Korea’s Quiet Military Power Move — And How to Invest in It
When you hear “defense innovation,” the first names that come to mind are likely American or European giants. But advisors looking to expand client portfolios beyond traditional defense ETFs should look east—specifically, to South Korea.
South Korean defense firms are no longer just hardware manufacturers. They’re at the cutting edge of defense technology, integrating artificial intelligence, robotics, cybersecurity, and autonomous systems into military applications. And with the Plus Korea Defense Industry Index ETF (KDEF), U.S. investors may gain targeted access to this global sector.
How Korean Defense Innovation Stands Apart
Korean defense firms have gained international recognition by combining advanced manufacturing with next-gen technology. Here are a few standout examples:
- AI-Guided Missile Systems: LIG Nex1, a key KDEF holding, is developing precision-guided munitions and missile systems with AI-enhanced targeting capabilities. These systems can process real-time battlefield data for improved accuracy and efficiency.
- Unmanned Ground Vehicles (UGVs): Hanwha Aerospace and Hyundai Rotem are both leading the charge in autonomous defense vehicles. Hyundai Rotem’s HR-Sherpa UGV is a six-wheeled, AI-driven vehicle designed for reconnaissance and logistics support in combat zones.
- AI-Powered Surveillance and Reconnaissance: Korean defense firms are advancing unmanned aerial vehicles (UAVs) equipped with AI-powered image recognition software, enhancing surveillance precision for both military and border security applications.
- Cyber Defense Solutions: Software companies, connected to the broader Korean defense ecosystem, are innovating in cybersecurity platforms aimed at protecting military command systems from increasingly sophisticated cyber threats.
These aren’t speculative technologies. South Korea has already secured multi-billion-dollar contracts with NATO countries, including Poland’s purchase of K2 Black Panther tanks and K9 self-propelled howitzers. [1] But what often gets less attention is that many of these systems come pre-integrated with cutting-edge software and autonomous capabilities—setting them apart from legacy Western counterparts.
Why KDEF? Focused Exposure to a potentially Rising Defense Sector
Most aerospace and defense ETFs lean heavily toward large U.S. contractors, many of which also produce commercial aircraft or other diversified products. KDEF aims to offer something more focused: pure-play exposure to South Korea’s dedicated defense innovators.
By tracking the Plus Korea Defense Industry Index, KDEF holds companies at the forefront of autonomous weapons, missile defense, and AI-driven surveillance—firms that might fly under the radar in larger, U.S.-focused funds.
For Financial Advisors: Why Now
For advisors helping clients diversify portfolios beyond U.S. borders, the case for KDEF comes down to three factors:
- Technological Leadership: South Korea’s fusion of AI, robotics, and manufacturing prowess gives its defense sector a unique edge.
- Growing Global Demand: As defense needs shift toward unmanned, intelligent systems, Korean firms are positioned as key suppliers.
- Strategic Relevance: With alignment to U.S. allies and NATO partnerships, Korean defense exposure may feel less speculative than broader emerging-market bets.
Bottom Line
Defense isn’t just about bigger tanks or faster jets anymore—it’s about smarter systems, autonomous vehicles, and AI-powered solutions. South Korea is investing in that evolution, and KDEF is designed to give investors a front-row seat. [2][3]
Explore how KDEF provides focused exposure to South Korea’s defense innovators here.
[1] Source 2: Ratka, Damien, Polish-Korean Consortium Created, Defense 24, 4/3/23.
[2] Baker, Berenice, AI Self-Driving Technology, Quantum Deemed Strategic in Korea, AI Business, 6/27/25
[3] Na-Heem, Kim et al, South Korean defense giants bet big on AI-powered military tech, The ChoSun Daily, 3/12/25
Some of the companies highlighted are holdings of the PLUS Korea Defense Industry Index ETF portfolio. Please see website for complete holdings information. Holdings are subject to change.
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