South Korean destroyer project faces budget crisis

May 17 (Asia Today) -- South Korea's next-generation destroyer program faces growing budget pressure, raising concerns that the project could stall unless the government adjusts funding to reflect rising shipbuilding and weapons costs.

The Defense Acquisition Program Administration set the Korean Destroyer Next Generation, or KDDX, project at 7.04 trillion won ($4.69 billion) in 2020. In February, the agency confirmed a selective bidding process and listed the total project cost at about 7.8 trillion won ($5.20 billion).

Defense and shipbuilding experts say that figure remains far below what is needed after years of inflation, higher steel prices and rising costs for advanced combat systems.

The KDDX is designed as South Korea's first fully domestic "smart warship," with Korean-built hulls, combat systems, multifunction radar and other key weapons systems.

Industry officials warn that equipment costs alone could consume much of the current budget before ship construction begins.

"With the current rigid budget structure, it will be difficult to build a ship capable of responding to suicide drones, hypersonic missiles and anti-ship missiles in a modern battlefield," a defense industry expert said on condition of anonymity.

The expert warned that the program could face a downgrade in operational requirements or prolonged delays.

The budget dispute is also affecting South Korea's naval defense industry, including major shipbuilders HD Hyundai Heavy Industries and Hanwha Ocean as well as smaller suppliers.

Industry officials say companies are hesitating to make early investments or hire workers because the government has not presented a clear plan to update the budget.

Some defense experts say President Lee Jae-myung's push for active fiscal policy could provide a way forward.

Lee has repeatedly argued that South Korea has room to expand public spending for domestic demand and future investment. Defense analysts say that approach should also apply to major national security projects such as KDDX.

The government plans to issue a bid notice in late May, evaluate proposals in June and sign a final contract in July. The lead ship is scheduled to be delivered to the Navy by the end of 2032.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260517010004431

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This story was originally published May 17, 2026 at 7:56 PM.