The Future of U.S.-South Korea Defense Industry Cooperation on AI and Cybersecurity
A new framework should be built upon two core pillars—physical AI and cybersecurity—and should be initially implemented in the defense shipbuilding sector.
Executive Summary
Recent conflicts, including the Russia–Ukraine war, demonstrate that modern warfare has evolved into a multi-domain, technology-driven environment integrating drones, cyber operations, electronic warfare, and space capabilities. This transformation fundamentally reshapes the nature of military operations. In this context, South Korea faces structural constraints, such as declining manpower and the increasing sophistication of North Korea’s nuclear and missile threats. These challenges necessitate a transition from a manpower-intensive force structure to a technology-driven military system. At the same time, the U.S.–South Korea alliance must move beyond a traditional dependency-based model toward a mutually reinforcing partnership grounded in industrial and technological collaboration.
Against this backdrop, this policy brief proposes advancing U.S.–South Korea defense industrial cooperation into a “fifth-generation cooperation model.” This model is centered on the concept of a “Production Web,” which integrates U.S. advanced AI design capabilities with South Korea’s world-class manufacturing capacity. It identifies physical AI and cybersecurity as the two primary pillars of this new cooperation framework and proposes applying this model first to the defense shipbuilding sector, thereby ensuring both practical feasibility and strategic impact.
Background
The character of warfare is rapidly evolving into an integrated battlespace encompassing land, sea, air, space, cyber, and electromagnetic domains. In such an environment, weakness in any single domain can lead to overall mission failure. Drones in particular have emerged as a central element of modern warfare, enabling persistent surveillance and precision strikes. However, victory is determined not by platforms alone, but by the doctrine and operational concepts governing their employment. Moreover, asymmetric cost dynamics are increasingly evident, as relatively inexpensive drone systems can neutralize high-value platforms such as armored vehicles. Cyber operations have become the starting point of military engagements, while AI significantly accelerates the detect–decide–engage cycle.
South Korea faces a complex set of strategic challenges within this evolving environment. Externally, North Korea continues to advance its nuclear and missile capabilities, while its special operations forces gain operational experience in modern warfare contexts. Internally, demographic trends indicate that active-duty force levels may decline to approximately 350,000 personnel, rendering the existing manpower-based force structure unsustainable. In parallel, the United States is placing greater emphasis on allied self-reliant deterrence, while discussions on wartime operational control (OPCON) transition continue. As a result, South Korea must simultaneously enhance independent deterrence capabilities and maintain alliance interoperability.
Historically, U.S.–South Korea defense industrial cooperation has progressed from an asymmetric dependency model to one characterized by production collaboration and global market expansion. However, current strategic conditions require a transition toward a new stage of cooperation that integrates the comparative advantages of both countries.
Policy Recommendations
The proposed cooperation framework should be built upon two core pillars—physical AI and cybersecurity—and should be initially implemented in the defense shipbuilding sector. The early conclusion of a Reciprocal Defense Procurement (RDP) memorandum of understanding is essential to enable reciprocal market access and establish a formal foundation for joint research and development programs.
A joint U.S.–South Korea research center should be established to integrate U.S. strengths in AI design with South Korea’s manufacturing and semiconductor capabilities. This collaboration should focus on autonomous systems, including drones and unmanned maritime platforms, and ensure interoperability between Korean integrated command and control (KICC) and joint all-domain command and control (JADC2) architectures.
In the cybersecurity domain, South Korea’s cybersecurity maturity model certification (K-CMMC) should be aligned with the U.S. CMMC framework. A joint cybersecurity cooperation center should be established to facilitate threat intelligence sharing and coordinated responses. A phased supply chain security framework should be implemented across all participating firms.
Conclusion
The future of U.S.–South Korea defense industrial cooperation depends on transitioning to a strategic partnership based on shared technological strengths. Physical AI and cybersecurity will redefine the alliance’s industrial foundation. The defense shipbuilding sector provides an ideal testbed for this transformation. By integrating U.S. AI capabilities with South Korean manufacturing excellence, the alliance can build a robust deterrence ecosystem capable of addressing emerging threats.
Dr. Eun-ho Kang is Chair of the Department of Advanced Defense Industry Studies and Director of the Defense Industry Research Institute at Jeonbuk National University (JBNU). He concluded his public service as Commissioner of the Defense Acquisition Program Administration (DAPA) in late June 2022. All views are the author’s alone.
This material is distributed by KEI on behalf of the Korea Institute for International Economic Policy. Additional information is available at the Department of Justice, Washington, DC.