To counter China’s dominance in the global shipbuilding industry, South Korea’s HD Hyundai Group is accelerating its overseas expansion by reviving the former world’s fifth-largest shipyard, the Subic Shipyard in the Philippines. Together with its shipyard in Vietnam, the group aims to establish a “dual-base” structure in Southeast Asia to enhance its global competitiveness comprehensively.
Capable of building 10 ships annually! HD Hyundai revives former world’s fifth-largest shipyard
According to reports, HD Hyundai Group plans to invest a cumulative $550 million (approximately RMB 3.95 billion) over the next decade to transform the Subic Shipyard in the Philippines into a new outpost for “K-shipbuilding.” To this end, HD Hyundai will officially commence operations at the shipyard in January 2026 after signing a 10-year lease agreement covering 200 hectares of land.
Located in Subic Bay, 110 kilometers northwest of Manila, the capital of the Philippines, the Subic Shipyard was built by Hanjin Heavy Industries (now HJ Shipbuilding) in 2006 and specialized in ship construction. Once the world’s fifth-largest shipyard, it boasts the largest dock globally, measuring 550 meters in length and 135 meters in width, capable of simultaneously constructing two 20,000-TEU container ships.
The Subic Shipyard has strong shipbuilding capabilities, having built 123 large container ships, bulk carriers, and crude oil tankers before its bankruptcy and closure in February 2019. However, due to the downturn in the global shipbuilding industry, the shipyard filed for court receivership in January 2019 and completely shut down in July of the same year, ending its final maintenance operations.
In April 2022, Cerberus Capital Management (CCM), the largest private equity firm in the U.S., completed the acquisition of the Subic Shipyard for $300 million through its international division, Cerberus Global Investments, securing a 50-year lease for the 300-hectare site. This transaction also marked the largest public-private partnership in the 75-year history of U.S.-Philippine relations.
In May of this year, HD Korea Shipbuilding & Offshore Engineering (KSOE) and CCM jointly held a press conference at the Philippine presidential residence to announce future operational plans for the Subic Shipyard. They also signed a contract for HD KSOE to lease part of the shipyard’s land and equipment to expand the production of offshore wind substructures and ship MRO (maintenance, repair, and operations) services. This move follows HD KSOE’s establishment of a Lifecycle Service Support Center (LSSC) at the Subic Shipyard in November 2022.
HD KSOE plans to collaborate closely with the Philippine government to develop the Subic Shipyard into a maritime complex capable of manufacturing offshore wind substructures, ship blocks, and providing ship repair services. The Philippines is located at the heart of the Asia-Pacific offshore wind market, which is expected to grow rapidly between 2030 and 2050, making it an ideal location for an offshore wind manufacturing base.
Under HD Hyundai Group’s latest plan, the Subic Shipyard, as a core infrastructure supporting both offshore wind platform construction and shipbuilding, can build up to 10 new ships annually and create approximately 7,000 jobs within 3 to 5 years. Currently, the shipyard has selected 3,500 local workers for essential technical training, such as welding. Efforts are also underway to transplant HD Hyundai Group’s stringent production standards to meet the target of officially launching the shipyard in January 2026.
The Subic Shipyard will primarily focus on building product tankers, all of which will be classified by the American Bureau of Shipping (ABS), with an estimated construction cycle of 16 to 18 months per ship. However, the shipyard’s full operational workforce of 7,000 is expected to fall short of Hanjin Heavy Industries’ peak employment of over 13,000.
A representative from the Subic Shipyard stated, “After Hanjin Heavy Industries withdrew, banks acquired most of the shipyard’s core heavy equipment, including cranes, which have been well-preserved.” This suggests the shipyard can quickly resume production.
As of 2022, the Philippines ranked seventh globally in new ship construction, with approximately 400,000 gross tons (GT). However, the country’s shipbuilding output and competitiveness have declined in recent years, lagging significantly behind South Korea and Japan.
The Subic Shipyard, once a major player in the global shipbuilding industry, is poised for revival with HD Hyundai Group’s investment. The Philippine government has expressed high hopes for this investment, anticipating that the shipyard—combining local skilled labor with South Korea’s advanced technology—will fully restart soon, boosting the competitiveness of the Philippine shipbuilding industry.
Investing $100 million to upgrade HD Hyundai Vietnam, aiming to cultivate a “counter to Chinese shipbuilding”
Meanwhile, HD Hyundai Group is also expanding its presence in Vietnam. On August 12, HD Hyundai discussed shipbuilding cooperation with the Vietnamese government, proposing to extend the operational period of its flagship joint venture, Hyundai Vinashin Shipyard (HVS), from 50 to 70 years.
Kim Sung-joon, a representative of HD KSOE, emphasized, “The development of Vietnam’s shipbuilding industry, as a core partner, is crucial for strengthening the sustained growth and value chain of South Korea’s shipbuilding sector. Vietnam is one of the pivotal hubs for HD Hyundai Group’s shipbuilding business and an optimal partner. The group will further enhance cooperation with Vietnam, a key base for overseas shipbuilding operations, through continued investment in HVS, a successful case of South Korean enterprises expanding abroad.”
Earlier, in early June, HD Hyundai Group announced an additional $100 million (approximately RMB 720 million) investment to upgrade HVS.
Established in 1996 as a joint venture between HD Hyundai Mipo and Vietnam Shipbuilding Industry Group (Vinashin), HVS became a subsidiary of HD Hyundai Mipo in 2011. Starting with ship repair and conversion, HVS transitioned to full-scale shipbuilding in 2008 with its first order for a 56,000-DWT bulk carrier. Over time, it shifted from primarily building bulk carriers to focusing on MR and LR2 tankers. Since entering the newbuild market in 2008, HVS has secured over 200 orders, becoming Southeast Asia’s largest shipyard and a successful example of South Korean shipbuilders expanding overseas.
Looking ahead, HVS plans to continue expanding facility investments, improving production efficiency, and increasing capacity. By 2025, it aims to deliver 20 ships annually, rising to 23 by 2030, supporting HD Hyundai Mipo’s product portfolio adjustment and profitability improvement. In early June, HD Hyundai Group announced an additional $100 million investment to upgrade HVS.
Currently, HVS spans over 992,000 square meters, featuring one 400,000-DWT dock, one 100,000-DWT dock, and 1.4 kilometers of shoreline, employing around 5,000 local Vietnamese workers.
Additionally, at the Korea-Vietnam Business Forum on August 12, witnessed by South Korean Prime Minister Kim Min-seok and Vietnamese officials, HD KSOE signed a comprehensive cooperation MOU with Vietnam Maritime Corporation (VIMC), the country’s largest state-owned shipping company. The agreement covers collaboration in Vietnam’s shipbuilding development, VIMC’s fleet expansion and modernization, technology transfer, and workforce training. Kim Sung-joon also shared the achievements and future vision of Korea-Vietnam shipbuilding cooperation at the forum, receiving positive feedback.
Years ago, South Korean industry experts regarded HVS as a “strategic weapon” to counter overseas competitors. HVS primarily builds medium-sized crude oil tankers and bulk carriers with relatively low added value—precisely the mainstay of Chinese shipyards, South Korea’s biggest competitors.
With the additional $100 million investment, HD Hyundai Group aims to transform HVS into a construction hub focused on general commercial vessels with overwhelming market share, positioning it as a “counter to Chinese shipbuilding.” Once upgraded, the shipyard’s commercial vessel construction capacity is expected to increase significantly.
South Korean industry insiders noted, “Relocating shipbuilding operations to Southeast Asia, where labor costs are lower, helps South Korean shipbuilders enhance competitiveness. For HD Hyundai Group, Vietnamese shipyards with abundant human resources are more suitable for building general commercial vessels than domestic shipyards facing labor shortages.”
An HD Hyundai Group representative stated, “Although HVS does not build South Korea’s main ship types, it can reduce costs and serve as a counter to Chinese shipbuilders, alleviating pressure from Chinese shipyards’ low-price order-grabbing strategies for LNG carriers and large container ships—South Korea’s core ship types.”
Regarding South Korean shipbuilders’ overseas expansion, an engineer from a major Chinese shipyard expressed skepticism, noting that South Korean-invested overseas shipyards have limited capacity and will mainly handle small and medium-sized orders. He stated, “China has sufficient capacity and stable labor, eliminating the need for overseas expansion,” expressing confidence in the competitive advantages of China’s shipbuilding industry.
