South Korea’s Defense Industry: How 5 Major Corporations Are Investing 6.4 Trillion Won in SMEs and Startups

Translation result.

South Korea’s Blue House said on March 18 that it convened a meeting, chaired by Senior Presidential Secretary for Economic Growth Ha Jun‑kyung, to review a cooperative growth strategy for the defense industry. Officials said five major defense firms outlined plans to invest KRW 642.7 billion (about $482.0 million) in win‑win cooperation initiatives.

This year, those firms will direct the KRW 642.7 billion (about $482.0 million) toward supporting small and medium‑sized enterprises (SMEs) and startups through joint research and development (R&D), financing, overseas expansion, and employee welfare programs.

KRW 145 billion (about $108.8 million) is earmarked for joint R&D to localize defense components, while KRW 481.4 billion (about $361.1 million) will fund financial measures to stabilize management and bolster the self‑reliance of smaller suppliers.

An additional KRW 3.2 billion (about $2.4 million) will support partner firms’ overseas expansion, and KRW 3.6 billion (about $2.7 million) will go to welfare improvements. The companies will also put KRW 9.5 billion (about $7.1 million) into a cooperative fund to strengthen the competitiveness of SMEs and startups.

At the meeting, officials highlighted best practices in industry collaboration.

Hanwha Aerospace is financing R&D and facility costs to drive domestic production, performance upgrades and innovation across five advanced defense fields, including aviation and robotics. Hyundai Rotem has expanded its co‑growth fund from KRW 70 billion (about $52.5 million) in 2025 to KRW 150 billion (about $112.5 million) this year, and will invest KRW 200 billion (about $150 million) in R&D over two years to improve partner research outcomes.

Hanwha Systems plans to invest KRW 408 billion (about $306 million) in SMEs and startups from this year through 2030 to strengthen partners’ technological edge. Korea Aerospace Industries will provide KRW 128 billion (about $96 million) to stabilize partner operations and boost competitiveness. LIG Nex1 will establish an independent legal entity in the United Arab Emirates to support partners and startups seeking overseas markets.

Senior Secretary Ha said, “The defense industry is a core sector that underpins national security and a strategic industry that drives advanced technology. Defense competitiveness cannot be secured by large firms alone. Partner SMEs and startups must grow alongside them so that supply‑chain stability, quality improvements and technological accumulation can be sustained.”