(LEAD) Hanwha wins U.S. Army contract for K9 artillery prototypes

Hanwha wins U.S. Army contract for K9 artillery prototypes

South Korean defense firm Hanwha Aerospace announced Wednesday that its U.S. unit, Hanwha Defense USA, has been selected to provide prototypes based on the K9 self-propelled howitzer for the U.S. Army's Mobile Tactical Cannon (MTC) program. The program aims to develop a highly mobile 155 mm artillery system to replace the Army's aging M777 towed howitzers, as reported by Yonhap News.

The contract calls for the delivery of six MTC prototypes, with an option for an additional 12 systems, and has a cumulative value of up to US$262.9 million, according to a separate U.S. Army statement cited by Yonhap. The Army said soldiers will use these platforms in a series of operational experiments to assess performance, reliability, and supportability in realistic combat conditions.

Hanwha Aerospace said the contract marks the K9 system's first entry into the U.S. defense market, the world's largest, and pledged to establish a stable production base as part of its localization strategy.

U.S. investment and production plans

The contract win comes as Hanwha Group, the parent company, moves to invest $299 million (415 billion won) into its U.S. subsidiaries, according to The Korea Times. The investments, made through rights offerings, target Hanwha Defense USA and Hanwha Futureproof, a unit focused on strategic assets in the U.S.

Hanwha Aerospace will invest $149 million in Hanwha Defense USA, its wholly owned subsidiary overseeing land defense business in the U.S. The latest investment alone is about 30 percent larger than Hanwha Aerospace's cumulative 159.7 billion won of investment into the subsidiary so far, according to industry officials cited by The Korea Times.

Hanwha companies will also subscribe to a $150 million rights offering by Hanwha Futureproof, with Hanwha Aerospace contributing half, Hanwha Ocean and Hanwha Systems each covering 18.75 percent, and Hanwha Solutions the remaining 12.5 percent, the report said.

To support the prototype work, Hanwha Defense USA in April signed a three-year lease for an idle facility in Opelika, Alabama, and began investing about $2 million to establish an integration and testing facility for the K9MH, according to The Korea Times. The company also plans to invest in the U.S. self-propelled howitzer supply chain, as reported by Yonhap.

Contract value and future prospects

The Korea Times reported that the agreement has a total cumulative value of $262.9 million, but the amount could grow to over $7 billion because Hanwha Defense USA was selected as the sole contractor for the program, putting it in a likely position to handle future mass production.

Global footprint of the K9

The contract marks another step in Hanwha's efforts to expand the global footprint of the K9, which is already in service or under contract in a number of countries, including NATO members such as Poland, Romania, Norway and Finland, according to Yonhap.