Hyundai Heavy Industries’ KDDX Destroyer Prospects Weaken After Security Penalty Extension

HD Hyundai Heavy Industries’ chances in South Korea’s next-generation KDDX destroyer program are now under pressure after the government extended its penalty over a 2020 security breach.

The Defense Acquisition Program Administration (DAPA) lengthened Hyundai Heavy’s penalty period until December 2026, one year longer than initially set, the Maeil Business Newspaper reported. 

A penalty period allows a company to participate in defense contract bids but gives it lower evaluation scores, making it harder to win projects compared with companies without penalties.

The case stems from a 2020 prosecution in which Hyundai Heavy employees were charged with leaking defense data. Eight employees were convicted under the Military Secret Protection Act, with the final ruling delivered in December 2023. 

DAPA counted the penalty period starting from that final decision, effectively extending the sanction into late 2026.

The company has indicated it may pursue legal action to overturn the extension, according to The Chosun Daily.

KDDX: South Korea’s Next-Generation Destroyer Program

The KDDX program aims to design and build six new destroyers to replace older warships and enhance the Republic of Korea Navy’s capabilities. 

Each vessel is expected to feature advanced radar, air and missile defense systems, and long-range strike capabilities. The ships will also feature integrated electric propulsion, making them more efficient and quieter at sea.

The program, valued at 8 trillion Korean won ($5.5 billion), is among South Korea’s most ambitious naval projects. 

Hyundai Heavy Industries and Hanwha Ocean are the main contenders for the contract. 

Hyundai Heavy argues it should lead the program, having already developed the basic design, while Hanwha advocates for open competition.