US Navy's 'SOS' Request... Why K-Shipbuilding Is Chosen Instead of Japan: 'Secret to Building Warships 9 Years Faster' (Shipbuilding Stocks) — Research Fellow Eom Gyeong-a

Summary

Shinyoung Securities Research Fellow Eom Gyeong-a argues that the US Navy is turning to Korean shipbuilders because Japan's shipbuilding industry is shrinking and Korea is the only non-China partner with sufficient scale and sustainability. She sees the US RFI to Korean yards as an early sign of future US naval work, highlights Korea's 65-80% warship parts localization as a positive for component suppliers, and explains how Korean block-building could shorten US warship construction from nine years. She cautions investors to take a long-term view because defense lead times are very long.

• US Navy is choosing Korean shipbuilders over Japan due to Japan's shrinking shipbuilding output and falling order share.
• The US RFI to Korean yards indicates US naval work can start to flow to Korea, though actual contracts may be one or two years away.
• Japanese shipbuilding lost competitiveness in LNG carriers and larger vessels after the Plaza Accord and has no export LNG carrier record since 2019.
• Korean combat ship localization is about 65% on average and near 80% in some series, and should keep rising, benefiting parts suppliers.
• Korea's block-built hull approach can be applied to warship hulls and could reduce US warship build times from nine years toward five.
• The speakers advise a long-term approach to shipbuilding stocks because defense program lead times are much longer than commercial orders.