SEOUL -- Korea Aerospace Industries, the South Korean defense contractor and the country's sole aircraft manufacturer, will spend 2.2 trillion won ($1.87 billion) in the space industry over five years to capture burgeoning demand abroad.
The company, known better as KAI, has cultivated a relationship with countries in Southeast Asia and the Middle East through defense deals, and plans to secure contracts from such nations lacking launch capabilities to send satellites into space and manage associated telecommunication operations.
"In addition to focusing on private-sector demand, we'll move forward with our outbound expansion to Southeast Asia," says KAI President and CEO Ahn Hyun-ho.
The company's push into space comes as the government focuses on developing that industry. Those ambitions were dealt a blow Thursday when South Korea's homegrown Nuri satellite launch vehicle failed to reach orbit. But plans are still in place to send a second rocket into space in May as Seoul looks to launch 100 satellites over a decade.
The market for rocket launch services is set to grow fivefold to $47.6 billion in 2030 from $9.5 billion in 2019, according to data from British researcher Visiongain. In July, KAI joined hands with Elon Musk's company SpaceX to launch a satellite. The partnership will further the safety and cost competitiveness of the space venture.
Ahn also has his eyes on urban air mobility, or flying taxis.
South Korea's homegrown Nuri space rocket was launched Nov. 21 (Photo courtesy of Korea Aerospace Research Institute) "We already have the technology for vertical takeoff and landing, and plans to collaborate with other companies are in progress," Ahn said.
The urban air mobility business will make use of the company's technology cultivated by years of developing and manufacturing military hardware. The company hopes growth of the new businesses will contribute to sales climbing to 10 trillion won by 2030, or roughly 3.5 times higher than a decade earlier.
KAI came to being in 1999 following the Asian currency crisis. Under the guidance of the government, the chaebol conglomerates Samsung, Hyundai and Daewoo merged their aerospace business into one company.
The state-backed Export-Import Bank of Korea is the largest shareholder in KAI with a 26% stake. Apart from making defense equipment, KAI is a supplier for Boeing and Airbus.
KAI's space business revenue will continue to expand with the launches of domestically made rockets, according to an assessment from South Korea's Daishin Securities. The mid- to long-term growth potential is high, the brokerage added.
The government is investing 3.7 trillion won into establishing South Korea's own global navigation system that would rival the U.S.'s Global Positioning System. A high-precision GPS will promote the implementation of self-driving vehicles, drones, urban aviation systems and technological innovations.
"We will unwaveringly continue to make investments with a long-term view," President Moon Jae-in told reporters at South Korea's Naro Space Center during the aftermath of Thursday's launch.
About 300 South Korean companies are participating in the Nuri project. KAI is responsible for the design and manufacture. Hanwha Aerospace was responsible for the engine while the launch platform was under the purview of Hyundai Heavy Industries. The government can repurpose the technology gained from the project for civilian benefit.
KAI has a long way to go to catch international rivals. U.S. and European companies have launched over 100 rockets. On Tuesday, Japan's Mitsubishi Heavy Industries successfully launched a Michibiki positioning satellite into orbit using the H2A No. 44 rocket.
"South Korea is at a stage where it is finally building a foundation for space development," said Huh Hwan-il, professor at Chungnam National University in Daejeon. "To compete in the race to win orders, the country needs to go one step further and work to raise cost competitiveness."
Sales to other governments will require bilateral coordination. The key to catching up to Japan, the U.S. and Europe will lie in how well South Korea can jointly deploy resources from the public and private sectors.
During a visit to KAI's mainstay plant at the company's headquarters in Sacheon, a southern port city, the staccato sound of rivets being driven reverberated throughout a building the size of three soccer fields.
The KF-21 currently under development is South Korea's first natively produced fighter jet. In one area of the massive structure, five workers were busy putting together a KF-21, a South Korea's first natively produced fighter jet measuring 16.9 meters long and 4.7 meters high.
The plant, located next to an airfield used for civil and military purposes, is not listed on South Korean maps for national security reasons. The KF-21 facilities alone require about 300 on-site engineers, according to a KAI manager.
"There are more assembly processes that rely on manual labor rather than on machines," said the supervisor.
The KF-21 project, led by the Ministry of National Defense, is the recipient of 8.8 trillion won in development spending. The development launched in 2016, and a prototype was unveiled to the public in April this year.
Experimental models are currently under production. After going through various tests, the jets will go into mass production in 2026.
The Indonesian government is shouldering a fifth of the development costs. In addition to being deployed to the South Korean military, the KF-21 are due to be shipped to Indonesia.
South Korea has exported training and transport planes to countries in Southeast Asia and the Middle East, among other nations. KAI has built up expertise in the aerospace sector by winning orders in foreign markets.
Unlike Japan's defense industries, whose deliveries mostly go to the Japan's Ministry of Defense, the South Korean government has actively encouraged exports. That pathway grants a greater advantage in terms of accumulating technology.