Inside the Canada Submarine Deal: How Korea and Germany Fought for a $60 Billion Prize

Picture a 3,000-tonne attack submarine slipping quietly into a harbour in Victoria, British Columbia. It had just crossed the Pacific, a voyage of 14,000 kilometres. The year was 2026, and the vessel was not there to fight. It was there to sell. By then the **Canada submarine deal** had reached a strange peak. A navy was literally sailing a warship halfway around the world as a sales pitch. That single image tells you almost everything about how high-stakes this contest had become.

For most outside observers, Canada buying submarines sounds like a routine defence story. It is anything but. This is one of the largest military procurements in Canadian history. Moreover, it is a contract that two of the world’s most capable shipbuilders have chased for nearly two years. On one side stands South Korea’s Hanwha Ocean, offering its battle-tested KSS-III. On the other sits Germany’s TKMS, a European heavyweight pitching its next-generation Type 212CD. As a result, the choice facing Ottawa is far bigger than steel and torpedoes. Instead, it is a decision about which part of the world Canada wants to tie its future to.

In this piece, we will walk through the full timeline of the Canadian Patrol Submarine Project. In addition, we will compare the two competing boats in plain language. We will then break down the eye-watering economic promises on the table. Finally, we explain why this contest matters far beyond the cold waters of the Arctic.

## Why Canada Needs New Submarines in the First Place

Before diving into the rival bids, it helps to understand the hole Canada is trying to fill. The Royal Canadian Navy currently operates four Victoria-class submarines. These are second-hand boats, originally built in Britain in the 1980s and acquired in the late 1990s. By 2026, however, only one of the four was actually operational. As Vice-Admiral Angus Topshee put it, the country was “down to a single operational submarine.” For a nation with the longest coastline on Earth, that is a remarkable admission.

Meanwhile, the strategic picture has shifted dramatically. Canada faces renewed Russian and Chinese activity near its Arctic approaches. At the same time, Washington is pressing Ottawa to do more on continental defence, and NATO is pushing hard to rearm. In addition, Ottawa wants to diversify its defence partnerships away from an over-reliance on the United States. This is especially true as trade tensions simmer. Submarines, in this context, are not a luxury. Rather, they are what Topshee calls the “ultimate guarantor” of a country’s control over its own waters.

So in July 2024, the government formally launched the Canadian Patrol Submarine Project, or CPSP. The plan was ambitious. Ottawa would acquire up to 12 conventionally powered, under-ice capable submarines. Crucially, the first boat was required no later than 2035, before the Victoria-class fleet begins retiring. For a useful parallel on how mid-sized economies approach big industrial bets, see our coverage of [Korea’s overseas construction boom](https://www.seoulz.com).

## The Two Contenders: KSS-III vs Type 212CD

At the heart of the Canada submarine deal are two very different boats. Each is built on a very different philosophy. Understanding them is essential to understanding the whole contest.

### South Korea’s KSS-III Batch-II

Hanwha Ocean is offering a version of the KSS-III, known at home as the Dosan Ahn Chang-ho class. This is a large conventional submarine. It runs roughly 89 metres long and displaces around 3,000 tonnes. Notably, it combines diesel engines with lithium-ion battery technology and air-independent propulsion. As a result, it can stay submerged for more than three weeks at a time. It also carries six torpedo tubes and a vertical launch system for several missile types. That gives it serious offensive punch and a range exceeding 7,000 nautical miles.

The KSS-III’s biggest selling point, however, is not any single specification. Instead, it is the simple fact that the boat already exists. The submarine is in active service with the South Korean Navy and rolling off production lines right now. Indeed, the first Batch-II vessel launched at Hanwha’s Geoje facility in October 2025. In a procurement world full of paper promises, that operational track record is rare.

### Germany’s Type 212CD

TKMS, in partnership with Norway, is pitching the Type 212CD. This is a smaller, stealthier boat. It displaces roughly 2,500 tonnes and is optimised above all for staying undetected. Its hydrogen fuel-cell propulsion lets it run silently without surfacing to recharge. In addition, its hull carries radar-absorbent coating, and its compact form suits tight Northern European waters. For NATO operations in the North Atlantic and the Arctic, it is a formidable design.

Yet the 212CD comes with a crucial caveat. It has completed its critical design review and entered production. Even so, no boat has yet entered service anywhere. In fact, the first delivery to Germany is not expected until around 2031 or 2032. In other words, if Canada chose TKMS, it would effectively become the first-of-class operator. Historically, that position has carried real risk.

## A Cautionary Tale from Greece

For instance, consider what happened to Greece. Athens became the launch customer for the earlier Type 214 submarine, signing in 2000. Much like Canada’s situation, Greece was scheduled to receive its boats before Germany’s own domestic program had matured. Then technical problems surfaced during sea trials. A contractual dispute erupted, and delivery slipped five years beyond the original target. Defence analysts have repeatedly raised this precedent when weighing the German bid. After all, first-of-class naval platforms so often encounter exactly these kinds of teething troubles.

This is precisely why delivery timing has dominated the debate. The one-year gap between Korea’s 2035 pledge and Germany’s 2036 pledge sounds trivial on paper. Given Canada’s looming submarine gap, however, it carries genuine weight.

## The Timeline: How the Race Unfolded

The Canada submarine contract did not come down to a single dramatic moment. Instead, it built through a long sequence of milestones. Each one ratcheted up the pressure. Here is how the two-year sprint actually played out.

### 2024: The Starting Gun

In July 2024, Canada announced its intent to buy up to 12 under-ice submarines. Notably, Ottawa chose a foreign-built, military-off-the-shelf approach rather than designing something from scratch. By September, Public Services and Procurement Canada had issued a Request for Information. In response, bidders from France, Germany, Norway, South Korea, Spain, and Sweden expressed interest. The field was wide open.

### August 2025: Down to Two

After extensive industry engagement, Ottawa narrowed the contest to two qualified suppliers. The finalists were Germany’s TKMS and South Korea’s Hanwha Ocean. Critically, the requirement that boats displace at least 3,000 tonnes and break through ice ruled out many European designs. Japan, the only other builder of 3,000-tonne conventional boats, declined to compete. As a result, Korea became the sole supplier offering an in-service vessel of that size.

### Early 2026: The Diplomatic Surge

As the deadline approached, both sides escalated dramatically. In January 2026, Hanwha hired a former Lockheed Martin executive and ex-Canadian Navy commander, Glenn Copeland. His job was to lead the Canadian push. Meanwhile, Canada’s defence procurement secretary, Stephen Fuhr, travelled to South Korea to tour Hanwha’s shipyards. For his part, Prime Minister Mark Carney visited shipyards in both Korea and Germany ahead of the bid deadline. The visits signalled how personally the contest was being managed.

### March 2026: Bids on the Table

On March 2, 2026, both companies submitted their formal proposals. The Korean “One Team” of Hanwha Ocean and HD Hyundai Heavy Industries faced off against TKMS. The program was valued at more than CAD $60 billion over its life cycle. Indeed, some analysts pegged the full figure as high as $80 billion to $120 billion. Ottawa, however, was not satisfied. Consequently, the government extended the process, asking both bidders to “sweeten” the economic and industrial benefits attached to their offers.

### May 2026: The Submarine Sails to Victoria

This is where Korea pulled off its most theatrical move. On May 23, the Dosan Ahn Chang-ho completed its 14,000-kilometre voyage and docked at CFB Esquimalt in Victoria. It was a vivid demonstration that the KSS-III could make the journey and integrate with allied navies. Days later, Germany countered with diplomatic firepower of its own. Berlin sent Defence Minister Boris Pistorius to the CANSEC defence expo in Ottawa. There, he personally vouched for the German timeline.

### June 2026: The Final Sprint

In the closing weeks, the bids escalated into a war of national packages. Korea elevated the contest to head-of-state diplomacy. President Lee Jae Myung raised it directly with Carney at a bilateral summit. Ottawa, for its part, committed to naming a preferred supplier before the end of June. Conveniently, that deadline fell just ahead of a Canada-United States-Mexico Agreement review beginning July 1.

## Following the Money: The Economic Bidding War

If capability got both boats to the final round, economics is what the contest ultimately turned on. From the start, Canada made clear that industrial benefits would decide the winner, not just military specs. Consequently, both bidders unleashed staggering economic packages.

Hanwha’s pitch leaned heavily on jobs and broad industrial cooperation. The company projected around CAD $94 billion in GDP contribution. On top of that, it promised support for more than 22,500 Canadian jobs annually through 2044. To get there, Korea assembled a sprawling web of commitments. These included a USD $250 million steel supply deal with Algoma Steel and a defence-vehicle joint venture. There was also a roughly CAD $3.1 billion hydrogen-truck package through Hyundai Motor Group. In addition, Korea forged partnerships with more than 100 Canadian companies, universities, and organisations.

Germany, in contrast, countered with even larger headline numbers. TKMS pointed to as much as CAD $160 billion in total economic activity. Furthermore, it cited CAD $86 billion in GDP impact and a remarkable 650,000 job-years over the program’s life. Its package included two coastal maintenance facilities, torpedo manufacturing, and investment in Manitoba’s Port of Churchill. Notably, though, the Germans chose to negotiate more privately, rather than mounting Korea’s loud public campaign.

One important caveat hangs over all of these figures. None of them have been independently verified. Both sets of numbers come from models commissioned by the bidders themselves. As one industry observer noted, the real question is not whose headline number is bigger. Rather, it is whose promised partnerships are actually feasible. For more on how Korean conglomerates structure global bets, see our look at [Korea’s hidden AI giants](https://www.seoulz.com).

## More Than Submarines: The Geopolitical Stakes

Ultimately, the Canada submarine deal is a proxy for a much larger question. As one defence scholar framed it, Canada is not merely buying boats. Instead, it is choosing a strategic partner for the next 40 to 50 years.

Picking TKMS would pull Canada deeper into the European and NATO orbit. After all, Germany and Norway already operate the same Type 212CD. That means shared training, maintenance, and upgrades across a tight transatlantic alliance. Canada has been moving in this direction anyway. Recently, for example, it won the bid to host NATO’s Defence Security and Resilience Bank. A German submarine would reinforce that Atlantic, Arctic-focused alignment. This makes particular sense given that Canada and Norway are both Arctic states.

Choosing Hanwha, on the other hand, would mark a bolder pivot toward the Indo-Pacific. It would represent a symbolic break from Canada’s traditional Western suppliers. Moreover, it would be a vote of confidence in Korea as a rising defence power. For Seoul, winning would be transformative. South Korea has already exported K2 tanks and K9 howitzers to Poland. Furthermore, it has set itself the goal of becoming the world’s fourth-largest arms exporter. A Canadian win would lift Korea into the same tier as Germany and France for future submarine tenders worldwide.

There is also the American dimension, which neither bidder can ignore. Canada’s submarines must share secure sensor and communications data with U.S. forces under existing NORAD obligations. Therefore, whichever boat Ottawa picks has to slot cleanly into a North American defence network. That network has been built over eight decades. This requirement quietly complicates any platform not already woven into Western alliance frameworks.

## The Hardest Part May Come After the Decision

Here is the twist that many headlines miss. Choosing a winner might actually be the easy part. The harder challenge is whether Canada can build the infrastructure and train the workforce to sustain a brand-new submarine fleet for decades. The country already faces labour shortages in its shipyards. On top of that, standing up maintenance facilities on both coasts is a monumental undertaking in its own right.

For that reason, both bidders have leaned heavily on Canadian sustainment partners. Hanwha teamed up with Babcock Canada and Seaspan. Meanwhile, TKMS signed agreements with Seaspan, CAE, and several Indigenous development organisations. Canada’s own rules, laid out in its Industrial and Technological Benefits Policy, are strict. The winner must perform business activity in Canada equal to the contract’s value. In addition, sustainment work must be based near Canadian homeports. In short, this is as much an industrial transformation as a weapons purchase.

## What Happens Next

By the end of June 2026, Ottawa was expected to name its preferred supplier. Yet even that announcement will not be the finish line. A preferred supplier is not a binding contract. In fact, the formal award is not anticipated until around 2028, with the first submarine due by 2035. In effect, the loud, theatrical phase of the Canada submarine deal is ending. However, the decades-long work of building, delivering, and maintaining the fleet is only just beginning.

Whatever Canada decides, the contest has already revealed something important. South Korea was once dismissed as a latecomer to global defence. Yet it has proven it can go toe-to-toe with Germany, the historic master of conventional submarines. That fight unfolded in one of the most demanding procurements on the planet. Win or lose, that alone marks a genuine shift in the global arms trade. For more on how Korea is reshaping global industries, explore our coverage of [the Korean defence and tech sectors](https://www.seoulz.com).