The US Department of Defense could channel $1.85 billion (approximately 2.8 trillion won) in naval research and development funds, included in its fiscal 2027 budget proposal, toward building two warships in South Korea or Japan, according to a White House official.
The Office of Management and Budget (OMB) said the $1.85 billion is "for asset procurement," noting that "a frigate costs $1 billion to build per vessel," US defense outlet Breaking Defense reported on Monday (local time).
"To acquire up to two warships, we are considering a model in which hull, mechanical, and electrical structures are produced in South Korea or Japan, while a US defense contractor leads combat system integration," the official said. The official added that the US administration "is in discussions with Korean and Japanese firms including Hanwha, HD Hyundai, Samsung Heavy Industries, Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and JMU about the possibility of building US Navy vessels." Excluding certain core components such as radar, the arrangement effectively leaves the door open for Korean and Japanese defense companies to construct warships outside the United States. The official stressed, however, that "overseas production of US warships is only a temporary measure," adding that "foreign shipbuilders must invest in the US shipbuilding industry."
The White House had earlier laid out its position in a 42-page document titled "America's Maritime Action Plan," released in February. The plan stated that "measures are needed to reduce dependence on unreliable suppliers through enhanced cooperation with allies and partners," and pledged to "continue historic cooperation with South Korea and Japan to revitalize US shipbuilding."
In that plan, the White House proposed a so-called "bridge strategy," under which foreign shipbuilders would invest capital in US shipyards through acquisitions or partnerships with American shipbuilding firms, and build the initial portion of contract volumes in their home countries until US-based production becomes viable.
Under current US law, known as the Jones Act, warships can only be built at domestic shipyards. The US government, however, previously applied the bridge exception when contracting with Finland for icebreaker construction. Two vessels were to be built in Finland while production facilities were established at a shipyard in Louisiana, where four additional vessels would later be constructed.
A US move to place warship orders with foreign shipyards is expected to draw pushback from the domestic American shipbuilding industry, but Korean shipbuilders are quietly optimistic. "Since South Korea and the United States agreed last year to pursue the MASGA shipbuilding cooperation project in trade negotiations, building US warships in Korea could serve as a new leap-forward opportunity," a Korean shipbuilding industry official said.
