Korea's defense export orders have swung sharply in recent years, reaching $13.5 billion (about 19.07 trillion won) in 2023, falling to $9.6 billion (13.6 trillion won) in 2024, and rebounding to $15.4 billion (21.8 trillion won) in 2025. As of the end of July 2026, export orders stood at about $8 billion, roughly half the level of a year earlier. Given the current momentum, this year's orders are expected to shrink again.
As overseas export performance has weakened, the order backlog at Korea's defense makers has fallen in step. Among the industry's so-called Big 4 — Hanwha Aerospace, Hyundai Rotem, Korea Aerospace Industries (KAI) and LIG Defense & Aerospace (LIG D&A) — all but Hanwha Aerospace saw their backlogs decline.
The order backlog at Hyundai Rotem's defense division fell 2.1% to 9.8917 trillion won from 10.1021 trillion won. KAI's dropped 3.0% to 25.7502 trillion won at the end of the second quarter from 26.5532 trillion won at the end of the first. LIG D&A's likewise fell 3.0% to 24.57 trillion won from 25.3291 trillion won.
The declines came as previously secured export volumes converted into revenue, expanding the companies' top lines quickly, while new orders failed to keep pace, leaving backlogs below the previous quarter. Indeed, Hyundai Rotem, KAI and LIG D&A have all yet to post notable overseas order wins this year.
Hanwha Aerospace was the exception. Its ground defense division's order backlog rose 0.3% to 38.3 trillion won at the end of the second quarter from 38.173 trillion won at the end of the first, the only increase among the four firms.
As a result, the combined order backlog of the four defense firms fell to 98.5119 trillion won in the second quarter from 100.1574 trillion won in the first.
Even so, with existing export contracts flowing through to revenue, all four firms posted double-digit revenue growth in the second quarter. Hanwha Aerospace, Hyundai Rotem, KAI and LIG D&A reported consolidated second-quarter revenue of 9.2929 trillion won, 1.6061 trillion won, 1.1679 trillion won and 1.1101 trillion won, respectively. That marked increases of 47%, 13.3%, 41% and 17.4% from a year earlier.
Analysts said the recent softness in Korea's defense industry is not yet a cause for concern. The four firms' combined backlog is close to 100 trillion won, and security uncertainty remains high in the Middle East and other key regions. Confidence in Korean defense products, backed by competitive delivery times and strong value for money, is adding weight to expectations of a recovery.
Defense companies are also pushing hard to win large export contracts to rebuild their backlogs. Hanwha Aerospace is pursuing a ground weapons systems deal with Saudi Arabia, while Hyundai Rotem is seeking to bring its K2 tank to Romania and Peru. KAI is in negotiations to export its KF-21 fighter jet to Indonesia, and LIG D&A opened a Latin America regional office in Peru last month to strengthen its push into the region's defense export market.
They are also stepping up efforts to sharpen their technological edge to secure an advantage in the global market. In June, Hanwha Aerospace demonstrated the integrated performance of a manned-unmanned combined combat system in Romania, deploying its multipurpose unmanned ground vehicle (UGV). It was the first time a domestically developed military unmanned vehicle demonstrated its capabilities on the ground in Europe.
Hyundai Rotem has obtained NATO quality assurance system certification for its K2 tank and is developing physical AI-based unmanned robot technology, while KAI is working on an artificial intelligence-based manned-unmanned combined system. LIG D&A is also accelerating the commercialization of unmanned surface vessels to break into overseas markets.
"Korean defense firms are establishing a stable position in the global defense market by continuously proving their fast delivery and high-performance weapons systems capabilities," an industry official said. "With order backlogs holding at around 100 trillion won and active efforts to expand export regions and volumes, they are expected to enter a full-fledged growth phase over the medium to long term."
