South Korea and Peru Sign LOI to Co-Develop Next-Generation Submarines

Milivox analysis: South Korea and Peru have signed a Letter of Intent (LOI) to collaborate on the development of next-generation conventional submarines. This marks a significant step in Latin America’s naval modernization and reflects South Korea’s growing role as a global submarine exporter. The agreement could reshape regional undersea capabilities while opening new industrial pathways for both nations.

Background

On November 14, 2025, South Korea’s Defense Acquisition Program Administration (DAPA) announced the signing of a Letter of Intent with Peru’s Ministry of Defense to jointly develop next-generation diesel-electric submarines. The LOI was signed during the International Defense Exhibition SITDEF 2025 in Lima by representatives from Daewoo Shipbuilding & Marine Engineering (DSME) and the Peruvian state shipbuilder Servicios Industriales de la Marina (SIMA).

This initiative builds on previous cooperation between the two countries. Notably, DSME has supported SIMA in assembling two Type 209/1200-class submarines in-country under earlier modernization programs. The new LOI signals an intent to move beyond licensed production toward co-development of an indigenous design tailored to Peruvian operational needs.

Technical Overview

While detailed specifications have not been disclosed publicly, Milivox assesses that the joint submarine project will likely be based on DSME’s KSS-III or KSS-II design lineage—modern diesel-electric platforms with optional Air-Independent Propulsion (AIP) systems. These designs are modular and export-friendly, with displacement ranging between 1,800–3,300 tonnes depending on configuration.

• KSS-II (Type 214 variant): Equipped with fuel cell AIP system; displacement ~1,800 tonnes; range ~12,000 km surfaced; capable of deploying heavyweight torpedoes and mines.
• KSS-III Batch-I: Indigenous South Korean design; up to ~3,300 tonnes submerged; includes lithium-ion battery option; vertical launch system (VLS) for cruise missiles in domestic variant—not likely for export version.

The Peruvian Navy currently operates four aging Type 209/1200 submarines acquired from Germany in the late 1970s–1980s. A joint development effort would allow Peru to leapfrog into modern undersea warfare capabilities including improved sonar suites (likely flank array + passive/active sonar), integrated combat management systems (CMS), and reduced acoustic signatures through raft-mounted machinery and advanced hull coatings.

Operational or Strategic Context

Peru is one of several Latin American nations seeking to modernize their submarine fleets amid rising maritime security concerns in the Pacific region—ranging from illegal fishing to strategic chokepoint control near the Strait of Magellan. Chile has already acquired Scorpène-class AIP-capable submarines from France/Naval Group; Brazil is developing nuclear-powered subs under its PROSUB program with French support.

The South Korea–Peru partnership offers an alternative path for capability enhancement without full dependency on Western suppliers. According to Milivox experts, this aligns with Seoul’s broader strategy of positioning itself as a mid-tier defense exporter capable of offering cost-effective alternatives in key domains such as naval platforms and armored vehicles.

DAPA’s support signals that this is not merely an industrial MOU but part of Seoul’s government-backed defense diplomacy campaign—similar to its recent successes in Poland (K2/K9/KF-21 deals), Indonesia (IFX fighter jet), and Egypt (K9 SPH).

Market or Industry Impact

If successful, this program could establish SIMA as a regional submarine integrator—a rare status among Latin American shipyards—and elevate DSME’s profile as a flexible partner beyond Asia-Pacific markets. It may also create opportunities for Korean subsystem suppliers across propulsion (Hanwha Ocean), CMS/electronics (LIG Nex1/Hanwha Systems), sonar suites (STX Engine), and batteries/power systems.

The agreement may stimulate local employment in Callao where SIMA operates its main naval yard. However, challenges remain regarding technology transfer safeguards, IP rights negotiation over sensitive components like CMS software architecture or quieting technologies—areas where South Korean firms have historically been cautious.

Milivox Commentary

This LOI represents more than just bilateral industrial cooperation—it is a signal that emerging powers are reshaping naval procurement norms through flexible co-development models rather than traditional buyer-seller dynamics. As assessed by Milivox analysts, if executed effectively over the next decade this project could become a blueprint for other Global South partnerships seeking affordable yet capable undersea deterrents without NATO-level dependencies.

The success of this endeavor will depend heavily on sustained political will from both sides post-SITDEF fanfare—particularly budgetary commitment from Lima amid fiscal constraints—and DSME’s ability to adapt its proven designs into modular export variants while preserving performance integrity.