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

As the United States faces urgent challenges in maintaining its naval power, the focus is shifting toward the proven ally of the South Korean shipbuilding industry.

U.S. President Donald Trump.

On June 22, Research Arum identified STX Engine, Daeyang Electric, and Korea Cast Iron 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 the top spot in the global naval power ranking (TvR) with a score of 323.9, but the gap with China (319.8) has narrowed to a marginal level. In terms of the number of naval vessels, China has already surpassed the United States, and by around 2030, the gap in core combat fleets between the U.S. and China is expected to exceed 130 ships.

STX Engine is a company that produces diesel engines for naval vessels based on a license from Germany's MTU, with solid demand for ship generator engines, supported by the large order backlogs of domestic shipbuilders. The company is expected to benefit directly if allied construction of U.S. warships ramps up, and it has also diversified into ground weapon systems by localizing engines for K9 self-propelled howitzers.

Daeyang Electric is a leading supplier of lighting and switchboards for ships and naval vessels, holding an oligopolistic position with a domestic ship lighting market share approaching 80%. With all three major Korean shipbuilders as clients, the company is expected to achieve stable growth, and it is diversifying its customer base into North America and China, as well as seeing growth in vehicle sensor sales.

Korea Cast Iron is a specialized manufacturer with advanced technology for producing large, complex-shaped castings. The company is set to become the only domestic firm capable of handling orders for castings weighing more than 120 tons starting next year. Only up to three companies, including Korea Cast Iron, can supply cast iron parts for warships, raising expectations for a re-evaluation of its value. The company is also actively diversifying into upstream industries, such as shipping high-priced gas turbine housings compared to existing products.

Do Yun Kim, a researcher at Research Arum, stated, "The United States has reached the limits of its domestic manufacturing capacity. Only 21 shipyards in the U.S. have an order backlog, and with nine military ship projects each delayed by up to 36 months, it is difficult to make up for these disadvantages through domestic production alone."

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