After a highly publicized 10-month competition, South Korean shipbuilder Hanwha Ocean has lost its bid to supply Canada with multibillion-dollar submarines to Germany’s Thyssenkrupp Marine Systems (TKMS).
Canada officially selected TKMS as the preferred supplier for its crucial Canadian Patrol Submarine Project (CPSP) on Monday, delivering a significant setback to Hanwha Ocean and its consortium partner, HD Hyundai Heavy Industries.
However, the outcome also highlights the considerable advancements of South Korea’s submarine industry, as Hanwha Ocean successfully competed head-to-head with one of Europe’s most experienced submarine manufacturers in the final stages of this major naval procurement.
• The CPSP outlines Canada’s strategic plan to acquire up to 12 advanced diesel-electric submarines for the Royal Canadian Navy.
• This new fleet will replace Canada’s aging Victoria-class submarines, which are scheduled for retirement in the mid-to-late 2030s, and will be crucial for operations across the Arctic, Atlantic, and Pacific oceans.
• The project’s value is estimated to be around 60 trillion won ($39.3 billion) and potentially up to $100 billion, including long-term maintenance and support services.
• It is recognized as Canada’s largest-ever naval procurement undertaking.
• Sept. 2024-Feb. 2025: Canada issues a comprehensive Request for Information (RFI) for the CPSP.
• August 26, 2025: Canada formally identifies two qualified suppliers for the project: TKMS and Hanwha Ocean.
• Jan. 2026: Hanwha Ocean forms a strategic consortium with HD Hyundai Heavy Industries to bolster their competitive bid.
• March 2026: Both Hanwha Ocean and TKMS submit their detailed formal proposals to Canada.
• April 29, 2026: Canada successfully concludes its bid clarification and amendment process.
• May 24, 2026: South Korea’s Dosan Ahn Chang-ho, a formidable 3,000-ton KSS-III submarine built by Hanwha Ocean, demonstrates its long-range capabilities by arriving at Canada’s western naval base.
• July 7, 2026: Canadian Prime Minister Mark Carney announces TKMS as the preferred supplier at a Royal Canadian Navy base in Halifax, Nova Scotia.
• Late 2027: The Canadian government aims to finalize and sign the definitive procurement contract for the new submarines.
• If talks fail: Hanwha Ocean could still potentially enter negotiations as the next-ranked bidder for the Canadian submarine contract.
• Mid-2030s: Delivery of the first new submarines is projected to commence.
Hanwha’s Bid: A Proven, High-Tech Submarine Fleet
• Hanwha Ocean’s proposal was centered on a customized KSS-III Batch-II diesel-electric submarine, featuring advanced lithium-ion batteries and fuel-cell air-independent propulsion (AIP) for extended underwater endurance.
• Hanwha emphasized its proven operational track record with the South Korean Navy, offering a shorter delivery timeline and compelling cost-competitiveness.
• Hanwha proposed delivering the first submarine in 2032, four years before Canada’s existing fleet retires in 2035, with all 12 vessels by 2043.
• The South Korean government mounted an extensive, all-out campaign for what could have become Korea’s largest-ever defense export deal.
• Hanwha and HD Hyundai Heavy Industries supported their bid with an ambitious industrial cooperation package, signing Memoranda of Understanding (MOUs) and forging over 80 partnerships across Canada in sectors including defense, energy, steel, and batteries.
• Hanwha’s comprehensive package was estimated to generate more than 433,000 jobs and contribute over 96.3 billion Canadian dollars ($67.7 billion) to Canada’s Gross Domestic Product (GDP) from 2026 to 2044.
TKMS’ Bid: Emphasizing NATO Interoperability
• TKMS proposed the state-of-the-art 212CD submarine, an evolution based on its highly regarded and proven 212A platform.
• The advanced 212CD is currently being jointly developed by NATO allies Germany and Norway, highlighting its strong alliance ties.
• This platform, described as among the “stealthiest” submarines globally, was specifically promoted as optimized for demanding Arctic operations and fully NATO interoperable.
• TKMS proposed to deliver four Type 212CD submarines to Canada by 2036, with the initial vessel slated for delivery by 2034.
• TKMS also presented a large-scale industrial package, including significant local partnerships, with its bid projected to stimulate CA$160 billion in economic activity, contribute CA$86 billion to GDP, and support over 650,000 jobs.
• Both Hanwha Ocean and TKMS successfully met Canada’s essential operational and technological requirements for the new submarines.
• The final decision, however, was ultimately swayed by factors such as NATO interoperability and Canada’s increasing strategic focus on collective defense with European nations.
• “The TKMS platform is optimized for challenging Arctic waters, and critically, it’s fully NATO interoperable, enabling seamless communication, intelligence sharing, and joint mission execution,” Prime Minister Carney stated.
• TKMS additionally offered a robust technology transfer program, with early submarines manufactured in Europe and subsequent vessels produced domestically in Canada.
• Despite the outcome, Hanwha Ocean’s competitive bid provided its advanced submarine technology with rare and valuable global exposure.
• The remarkable voyage of the Dosan Ahn Chang-ho to Canada effectively demonstrated Korea’s capability to build submarines capable of extensive, long-range operations.
• Hanwha Ocean also conclusively proved its ability to compete directly and effectively with TKMS, one of the world’s most established and leading submarine manufacturers.
• Moving forward, the company is now expected to strategically redirect its focus to other significant submarine and naval projects in key markets such as Saudi Arabia, Greece, the Philippines, Colombia, Chile, and across the Middle East.
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