Funding Dispute Delays South Korean Naval Expansion in the U.S.

South Korea's government and its shipyards remain at odds over who should commit first to financing the $150 billion 'Make American Shipbuilding Great Again' (MASGA) initiative, delaying the expansion of Hanwha Philly Shipyard. The bilateral investment memorandum was signed in November 2025, nearly a year ago.

An official from the Ministry of Trade, Industry and Resources, Lee Di-do, argued that companies should first make their own investment decisions, after which the government would evaluate the resulting projects in the U.S. on commercial terms. Industry sources, however, stated that state funds should be made available before expanding capacity for large-scale vessel production, since Hanwha Ocean had planned to use that fund to expand its shipyard—an expansion that has been delayed because the fund has yet to take concrete shape, which could halve the number of orders it is able to accept.

Hanwha acquired the Philadelphia shipyard in December 2024 and in August 2025 announced a $5 billion plan to add two drydocks and three berths, raising annual output from fewer than two vessels to as many as 20. South Korea's National Assembly had approved the investment framework on March 12, while the Export-Import Bank of Korea indicated that participating institutions continue discussions and that financing arrangements will be defined on a project-by-project basis as opportunities arise.

As a condition for fulfilling its investment commitment under MASGA, South Korea is seeking a dedicated U.S. visa quota for shipbuilding workers, according to information from the Ministry of Trade, Industry and Energy provided to lawmaker Huh Sung-moo. The ministry explained to its U.S. counterparts that Washington must guarantee sufficient orders, allow joint construction with exceptions to restrictions on overseas work, offer financial incentives, and establish that sector-specific visa quota, which accounts for $150 billion within South Korea's overall $350 billion investment commitment to the U.S.—the largest single segment of the package.

The South Korean government is also pushing for the creation of a new E-4 visa category for specialized professionals, although the proposal has not yet been enacted into law, while in the U.S. Congress the Partner with Korea Act, championed by Representative Young Kim, remains pending; it provides for an annual quota of up to 15,000 visas for Korean nationals in specialized occupations.

At the same time, South Korean shipyards' ambitions to expand production abroad pose a dilemma for state-backed lenders, who must balance international competitiveness with domestic employment, as raised at a meeting attended by officials from K-Sure and the Export-Import Bank of Korea (KEXIM).