HD Hyundai Heavy Industries (HHI) and HII, two of the world’s leading shipbuilders, signed a memorandum of agreement (MOA) at the Asia-Pacific Economic Cooperation (APEC) 2025 forum to advance the objectives of the shipbuilding dialogue between the United States and Republic of Korea. This partnership will work together on distributed shipbuilding. It will also look for teaming opportunities for naval auxiliary and commercial vessels. We will boost research and development in AI/ML, robotics, automation, and lifecycle support.
Agreement Highlights
The MOA outlines four key priorities for the two companies:
Boosting the U.S. shipbuilding industry means looking into joint investments in new shipyards or buying existing ones. This will help create more flexible and spread-out production options.
Teaming on auxiliary shipbuilding programs for the U.S. Navy, leveraging HHI’s experience in auxiliary and logistics vessels and HII’s deep presence in U.S. naval procurement.
Collaborating on engineering, R&D and technology implementation, notably in areas such as artificial intelligence (AI), machine learning (ML), robotics and automation of ship construction processes.
Reinforcing Indo-Pacific lifecycle support in theatre, enabling enhanced vessel maintenance, sustainment and operational support closer to operational theatres.
As HII’s executive vice president Eric Chewning commented: “This marks the beginning of deeper collaboration that will support enduring changes to military and commercial shipbuilding in America.” HHI’s Joo Won-ho echoed a similar sentiment: “We are confident that this partnership will generate powerful synergies by combining Korea’s cutting-edge shipbuilding technologies with the U.S. defence sector’s strong market competitiveness.”
Implications for the Defence Technology Industry
This agreement signals major shifts for the broader defence-tech industry-particularly in how naval shipbuilding, supply chains and technology architectures are evolving.
Distributed Shipbuilding & Industrial Base 2.0
By committing to explore distributed shipyard models and joint investments, HHI and HII are responding to the increasing need for resilient, responsive naval production. The global environment-characterised by supply-chain disruption, regional deterrence needs and rising naval investment-demands more flexible production approaches. For the defense industry, this means fewer big shipyards. Instead, there will be more modular, connected sites for building.
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Rise of Automation, AI, and Robotics at Sea
AI/ML, robotics, and automation increase the importance of digital engineering. They enhance additive manufacturing, robotics-assisted fabrication, and digital twins in shipbuilding. Defence-tech suppliers, system integrators and software providers now face strong tailwinds to deliver solutions that reduce build time, improve quality and cut lifecycle costs of naval platforms.
Teamed Large Contractors & Global Synergies
With HHI bringing proven shipbuilding pedigree (over 2,300 ships delivered globally) and HII anchored in the U.S. naval industrial base (as the largest U.S. military shipbuilder) HII, businesses in the defence-tech ecosystem must adapt to transnational teaming models. Suppliers who once served purely domestic markets now face opportunities-and competition-in broader allied supply-chain networks.
Commercial & Defence Convergence
While the MOA emphasises naval auxiliary and commercial vessels, the technologies and processes developed will likely spill over across defence-commercial boundaries. This convergence opens new markets for firms specialising in dual-use technologies: autonomous systems, modular ship design, smart ship systems and digital-fabrication tools.
Effects on Businesses Operating in the Defence Technology Landscape
Defense-tech supply chain companies, like engineering firms, software developers, and logistics providers, will see both opportunities and challenges with this setup.
Opportunities include:
We link suppliers to key U.S. Navy procurement channels. We do this through partnerships with HHI and HII. They are joining forces to build new naval auxiliary ships. This includes the next-gen logistics ship (NGLS).
We work with companies that use AI, robotics, automation, advanced materials, or modular systems to highlight their solutions.
New global supply chains are forming. They connect suppliers and service providers in South Korea, the U.S., and allied regions. This boosts export chances and collaboration.
Challenges will arise from:
Competition is growing. Shipbuilders are using smarter, faster methods and global supplier networks. This change forces companies to invest in innovation and improve cost efficiency.
Compliance & Security Demands: Working on allied naval programs means strict export controls. It also requires cybersecurity measures and oversight of the industrial base. This means we must have strong compliance frameworks in place.
Adaptation to Distributed Model: Businesses that operate centrally may need to adjust their practices. They might have to set up networked, modular build models. This could involve redesigning processes and providing training.
Conclusion
The MOA between HHI and HII is more than a partnership. It shows a strategic shift in naval shipbuilding for the 21st century.
For the defence-technology industry, the main takeaways are clear:
Modular, distributed production
Heavy investment in digital and automation tools
Cross-border teamwork
Integration of defence and commercial shipbuilding capabilities
As this collaboration moves forward, keep an eye out for clear developments. Check for joint shipyard investments in the U.S. Look at awarded contracts. Also, explore how automation or AI is used in ship production. For instance, check programmes like the U.S. Navy’s NGLS. Early alignment with these trends-by suppliers, facilitators, or integrators-will help businesses gain more from the changing landscape.
The HD Hyundai-HII agreement is a big step for defense tech and naval shipbuilding. The industry must adapt, innovate, and strategically position itself. This lets businesses begin a new era of teamwork and skill building in defense tech.