Hanwha Aerospace Co. is in advanced negotiations with Saudi Arabia regarding potential arms collaboration as the Middle East becomes a primary focus, according to the head of its global defense division.
The growing opportunities in the region prompted South Korea’s largest defense contractor to announce a share sale last month to raise funds, stated Michael Coulter, the global defense president and CEO of Hanwha.
Coulter mentioned in an interview with Bloomberg that the company is in discussions with both Saudi Arabia and the United Arab Emirates about programs to bolster capacity in the Middle East, addressing sovereignty issues and security threats. He noted the real potential for Hanwha to address these challenges through local facilities.
Hanwha has benefited significantly from the rising demand for ground weapons following conflicts in Ukraine and the Middle East. Over the past five years, the firm’s shares have surged nearly thirtyfold, becoming Asia’s top-performing stock this year. Known for delivering weapons more efficiently and cost-effectively than competitors, the company’s notable products include the K9 self-propelled howitzer.
The company’s shares declined by 2.1% on Tuesday, while the benchmark Kospi saw little change.
Coulter, a former U.S. navy officer, added that Hanwha is still determining the specifics of its involvement in Saudi Arabia, with possibilities including a facility, joint venture, or partnership. An agreement may be announced later this year.
Hanwha’s initiatives align with Saudi Arabia’s investment of trillions in diversifying its economy beyond oil, aiming to localize 50% of its military spending by 2030 under Vision 2030.
Arms sales to the Middle East present a sensitive issue for South Korea, balancing its relations with Arab states and its treaty ally, the U.S., which maintains long-standing security ties with Israel.
Earlier this month, Hanwha reduced its planned share sale to 2.3 trillion won ($1.6 billion) from an initial 3.6 trillion won due to investor and regulatory concerns. Coulter described the decision as demonstrating the company’s responsiveness to its investors and shareholders.
Hanwha is also in discussions with several Western European countries about enhancing their arms manufacturing capacities amid rising global instability. Coulter emphasized that the company does not intend to displace European partners but seeks collaboration with governments and industries to identify areas for potential partnership.
He expressed optimism about a forthcoming resolution between the U.S. and South Korean governments regarding trade disputes initiated by the Trump administration’s tariff threats. Highlighting the significant U.S. military presence in Korea, Coulter remains cautiously optimistic that the issue will not escalate politically.
This report was initially published on Fortune.com.
