Hanwha had previously sought to buy Austal USA in 2024, but the purchase was halted amid regulatory concerns. Two years later, it is trying again.

The United States Navy has a major problem: it urgently needs more warships, but nearly every major sea-based program is running late and over budget. At present, the US shipbuilding industry simply lacks the capacity to engage in the necessary course correction, and the Department of the Navy has taken the drastic move of considering how foreign shipyards might be one solution.

On Tuesday, the issue took another noteworthy turn as South Korea’s Hanwha Group—one of the country’s “Big Three” shipbuilders, along with Samsung Heavy Industries and Hyundai Heavy Industries—made a non-binding offer to buy Austral USA, a builder of the US Navy’s ships and submarine components.

News of the proposed acquisition was first reported by The Wall Street Journal, which cited people familiar with the matter.

Hanwha Defense USA, the US-based subsidiary of the South Korean conglomerate, is seeking to acquire Austal USA’s shipyard facilities in Mobile, Alabama, along with its other US support operations, HDUSA company officials later confirmed.

“Hanwha Defense USA has made a preliminary, non-binding offer to acquire Austal’s US business,” Hanwha Defense USA spokesperson James Hewitt announced in a media statement.

“Any deal will be contingent on due diligence that permits a thorough evaluation of Austal USA’s operations and financials, including newly disclosed information,” added Hewitt. “Hanwha has made it a priority to significantly contribute to revitalizing American shipbuilding and is exploring a range of options to expand our footprint in the United States.”

Austal USA Has Struggled to Meet Navy Demands

Headquartered on Blakeley Island in Mobile, Alabama, Austal USA is a subsidiary of Australian-based defense contractor and shipbuilder Austal Limited. It operates under a “Special Security Arrangement,” allowing it to handle sensitive US national security and defense programs despite its foreign ownership. (Such an arrangement would be unthinkable for many countries, but for Australia, a strong US ally and a co-partner in the AUKUS security pact, it is less of an issue.)

Austal USA’s main programs to date have been the United States Navy’s Independence-class Littoral Combat Ships (LCS) and Spearhead-class Expeditionary Fast Transports (EPFs). It also manufactures modules for the Virginia-class and Columbia-class submarines in partnership with General Dynamics Electric Boat. It has also been awarded contracts for the United States Coast Guard’s Heritage-class offshore patrol cutters.

The company employs approximately 3,500 people across its operations in Mobile, Alabama, San Diego, California, and its other offices. Austal had set a goal to expand its total workforce to between 5,500 and 6,000 employees over the next three years. Its San Diego facility is largely focused on service and repair rather than actual shipbuilding.

HDUSA’s proposed acquisition would not include any of Austal’s operations in Australia, nor in the Philippines or Vietnam, where it also maintains a corporate footprint. The Korean firm has said that the standing offer would also not impact the Strategic Shipbuilding Agreement now in place between Washington and Canberra.

Austal USA has faced a difficult financial year, with the company on track to post a $123.5 million operating loss for fiscal year 2026 (FY26). In 2024, the shipbuilder settled an accounting fraud investigation and agreed to pay a $24 million penalty.

South Korea Sees an Opportunity in America’s Shipbuilding Sector

The deal could see HDUSA acquire Austal USA in a deal valued between $1.05 billion and $1.2 billion on a cash- and debt-free basis, pending completion of due diligence by the South Korean firm and necessary regulatory approvals in the United States.

This is the second time that Hanwha has attempted to acquire the Australian firm’s US operations. A 2024 attempt was rejected, with Austal stating at the time that it was uncertain if such a deal would secure approvals from US and Australian regulators. However, Austal noted that it remained open to such a transaction if Hanwha was able to demonstrate it could achieve a successful outcome.

Hanwha has continued its expansion in the United States, which has included its acquisition of the Philly Shipyard for approximately $100 million in December 2024. The facility has since been renamed the Hanhwa Philly Shipyard; it secured its first US Navy contract in March 2026, where it will serve as a subcontractor with Vard Marine US on the concept design for the US Navy’s next-generation logistics ship program.

Last month, the US Missile Defense Agency announced it had selected Hanhwa Philly Shipyard and TOTE Services to build the agency’s Missile Range Instrumentation Vessels. The lead vessel, the Golden Defender, is on track to enter service in 2030 to support the proposed Golden Dome for America missile defense system.

About the Author: Peter Suciu

Peter Suciu has contributed to dozens of newspapers, magazines and websites over a 30-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. Peter is also a contributing writer for Forbes and Clearance Jobs. He is based in Michigan. You can follow him on Twitter: @PeterSuciu. You can email the author: Editor@nationalinterest.org.

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