relationship because there’s so many things we can do together.”
South Korea’s Defence Acquisition Program Administration described the Canadian decision as “deeply regrettable.”
“The fact that the Republic of Korea, which previously imported submarine technology from Germany, competed on equal footing with the original submarine originator in terms of all technical capabilities—including performance and delivery time—is a significant achievement demonstrating the rapid growth of our defence technology,” it said in a statement.
“Although we were unable to overcome the disadvantages of strategic conditions, the Defense Acquisition Program Administration will not let the experience of this project remain merely a failure and a setback, but will turn it into a valuable lesson for the leap to becoming one of the top four defence powers.”
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Since August, 2025, Hanwha and TKMS – and the countries backing them – have waged a very public campaign to win the 12-submarine contract.
Hanwha promised more than $70-billion in trade and investment in Canada, and more than 25,000 jobs annually between 2026 and 2044, while TKMS said its proposal would generate $167-billion in total economic activity across Canada, deliver over $86-billion in economic impact, and create over 650,000 job-years across Canada during the life of the project. A job-year means one job for one year.
Canada hasn’t purchased unused submarines since the 1960s, during the Cold War, and has never ordered anywhere near 12 at once. Canada currently owns four subs, all of which were purchased second-hand, and only one of which is typically operational.
The Canadian military has said that it needs 12 subs to properly defend the country, based on the assumption that for high readiness only one of every four vessels would be fit to deploy, with others under maintenance or used for training.
The purchase will give Canada three submarines to deploy at any time – stealth machines that will create an ability to deter hostile or rival countries from prowling around the country’s Arctic, or its Pacific and Atlantic coastlines.
With files from Steven Chase