[2026 National Assembly Audit] DAPA Chief: "Hanwha's KAI Stake Acquisition Has Pros and Cons"

Response at parliamentary audit... "Government policy on KAI privatization has not been decided"

Lee Yongcheol, chief of the Defense Acquisition Program Administration, said of Hanwha Group’s acquisition of a stake in Korea Aerospace Industries (KAI), “There are both pros and cons, so it would be premature to decide on a course of action at this point.”

During an audit of the Defense Acquisition Program Administration by the National Assembly’s National Defense Committee on the 13th, Assemblyman Song Young-gil of the Democratic Party of Korea asked Lee about the agency’s position, saying, “Would you allow Hanwha to acquire control of KAI as well?” Lee replied, “If Hanwha becomes the largest shareholder, that would mean it intends to pursue a merger and acquisition, so we would need to express our opinion. But at this point, it is not yet the stage for us to do so.” Lee also noted, “The government has not yet decided on a policy regarding the privatization of KAI.”

Lee Yongcheol, chief of the Defense Acquisition Program Administration, Yonhap News

He explained that the agency must consider its bargaining power in program management, supply chain risks, and the healthy sustainability of the industrial ecosystem, but added that there is also “the potential to enhance international competitiveness through economies of scale.”

Hanwha Group currently holds a 15.89% stake in KAI, making it the second-largest shareholder. Its holdings consist of 9.90% through Hanwha Aerospace, 4.98% through Hanwha Systems, and 1.01% through Hanwha Aerospace USA. The Export-Import Bank of Korea is KAI’s largest shareholder, with a 26.41% stake, while the National Pension Service holds 8.75%. Observers say Hanwha could actively pursue the acquisition or integration of KAI if government-led privatization of the company is brought into public discussion.

In August, the Export-Import Bank of Korea, KAI’s largest shareholder, commissioned a consulting project. It was the first time a proposal had been made to seek consulting on the space and aviation industry. With domestic defense companies also actively pursuing the acquisition of KAI, hopes have emerged that the company’s privatization, which has failed in the past, could take place under the current administration.

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