2026’s Top Defense Strategy: How Hanwha Plans to Secure Canada’s $60 Billion Submarine Contract
Daniel Kim Views
Maintenance and industrial cooperation carry 65% of the evaluation weight
Plan to use Canadian steel and build a local shipbuilding workforce
Hanwha offers incentives to strengthen local value chains
Hanwha Aerospace operating profit rises 21% to 638.9 billion KRW (about 479.2 million USD)
Export-related backlog reaches an all-time high
Hanwha (000880) has mobilized its entire corporate group in a one‑team push to win Canada’s Coastal Patrol Submarine Program (CPSP). By offering local production of K9 self‑propelled howitzers and the Chunmoo multiple‑rocket launcher—two of South Korea’s most exported systems—Hanwha aims to meet Ottawa’s twin priorities: bolstering defense capability and revitalizing domestic industry.
The CPSP is intended to replace Canada’s Victoria‑class boats, which are slated for retirement in the 2030s, with up to 12 new 3,000‑ton submarines. The competition has narrowed to a head‑to‑head between Hanwha Ocean’s Jangbogo‑III Batch II and Germany’s ThyssenKrupp Marine Systems’ 212CD.
Industry sources and international outlets reported on the 30th that Canada is treating CPSP as more than a platform swap. Ottawa sees the program as an opportunity to shift its maritime posture—expanding operations across the North Atlantic and the Arctic and restructuring long‑term force posture. As a result, industrial cooperation and technology transfer rate as highly as platform performance in the selection calculus.
The Canadian government will evaluate bidders on four criteria: performance (20%), maintenance and logistics support (50%), price (15%), and economic/strategic cooperation (15%). With maintenance and industrial cooperation accounting for 65% of the score, analysts say contributions to Canada’s defense industrial base could outweigh pure platform metrics. The Korea Institute for Industrial Economics & Trade warned that, beyond technical performance, long‑term industrial partnerships and operational sustainment capability are likely to decide the contract.
That assessment underpins Hanwha’s focus on economic engagement and investment. To meet Ottawa’s localization requirements, Hanwha has proposed multi‑year infrastructure investments and industrial partnerships. Hanwha Ocean, for example, plans to incorporate Canadian steel (Algoma Steel) in submarine construction and partner with Ontario shipyards and Mohawk College to expand local shipbuilding capacity.
A proposed joint venture with the Automotive Parts Manufacturers’ Association (APMA) would add appeal. Hanwha’s package links submarine construction with local production of the K9 howitzer, Redback infantry fighting vehicle and Chunmoo rocket system—effectively tying a submarine contract to a broader modernization of Canada’s land forces and strengthening the domestic defense supply chain. That aligns with Ottawa’s push to shore up security sovereignty through resilient domestic suppliers.
Hanwha also proposes the Hanwha Arctic & Defense Innovation Center (HADIC) as a long‑term R&D hub. The plan envisions joint research with Canadian universities and institutes and an annual shipbuilding workforce training pipeline of roughly 580 personnel, backed by about 1 billion CAD (roughly 810 million USD) over 18 years. KPMG projects that, if implemented, Hanwha’s investments could support an average of 22,500 jobs per year and add about 94.1 billion CAD (roughly 76.8 billion USD) to GDP by 2044.
Canada plans to name a preferred bidder in the first half of the year. Hanwha’s local production memorandum of understanding (MOU) is intended as a decisive play ahead of final evaluations. Kim Mi‑jung, a senior researcher at the Korea Institute for Industrial Economics & Trade, urged that Hanwha’s one‑team CPSP approach evolve into a sustainable public‑private industrial cooperation model, systematically extending collaboration into energy, critical minerals, Arctic development and artificial intelligence.
Separately, Hanwha Aerospace reported first‑quarter consolidated revenue of 5.751 trillion KRW (about 4.31 billion USD) and operating profit of 638.9 billion KRW (about 479.2 million USD). Revenue rose 5% year‑over‑year and operating profit climbed 21%. The ground‑systems unit recorded revenue of 1.2211 trillion KRW (about 915.8 million USD) and operating profit of 208.7 billion KRW (about 156.5 million USD), pushing the order backlog to a record roughly 39.7 trillion KRW (about 29.8 billion USD).
The aerospace segment posted a 533% year‑on‑year jump in operating profit driven by higher defense volumes, while Hanwha Ocean’s shift to higher‑value commercial ship projects lifted its operating profit 71%.
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