The Era of U.S. Naval Vessel Shortages... Stocks Poised for the Trickle-Down Effect

As the United States faces an emergency in maintaining its naval power, the focus is shifting toward the verified ally, the Korean shipbuilding industry.

U.S. President Donald Trump.

On June 22, Research Arum released a report highlighting STX Engine, Daeyang Electric, and Korea Lost-Wax as promising domestic shipbuilding equipment companies expected to benefit from the trickle-down effect of the U.S. naval vessel shortage.

As of 2025, the United States maintains its No. 1 position in the global naval power rating (TvR) at 323.9, but the gap with China (319.8) has narrowed to a minimal level. In terms of the number of naval vessels, China has already surpassed the U.S., and by around 2030, the gap in major combat fleets between the U.S. and China is expected to widen to more than 130 ships.

STX Engine manufactures diesel engines for naval vessels under a German MTU license, and demand for its marine generator engines remains strong, backed by the substantial order backlog of domestic shipbuilders. The company is expected to benefit directly if allied countries begin full-scale construction of U.S. military ships. Additionally, it has diversified its business into ground weapon systems, such as the localization of engines for K9 self-propelled howitzers.

Daeyang Electric supplies lighting and switchboards for ships and naval vessels as its main products, holding a near-monopolistic position with almost 80% market share in domestic ship lighting. With all three major Korean shipbuilders as its clients, the company is expected to see stable growth, while its vehicle sensor sales are increasing and customer diversification into North America and China is underway.

Korea Lost-Wax is a specialist in large, complex-shaped cast steel products. Starting next year, it will become the only company in Korea capable of receiving orders for castings weighing over 120 tons. There are only up to three companies, including Korea Lost-Wax, capable of supplying cast steel parts for naval vessels, so a reassessment of its value is anticipated. The company is also actively diversifying into upstream industries, such as shipping gas turbine housings, which command higher prices than existing products.

Do Yoon Kim, a researcher at Research Arum, stated, "The United States is reaching the limits of its domestic manufacturing capacity. There are only 21 U.S. shipyards with order backlogs, and as many as nine military ship projects are delayed by up to 36 months, making it difficult to address the shortfall through domestic production alone."

This content was produced with the assistance of AI translation services.