In the first half of this year, thanks to the strong performance of high-value-added vessel orders, the operating performance of South Korea’s three major shipbuilding giants—HD Hyundai Group, Samsung Heavy Industries, and Hanwha Ocean—continued to improve, with profitability significantly enhanced. Meanwhile, the entire South Korean shipbuilding industry also achieved a strong rebound. According to a report released by the Korea Development Bank (KDB) Overseas Economic Research Institute on July 29, South Korea’s shipbuilding industry accounted for 25.1% of global market share in new vessel orders in the first half of this year, measured by compensated gross tonnage (CGT), up approximately 8 percentage points from 17.2% in the same period last year.
At the same time, on July 30 local time, U.S. President Donald Trump announced that the United States had reached a “comprehensive and complete” trade agreement with South Korea. Under the agreement, the U.S. will reduce tariffs on South Korea to 15%, while South Korea will provide $350 billion for investment projects owned and controlled by the U.S. On the same day, the South Korean government disclosed in a statement that of the $350 billion investment in the U.S., $150 billion (approximately ¥1.08 trillion RMB) will be allocated as the “Korea-U.S. Shipbuilding Cooperation Fund,” covering the entire shipbuilding industrial ecosystem, including vessel construction, ship maintenance, repair, and overhaul (MRO), new shipyard construction, and upgrades to shipbuilding equipment, to help revitalize the U.S. shipbuilding industry.
**Three Giants See Major Profit Growth, Driving Industry Rebound**
On July 31, HD Korea Shipbuilding & Offshore Engineering (KSOE), the shipbuilding holding company of HD Hyundai Group, announced that its consolidated operating profit in the second quarter reached KRW 953.6 billion, a 153.3% year-on-year increase. Sales rose 12.3% to KRW 7.4284 trillion, while net profit grew 25% to KRW 447.1 billion. Among its three shipbuilding subsidiaries, HD Hyundai Heavy Industries led with sales of KRW 4.1471 trillion and operating profit of KRW 471.5 billion. HD Hyundai Samho and HD Hyundai Mipo recorded sales of KRW 2.1187 trillion and KRW 1.2345 trillion, respectively, with operating profits of KRW 371.7 billion and KRW 89.4 billion. An HD KSOE representative stated that the improved profitability was primarily due to increased high-value-added vessel orders and rising ship prices.
On July 29, Hanwha Ocean announced that its second-quarter operating profit reached KRW 371.7 billion, turning around from a KRW 9.6 billion loss in the same period last year. Sales rose 29.9% year-on-year to KRW 3.2941 trillion, while net profit stood at KRW 148.5 billion. By business segment, the commercial ship division saw sustained growth in sales and operating profit due to higher sales of liquefied natural gas (LNG) carriers. The special vessel division maintained stable profitability thanks to steady production of submarines, surface ships, and MRO services. The offshore division’s sales growth was attributed to the nearing completion of a drillship conversion project. A Hanwha Ocean representative stated that the company would continue targeting high-value-added vessel orders while improving efficiency and maximizing profitability through stable production and cost reductions.
Another South Korean shipbuilding giant, Samsung Heavy Industries, posted its highest quarterly profit in 11 years in Q2. According to its July 24 earnings report, the company’s Q2 sales reached KRW 2.683 trillion, with operating profit at KRW 204.8 billion—marking the first time since Q2 2014 that quarterly profit exceeded KRW 200 billion. In the first half of 2024, Samsung Heavy Industries recorded sales of KRW 5.1773 trillion and operating profit of KRW 327.9 billion, up 6.1% and 57.2% year-on-year, respectively. As of July, the company had secured $3.3 billion in orders, achieving about 34% of its annual target of $9.8 billion, including $2.6 billion in commercial ship orders and $700 million in offshore orders. A Samsung Heavy Industries representative noted that medium- to long-term demand for gas carriers like LNG and large ethane carriers would continue growing, while new orders for 12,000+ TEU container ships and tankers with high proportions of aging vessels were also expected to rise. The company sees opportunities in these areas and anticipates securing a floating liquefied natural gas (FLNG) order within the year.
The strong performance of South Korea’s three shipbuilding giants reflects the broader industry rebound. The KDB report noted that South Korea’s share of global new vessel orders rose to 25.1% in H1 2024 from 17.2% a year earlier, marking a strong recovery. The report attributed this to geopolitical factors and increased uncertainty in the external environment, which led some large container ship orders to shift to South Korea, while LNG carrier orders remained stable.
However, the report also highlighted that global market uncertainty has dampened the business environment. Despite the increased market share, South Korea’s new orders totaled only 4.87 million CGT, down 54.5% year-on-year, while order value fell 31.8% to $16.14 billion. The report suggested that trade friction, including U.S. tariffs, has negatively impacted new orders, and shipowners may remain cautious in H2 rather than actively investing. Full-year new orders are projected at 40 million CGT, down about 46% from 2023. In this context, South Korean shipbuilders should focus on high-tech, high-value-added vessel orders to enhance profitability.
**Largest Single-Industry Investment, Mutual Development Boost**
The shipbuilding industry’s rebound also bolstered U.S.-South Korea trade negotiations. At a post-negotiation press conference, South Korean Deputy Prime Minister Koo Yun-cheol revealed that shipbuilding was a key factor in finalizing the trade deal. “Without shipbuilding, the negotiations would not have progressed,” a South Korean trade negotiator stated. The $150 billion Korea-U.S. Shipbuilding Cooperation Fund accounts for 43% of the total $350 billion investment package, making it the largest single-industry investment, which will play a central role in future bilateral economic cooperation.
A South Korean trade official explained that the fund will cover the entire U.S. shipbuilding ecosystem and be allocated to specific projects based on corporate needs. “The initiative aims to support South Korean shipbuilders’ entry into the U.S. market and its supply chains through investments, loans, and guarantees, revitalizing the U.S. shipbuilding industry while also benefiting South Korea’s,” the official said, adding that the effort will be systematically supported by public financing for maximum efficiency. The U.S. government stated that the fund will primarily finance new shipyard construction, workforce training, supply chain rebuilding, vessel construction, MRO services, and equipment upgrades.
South Korea has dubbed the initiative the “MASGA” project—”Make American Shipbuilding Great Again.” Industry sources revealed on August 3 that HD KSOE, Hanwha Ocean, and Samsung Heavy Industries have formed a working group to coordinate implementation. Observers note that aligning the three companies’ differing approaches to the U.S. market will be crucial.
Currently, Hanwha Group is the most active investor in the U.S., having acquired Philadelphia Shipyard and taken steps to increase its annual output from 1.5 to 10 ships. Recently, Hanwha Philadelphia Shipyard secured an order for 1+1 LNG carriers—the first such vessels built in the U.S. in nearly 50 years. HD Hyundai Group is accelerating its U.S. entry through partnerships and capacity-sharing with American shipyards, with industry analysts not ruling out potential acquisitions. Samsung Heavy Industries is exploring collaborations with local U.S. shipyards, including joint construction and business expansion.
Despite cautious optimism in South Korea’s shipbuilding sector, the MASGA project faces significant challenges. Beyond upgrading or building new U.S. shipyards and training workers, the initiative requires transplanting an entire shipbuilding supply chain to effectively revitalize the industry.
