High geostrategic stakes as South Korea pursues mega submarine deal with Canada

SEOUL – South Korea is going full throttle in a bid to win the Canadian Patrol Submarine Project (CPSP) valued at US$44 billion (S$55.8 billion), and a deal against the odds would propel it up the league of the world’s top arms exporters.

Canada’s

procurement of 12 submarines

– including lifetime maintenance and support – is viewed as one of the largest defence deals in recent history, in terms of the scale of the one-time purchase and the corresponding life-cycle maintenance cost.

The competition for the Canadian submarine deal is now down to the wire between South Korea’s consortium led by Hanwha Ocean and Hyundai Heavy Industries, and Germany’s ThyssenKrupp Marine Systems (TKMS).

The deal overshadows another major global defence deal on the horizon –

a US$8 billion strategic partnership between India and TKMS

to build six diesel-electric attack submarines to replace ageing vessels in the Indian Navy.

Said to be India’s largest-ever defence procurement, the India-Germany deal is set to be signed by the end of March.

For South Korea, the CPSP deal goes far beyond just economic and industrial benefits.

Winning the bid means a major export breakthrough that would open more doors to the Western defence market for the world’s 10th biggest arms exporter, which currently holds 2.2 per cent of the market share.

The mega deal will also bring about a significant boost in economic and security cooperation with Canada, strengthening both countries’ alliance with the US, and even offering South Korea a foothold in the Arctic geostrategic space, experts say.

The CPSP is regarded as “one of the largest single orders for conventional submarines in the West since the Cold War”, says Korea Research Institute for National Strategy defence analyst Doo Jin-ho.

Winning the contract would pave the way for South Korea-made submarines to be more widely adopted across Europe and the Indo-Pacific, and elevate the country’s exports to the same competitive tier as Germany and France for future tenders for mid-sized conventional submarines, he added.

South Korea currently counts Poland, Finland and Estonia among its defence exports clientele. Its main defence exports are armoured vehicles, and artillery and rocket systems, followed by military aircraft.

While South Korea and Canada are not formal allies, Dr Doo expects that the submarine contract would also potentially see the two countries strengthening ties in maritime security in time to come, given the eventual interoperability of both naval systems.

“The US, which is allied with both Canada and South Korea, already treats Canada’s defence-industrial base as effectively integrated with its own,” said Dr Doo.

“So if Canada were to choose South Korea for the submarine bid, this would result in South Korea’s defence manufacturing standards gaining broader acceptance across the Western bloc and thus boost South Korea’s credibility as an arms exporter.”

South Korea is making an aggressive push to build the world’s fourth-largest defence industry, with President Lee Jae Myung pledging massive investment in defence and aerospace research and development through 2030.

The world’s top three defence exporters are currently the US, France and Russia.

Riding the arms shortages triggered by the outbreak of the Ukraine war in 2022, South Korea’s weapons exports surged to a record US$17.3 billion that year, before easing slightly to about US$15 billion in 2025.

Seoul is now targeting to export US$20 billion worth of weapons annually by 2030, thus tripling its current market share to 6 per cent, which will propel it to the ranks of the top five global arms exporters.

Germany’s TKMS is widely recognised as being among the world’s leading suppliers of conventional submarines, and inked a contract with Singapore’s Ministry of Defence in May 2025 for the order of two additional Invincible-class conventional attack submarines that would supplement the existing fleet of four.

The CPSP contract is expected to be awarded in 2026, as delivery of the first submarine is expected to be no later than 2035.

Canada’s Secretary of State Stephen Fuhr, who is in charge of defence procurement, is currently in South Korea for a one-week visit. He will meet South Korea’s Defence Minister Ahn Gyu-back and senior navy officials, as well as visit the country’s shipyards to review submarine construction capabilities and industrial cooperation options.

Mr Fuhr also made a similar site visit to Germany in December 2025.

Seoul and Ottawa inked a South Korea-Canada Security and Defence Cooperation Partnership on the sidelines of the APEC meeting in October 2025, a framework partnership aimed at boosting joint defence initiatives and strengthening industrial collaboration.

The partnership is the first of its kind for Canada in the Indo-Pacific. 

Ms Vina Nadjibulla, who is with Canadian think-tank Asia Pacific Foundation of Canada, told The Straits Times that the partnership underscores “how closely Ottawa is linking this procurement to broader defence-industrial cooperation”.

At a time when there is domestic pressure to protect domestic manufacturing, “Canada is explicitly signalling that CPSP is not only about meeting military requirements”, said Ms Nadjibulla, the think-tank’s vice-president of research and strategy.

“It is also about industrial strategy – creating high-paying jobs, building sovereign sustainment capacity, and using a generational programme to strengthen Canada’s marine defence industrial base over the fleet’s operational life,” she added.

Ms Nadjibulla sees the possible submarine partnership as complementary to both Canada and South Korea’s separate alliances with the US, “especially given Washington’s emphasis on allies carrying more of the regional security burden and deepening defence-industrial collaboration”.

As a deal sweetener, South Korean companies signed six memorandums of understanding (MOUs) with Canadian companies in January, to expand cooperation in the areas of steel supply, AI technology in shipbuilding and submarine sectors, space technology and rare earth development.

Dr James Kim, director of the Korea Program at the Stimson Center in Washington, says that the reinvestment of the contract money into Canada would translate into jobs and other economic opportunities, which “can only help make the case stronger to justify that contract for Canadian voters”. 

Both Ms Nadjibulla and Dr Kim shared the view that the submarine deal would also bolster South Korea’s alliance with the US, given that Canada is also a US ally.

More critically, noted Dr Kim of the Stimson Center, is that Canada is an Arctic power, like the US.

As a maritime nation that depends on sea routes for more than 99 per cent of its trade, South Korea has a strong interest in Arctic shipping lanes and has been a permanent observer at the Arctic Council since 2013.

“With renewed attention on the Arctic, having another close partner with a major presence there allows South Korea to become a stakeholder in that geostrategic space,” said Dr Kim.