Asia Defense | Security | East Asia

US Allied Shipbuilding Gains Momentum, But Ambitions May Collide

Japan, South Korea, and the U.S. appear to have given little thought to which country should build what, or who controls the key technologies that every shipyard depends on.

Allied efforts to revive shipbuilding are picking up steam, but they are moving along separate tracks. On October 2, Nikkei Asia reported that Japan’s government fund for revitalizing the industry has begun to spur a wave of private investment. Among the projects, Hakodate Dock, which repairs vessels for the Maritime Self-Defense Force, plans to bring back a dock that has sat out of commission since an earthquake in 1993. The fund, launched in fiscal year 2025, has already approved eight projects and will provide up to 311 billion yen ($1.97 billion) through 2034, with total spending expected to reach around 900 billion yen ($5.69 billion) once private investment is included. South Korea, meanwhile, has taken a more direct route, with its companies pouring money into U.S. shipyards. 

Both efforts come as the U.S. leans on its allies to counter China’s dominance in commercial shipbuilding and to ease the delays and backlogs plaguing the U.S. Navy. Yet for all this momentum, Japan, South Korea, and the U.S. appear to have given little thought to which country should build what, or who controls the key technologies that every shipyard depends on.

Japan’s ambitions to revive its shipbuilding industry come amid a long-running erosion of its share of the global market. Japan was once the largest shipbuilder in the world, but was overtaken by South Korea around 2000 and by China soon after, and now ranks third. This is largely due to expansive Chinese investments and policies, alongside South Korea’s specialization in key vessel classes such as LNG carriers. In response, Tokyo has renewed its attention and investment in the sector, designating it one of 17 strategic industries and partnering with industry on roughly 1 trillion yen ($6.33 billion) in public and private investment. 

However, chronic issues plague the industry and any efforts on Tokyo’s part to alleviate them. Labor remains a major constraint, shipyards are booked three to four years in advance, and Japan won just 5 percent of new orders in 2025. Yet despite these constraints, Japan offers many benefits for the U.S. In 2025, Mitsubishi Heavy Industries completed a major overhaul of a U.S. Navy vessel in Yokohama, and last October the two countries signed a memorandum of cooperation to expand shipbuilding ties.

South Korea occupies a stronger position as the world’s second-largest shipbuilder, but its position largely rests on specialization in LNG carriers, an expensive and technologically advanced vessel class. South Korean shipbuilders now hold roughly 70 percent of the global LNG carrier market. Additionally, South Korean shipyards have mastered production methods that allow them to compete on quality, while Chinese yards leverage mass and dominance in less complex classes, like dry bulk carriers. 

South Korean companies, backed by government financing, have also made active efforts to invest in American shipyards, such as Hanwha’s purchase of Philly Shipyard and its pledge to invest $5 billion there. All of this is part of a $150 billion package that South Korea has touted as “Make American Shipbuilding Great Again.” Although it occupies a stronger position in the global market, South Korea faces similar labor constraints to Japan, as well as the domineering presence of Chinese shipyards, which are increasingly competing for LNG orders as well.

The motivations behind these........

© The Diplomat