Canada on July 6 selected Germany’s Thyssenkrupp Marine Systems (TKMS) as the preferred bidder for its next-generation submarine program, handing South Korea’s Hanwha Ocean a setback in one of the world’s largest naval procurement competitions.
Prime Minister Mark Carney announced the decision at the Royal Canadian Navy’s Halifax naval base, saying Canada will enter exclusive negotiations with TKMS to replace its aging submarine fleet.
The Canadian Patrol Submarine Project is valued at as much as $51 billion and includes the construction of 12 conventionally powered submarines, along with maintenance, sustainment and operational support over roughly three decades.
Carney said Hanwha Ocean would remain the backup bidder if negotiations with TKMS fail.
“If negotiations with TKMS are unsuccessful, Canada retains the right to designate Hanwha Ocean as the preferred supplier and proceed with negotiations,” he said
Carney said both companies met the Royal Canadian Navy’s demanding operational requirements, suggesting the competition remained close until the final decision.
He said the government selected the proposal that best balanced military capability with broader strategic and economic interests.
Under the proposed agreement, TKMS will reinvest an amount equal to the full contract value into Canada’s economy. The company also offered to reallocate production slots from submarines already ordered by the German and Norwegian navies, allowing Canada to receive its first four boats in 2034, earlier than previously planned.
Carney also noted that TKMS supplies roughly one-third of NATO’s submarine fleet, underscoring the company’s established role within the alliance.
Despite Hanwha Ocean’s defeat, Carney emphasized Canada’s broader strategic partnership with South Korea.
He said he had held an extended conversation with South Korean President Lee Jae Myung over the weekend, including discussions about the submarine competition, and that the two leaders planned to meet again in Ankara within 24 hours to discuss additional strategic issues.
“I understand South Korea’s disappointment,” Carney said. “But Canada and South Korea cooperate in many areas, and South Korea remains an important strategic partner.”
Asked whether the decision represented a retreat from Canada’s Indo-Pacific strategy, Carney replied, “Absolutely not.”
Hanwha Ocean mounted an aggressive campaign backed by the South Korean government and military, including deploying the Dosan Ahn Chang-ho submarine to Canada for demonstrations.
The company offered to deliver the first submarine by 2032—two years ahead of TKMS’s proposed schedule—and pledged to generate about $51 billion in economic opportunities for Canada through 2044.
Ultimately, however, TKMS’s close integration with NATO defense programs and its industrial partnership with Germany and Norway helped outweigh Hanwha Ocean’s advantages in delivery speed and industrial cooperation.
