Hanwha has secured its first U.S. Navy shipbuilding contract two years after acquiring Philly Shipyard in the United States, accelerating its push into the local defense market.

Hanwha Defense USA, the U.S. subsidiary of Hanwha Aerospace, signed a contract with Tote Services, a U.S. Navy Vessel Construction Manager , on Oct. 29 (local time) for the construction of one Landing Ship Medium . The contract is valued at approximately $269 million, equivalent to about 357.5 billion won. The agreement also includes options to build up to three additional vessels, opening the door to further business opportunities.

Construction will be carried out by Hanwha Philly Shipyard, with work scheduled to begin in the fourth quarter of 2027. The LSM is an expeditionary vessel the U.S. Navy is introducing to rapidly deploy small Marine units across contested littoral areas, including the Indo-Pacific. Measuring 100 meters in length and 16 meters in width, with an operational range of approximately 7,400 kilometers, the vessel is designed to transport Marine Corps personnel, equipment and supplies. The U.S. Navy plans to base the LSM on the LST-100 design developed by Dutch shipbuilder Damen and accelerate deployment by having multiple shipyards build the vessels simultaneously.

The contract marks a significant step for Hanwha Philly Shipyard as it expands beyond its traditional focus on commercial vessels into the higher-value U.S. Navy shipbuilding market. Tote Services said it selected Hanwha Philly Shipyard as the final builder through a competitive process that evaluated safety, quality and delivery performance. The U.S. Navy and Marine Corps plan to acquire a total of 35 LSMs, with the first vessel under the program targeted for delivery in 2030. Tote Services’ base contract covers up to eight vessels, and other shipbuilders, including Bollinger Shipyards and Fincantieri Marinette Marine, are reportedly in discussions over subsequent construction work.

Hanwha has restructured Philly Shipyard’s ownership structure and continued to make large-scale investments in personnel and technology. Entities including a subsidiary of a subsidiary of Hanwha Aerospace hold a 60% stake in the shipyard, while Hanwha Ocean owns the remaining 40%. Before securing the LSM contract, Philly Shipyard participated in a U.S. Navy next-generation logistics support ship concept design project with HDUSA in March. In October, it also signed a contract to build a missile test and instrumentation vessel for the U.S. Missile Defense Agency (MDA). In September, the shipyard reached an agreement with local authorities to expand its site by approximately 40%, further strengthening its operational base. Michael Coulter, president of Hanwha Defense USA, said the company had continued investing to establish a shipbuilding base for federal government clients, adding that it would work with Tote Services to deliver the vessels on schedule and within budget.

The contract has also drawn a positive response from U.S. political circles. Republican Sen. Dave McCormick welcomed Hanwha’s continued investment in a statement, saying it would benefit American workers and industry. The deal is expected to help expand MASGA, the Korea-U.S. shipbuilding cooperation initiative, into the defense sector.

However, restoring Philly Shipyard’s financial health remains a major challenge. The shipyard recorded a net loss of 126.9 billion won, or approximately $94.49 million, last year and remained in a state of negative equity. Analysts have warned that additional financial support may be needed as capital expenditures increase. Meanwhile, HD Hyundai is also moving to establish a joint venture with U.S. engineering and construction firm Kiewit to build a new shipyard, targeting operations in 2029 and intensifying competition among South Korean shipbuilders to gain a foothold in the U.S. market. HD Hyundai is considering building U.S. Navy logistics support ships and commercial vessels at the new facility, as well as supplying ship blocks and modules to existing U.S. shipyards. It plans to introduce robotic welding and automated equipment to address a shortage of skilled local workers.

There is also growing interest in whether vessels built at U.S. shipyards could generate additional work for South Korean shipbuilders. In August 2026, President Donald Trump signed a National Security Presidential Memorandum allowing certain vessels to be built overseas, subject to conditions including the establishment or acquisition of U.S. shipyards and the development of a local workforce. However, overseas construction remains subject to individual national security reviews and congressional notification procedures. Whether South Korean shipyards can participate will ultimately depend on U.S. procurement requirements and the scope of the permission granted.

Source:Business Korea