The recent U.S. midterm elections have resulted in a significant victory for the Democratic Party, raising expectations for the expansion of K-defense contracts in the European market. This is particularly relevant if the Democrats decide to increase military support for Ukraine.
As of the end of the third quarter, the combined order backlog of four major South Korean defense companies—Hanwha Aerospace, Hyundai Rotem, LIG D&A, and Korea Aerospace Industries (KAI)—was approximately 95.3 trillion won. This marks a decline from over 100 trillion won at the end of last year, dropping to the 98 trillion won range in the second quarter and further down to 95 trillion won in the third quarter. Notably, all three companies, excluding KAI, saw their order backlogs decrease in the third quarter.
The intensified competition among global defense firms has made it increasingly difficult to secure new contracts in key export markets such as Europe and the Middle East.
In this context, the outcome of the U.S. midterm elections has emerged as a new variable for the domestic defense industry. With the Democrats securing majorities in both the House and Senate, changes in former President Donald Trump's foreign security policies are anticipated.
Market analysts are hopeful for an increase in arms exports, particularly to Europe. According to reports from the Financial Times, the Democratic Party is considering an additional military aid package for Ukraine worth up to $15 billion (approximately 21 trillion won). The U.S. has not allocated new support funds for Ukraine since April 2024.
If the U.S. expands military support for Ukraine, it could lead to replenishment of weapon stockpiles and military buildup in various European countries, potentially opening up global defense contract opportunities.
According to the Stockholm International Peace Research Institute (SIPRI), Europe accounted for 33% of major global arms imports from 2021 to 2025, surpassing Asia-Oceania (31%) and the Middle East (26%). During the same period, Poland represented 58% of South Korea's major arms exports.
The South Korean defense industry is also broadening its export base in the European market. Hanwha Aerospace entered the Western European market in late August by signing an export contract for K9 self-propelled howitzers with Spanish defense firm Indra. In September, it secured a supply contract for the Chunmoo multiple rocket launcher worth approximately 640 billion won with Croatia. Hyundai Rotem is also pursuing additional contracts in overseas tank projects in Peru and Romania, building on its K2 tank exports to Poland.
Lee Jun-gon, an adjunct professor at Konkuk University’s Defense Acquisition Department, stated, "While the overall framework of U.S. defense and security policy is unlikely to change, the pressure from the Democratic Party could influence defense budget allocations."
* This article has been translated by AI.
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