2025 will mark a historic turning point for South Korea’s defense industry. The ‘K-Defense Big 4’—Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries (KAI)—achieved record-breaking performance and established a solid position in the global arms market.
The K-Defense Big 4’s cumulative operating profit for the first three quarters of 2025 reached 3.49 trillion won. This already exceeded the previous year’s annual performance by 31%. Industry analysts project annual operating profit will surpass 4 trillion won for the first time in Korean defense industry history.
According to the Stockholm International Peace Research Institute (SIPRI), the K-Defense Big 4 made the list of the world’s top 100 defense companies for the second consecutive year. Their sales surged 31% year-over-year. Their share of global top 100 company sales increased from 1.7% to 2.1%.
The most remarkable achievement came as order backlogs approached 100 trillion won. This massive pipeline guarantees years of stable revenue and profit generation. Large-scale contracts with Poland, Iraq, Saudi Arabia, and Australia drove this increase.
Hanwha Aerospace’s performance stood out dramatically among the Big 4. Third-quarter 2025 operating profit increased 79.5% year-over-year to 856.4 billion won. This accounted for 66.7% of the Big 4’s combined operating profit. Third-quarter consolidated revenue soared 147% year-over-year to 6.49 trillion won.
Large-scale contracts with Poland drove Hanwha Aerospace’s success. The K9 self-propelled howitzer achieved an astonishing milestone by delivering 200 units two years ahead of schedule. Poland had contracted to receive 212 K9 howitzers by 2026. The accelerated delivery proved Korean production capacity and reliability.
Securities firms now project Hanwha Aerospace’s 2026 operating profit at 4.64 trillion won. They raised target stock prices to 1.5 million won. The company’s order backlog stood at approximately 28 trillion won, representing 28.1% of the Big 4’s total.
Hanwha Aerospace secured 1 trillion won in capital for U.S. market entry. The company added defense to the Hanwha FutureProof business area. It now promotes U.S. exports of K-9 howitzers and Chunmoo multiple rocket launchers. The American market holds tremendous potential as a new growth engine.
Hyundai Rotem signed a second implementation contract for K2 tanks with Poland in August 2025 worth approximately 9 trillion won. This represented the largest single contract in Korean defense export history. Poland’s comprehensive contract from July 2022 included 1,000 K2 tanks and totaled approximately 65 trillion won in K-weapons imports.
Hyundai Glovis successfully transported 20 K2 tanks and 21 K9 howitzers to Poland’s Gdansk port in November using car carriers. Poland also began the first local production of K2 tanks. This demonstrated smooth establishment of local production systems.
Hyundai Rotem’s third-quarter order backlog stood at approximately 26 trillion won, accounting for 26.8% of the total. Additional K2 tank contracts with Iraq and Poland appear increasingly likely. The company now pursues production facility expansion. Securities firms forecast 2026 defense operating profit to increase 26.6% compared to 2025.
LIG Nex1 continued impressive growth through exports of advanced weapons systems. The Cheongung II air defense missile system led the charge. Second-quarter 2025 revenue reached 883.4 billion won with operating profit of 83.1 billion won, representing increases of 46.1% and 69% year-over-year respectively.
LIG Nex1’s export proportion remains the lowest among the Big 4. While Hyundai Rotem reaches 67.3% in exports and Hanwha Aerospace stands at 42.2%, LIG Nex1’s export share sits relatively lower. This signals greater future growth potential.
The company has strengthened its indirect export strategy to target the European market since 2025. Contracts for Cheongung II exports to Iraq and partnerships with European nations could provide additional growth engines. Third-quarter order backlogs stood at approximately 21 trillion won, accounting for 21.2% of the total.
Among the K-Defense Big 4, only KAI suffered poor performance in 2025. While Hanwha Aerospace, Hyundai Rotem, and LIG Nex1 all showed increases, KAI’s third-quarter operating profit decreased 21% year-over-year. The company faced postponed LAH (Light Armed Helicopter) deliveries and failures in order competitions.
KAI’s difficulties extended beyond business aspects. Internal conflicts intensified due to chronic “parachute appointment” problems. Leadership vacuums emerged and various allegations surfaced. The KAI labor union publicly expressed distrust in management. This negatively affected productivity and organizational stability.
Despite current challenges, KAI’s third-quarter order backlog maintained a healthy level of approximately 23 trillion won. Exports of FA-50 light combat aircraft to Poland continue. Next-generation fighter development projects remain underway. Long-term growth potential stays valid. However, the company must address organizational stabilization and ensure management transparency.
The Korean government set an ambitious goal for 2030. Korea aims to become the world’s 4th largest defense exporter behind only the United States, Russia, and China. The government established an intermediate goal of reaching $20 billion in defense exports.
Korea recorded $7 billion in 2021 and jumped to $17 billion in 2022. After slowing to $13.5 billion in 2023, exports recovered to the $15 billion line in 2025. The country secured momentum for another attempt at $20 billion in 2026.
Achieving these goals requires advanced weapons systems development. Innovative technologies including hypersonic missiles, next-generation fighters, and AI-based command and control systems are now underway. At ADEX 2025 in October, ‘AI Defense’ emerged as the protagonist. Hanwha, KAI, and Korean Air showcased cutting-edge weapons systems.
Korea achieved a remarkable feat by tying with France for second place in weapons exports to NATO member countries at 6.5%. This resulted from explosive demand for Korean weapons systems as European countries strengthened their defense capabilities following the Russia-Ukraine war.
International media in the United States, Japan, and Western Europe reported on Korean defense companies’ achievements with great attention. K-Defense has emerged as a major player in the global defense market, extending beyond regional Asian influence.
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