HD Hyundai to Merge Ulsan Shipyards to Expand Defense and Commercial Work

HD Hyundai, which is already South Korea’s largest shipbuilder, announced plans to reorganize by merging its shipbuilding operations in Ulsan to realize opportunities both in naval shipbuilding and repair, and the South Korean MASGA (Make America Shipbuilding Great Again) initiative. 

The company said that it looks to take a leadership role in the South Korean program following the meeting earlier this week between the country’s president, Lee Jae Myung, and Donald Trump, in which South Korea committed to investing at least $150 billion into U.S. shipbuilding and other key industries. As part of the agreement, the company announced a new partnership with U.S. private equity giant Cerberus Capital Management and the Korea Development Bank to pursue a maritime investment strategy.

Under the terms of the proposed merger, HD Hyundai Heavy Industries will acquire the mid-sized operation HD Hyundai Mipo with HHI as the surviving company. HD Hyundai’s shipbuilding holding company, HD Korea Shipbuilding & Offshore Engineering, owns 74 percent of HHI and 42 percent of Mipo, and after the merger will have a 69 percent position in the combined company.

HHI says the merger is an effective response to future changes in the shipbuilding industry and points to the opportunities to reduce unnecessary costs and structure by integrating its systems. Media reports are highlighting that China recently consolidated its two large shipbuilding companies and that Japan’s two largest shipbuilders have also reorganized.

In the first seven months of 2025, HD KSOE reported that it booked orders for a total of 82 ships worth $11.22 billion. It has achieved 62 percent of the annual order target of $18.05 billion for 2025. HHI specializes in larger vessels, including LNG carriers and containerships, while Mipo is considered a medium-sized operation building containerships, chemical tankers, and vehicle carriers.

One of the key markets the combined company will be targeting is defense shipbuilding, which HD Hyundai highlighted to investors as a rapidly growing segment as countries expand their investments. HHI reports it has built 106 naval vessels, more than any other domestic shipbuilder. It has experience with destroyers, frigates, submarines, and patrol boats, and looks to expand both internationally and specifically with the United States as part of the MASGA program.

“We will increase our competitiveness in the K shipbuilding and defense sectors by reorganizing the shipbuilding business,” the company told investors. It said the target is to grow defense revenues to $7.2 billion annually by 2035.

It also looks to expand its entry into the repair business. The company recently won its first MRO contract from the U.S. for the overhaul of a U.S. Military Sealift vessel, USNS Alan Shepard, a 41,000-ton displacement Lewis and Clark class dry cargo and ammunition vessel. As part of MASGA, they believe this business segment will grow rapidly.

They also look to expand their expertise in specialty ships, pointing to the opportunity for icebreakers due to the rise in Arctic development. South Korea previously announced that it plans to launch an Arctic shipping initiative and recently ordered a new Arctic research vessel.

The combined company will also accelerate its focus on green shipping. They will consolidate the R&D and design capabilities of the two shipbuilders. Mipo will also provide additional capacity to the combined company, as reports are that it is currently operating at a rate of 45 ships but has a capacity to reach 70 ships annually.

The combined company plans to launch by December a new overseas investment holding company to be based in Singapore. It will manage the operations of the shipyards in Vietnam and the newly launching yard in the Philippines, as well a the recently acquired tank and crane manufacturer in Vietnam that it has agreed to acquire from Doosan. HD Hyundai has also been exploring additional overseas operations, including possibly a shipyard in Morocco and Egypt, and has formed new relationships in the United States.