Iran war sparks rush for South Korea’s cheap Patriot-style interceptor

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SEOUL – The conflict in Iran is pushing Middle Eastern countries towards South Korea’s lower-cost air defence systems, opening a new opportunity for the country to expand its arms export footprint beyond Europe. 

In the spotlight is South Korea’s home-grown surface-to-air missile, Cheongung, also known as M-SAM, which has emerged as a viable alternative to the US-made Patriot system as Gulf nations bolster defences against Iran’s barrage of drone and missile attacks.

The key selling point for manufacturers Hanwha Aerospace and LIG Nex1: similar performance to the US$4 million (S$5.1 million) Patriot PAC-3 missile for about a quarter of the price.

“Middle Eastern countries are lining up to buy South Korean missiles right now,” South Korea’s Finance Minister Koo Yun-cheol told Bloomberg News. “They are requesting weapons from South Korea because of their accuracy – the fact that they destroy ballistic missiles with a success rate of over 90 per cent.” 

Other air and missile defences currently in the Middle East, including US-made Patriot and THAAD systems, have reported similar success rates. But as inventories of those expensive, hard-to-replace interceptors are used up against Iranian attacks, South Korean manufacturers are positioning themselves as a faster and cheaper option.

“Iran’s mass deployment of ballistic missiles and low-cost drones has underscored the need for a robust, layered air defence system. Korean systems could complement US platforms like Patriot PAC-3 and THAAD, where interceptor availability remains tight amid elevated demand, helping to diversify production and supply chains,” said Bloomberg Intelligence analysts Eric Zhu and George Ferguson. 

South Korea has agreed to deliver dozens of Cheongung missiles to the United Arab Emirates ahead of schedule at the Gulf nation’s request, Chosun Ilbo newspaper reported, citing an unidentified government official from the Asian country.

The Emirates was the first country to buy the South Korean interceptor in a 2022 deal, which was followed by contracts in Saudi Arabia and Iraq. Mr Koo did not say which countries were in talks with South Korea for early delivery. South Korea’s Defence Ministry declined to comment. 

Shares of Hanwha Aerospace have risen 7 per cent and those of LIG Nex1 have surged 26 per cent since the start of the Iran war, outpacing broader Kospi index and defence peers.

The interceptor, designed to target incoming projectiles at an altitude of 15km to 20km, costs about 1.5 billion won (S$1.28 million), according to media reports.

It is not immediately clear how much capacity the South Korean manufacturers have to meet the surging demand amid the missile’s first combat use. LIG Nex1 declined to comment on the system’s unit cost or factory capacity. 

In the US, Lockheed Martin, which makes the PAC-3 Patriot missile, plans to increase output to more than 2,000 a year, but only by 2030. For 2026, the company aims to make about 650.

“Demand in the Middle East has been driven by efforts to reduce reliance on US suppliers and replace ageing weapon systems,” financial analyst Morgan Stanley said in a note. “Countries may now accelerate inventory restocking due to depletion of existing inventory.”

Though smaller than industry giants like Lockheed and BAE Systems, South Korean manufacturers have gained a reputation for speed and reliability, honed by decades of preparing for a potential conflict with their heavily militarised neighbour, North Korea.

South Korea is the world’s ninth-largest weapons exporter, according to a March report from the Stockholm International Peace Research Institute, and wants to be the fourth-largest by 2027. 

With Tehran still hitting valuable military installations and energy infrastructure across the Middle East daily, the interest in M-SAM could spark orders for other South Korean air defence systems. 

“Although the number of Iran’s ballistic missile launches has sharply decreased, considering stockpiling demand to boost defence, increased deliveries of guided missiles are expected to expand the extent of the sector’s performance improvement this year,” Kiwoom Securities said in a note. Bloomberg