• South Korean and Japanese arms dealers are growing almost on pace with Russia's top defense firms.
• New data found that South Korea's and Japan's arms revenues jumped by 39% and 35% respectively.
• The data underscores an aggressive push by Asian firms to fill recent gaps in arms manufacturing.

The top defense manufacturing firms in both South Korea and Japan saw growth rates of nearly 40% in 2023, nearly on pace with that of the top arms dealers in Russia, per a new report.

Data published on Monday by the Stockholm International Peace Research Institute found that the top four South Korea-based firms recorded a combined 39% increase in revenue over the year, while the top five Japanese defense firms saw a combined 35% increase.

In comparison, the two top Russian defense enterprises saw a combined 40% revenue increase from 2022 to 2023 and higher revenues. SIPRI attributed the production spike to the huge expenditures required by Russia's invasion of Ukraine.

The institute analyzed public data on the world's top 100 defense firms by revenue and found that arms revenues across all regions increased by 4.2% in 2023.

Its findings show how rapidly defense industries in Japan and South Korea — two key US allies — have stepped in to fill demand for arms and equipment since the outbreak of recent conflicts like the Ukraine war. The five largest US arms makers top SIPRI's list, but saw slower rates of growth.

Still, Xiao Liang, a researcher at SIPRI, told Business Insider the data doesn't directly translate into military might.

"The true scale of Russia's arms industry is likely a lot larger, so the data presented provides only a general overview and not a detailed representation of the current state of the Russian arms industry," he wrote in an email.

Arms sales take off in South Korea and Japan

South Korean firms, in particular, have caught attention in the last two years for selling billions of dollars worth of artillery in Europe, where it's been in short supply due to Ukraine's dire need for ammo to counter Russia's firepower advantage.

Among the four South Korean companies on the list are industrial heavyweights such as the Hanwha Group and Hyundai Rotem.

"South Korean firms specialize in tanks, artillery, and armored vehicles, with both domestic and international export deals boosting revenue," Liang wrote.

These companies are typically known for producing weapons systems like the K239 Chunmoo rocket artillery system and the K9 howitzer. Poland, for example, purchased 72 K239 Chunmoo systems in April for $1.6 billion; these truck-mounted launchers can fire guided or unguided rockets.

Hanwha Group rose from 42nd place in the world in 2022 to 24th in 2023. It brought in $5.71 billion in arms revenue in 2023, up 52.7% from $3.74 billion in 2022, per SIPRI.

According to SIPRI, much of the Seoul-based conglomerate's arms revenue was driven by its 2023 acquisition of one of South Korea's three biggest shipbuilders, DSME.

Five Japanese firms were listed among the world's top 100 defense firms. They include Mitsubishi Heavy Industries, which saw a 23.9% increase in arms revenue to $3.89 billion in 2023, and Fujitsu, which saw a 16.4% increase to $1.85 billion that year.

Liang said Japan's defense industry has benefited from a major increase in Tokyo's military spending policy. "Domestic orders for advanced systems have soared, further driving revenue growth," he said.

Mitsubishi Heavy Industries, for example, builds submarines and aircraft for Japan's forces, and saw new orders triple in 2023, Liang added.

Russia still leads in absolute figures

Still, the combined arms revenues of all nine Asian firms — about $21 billion — are eclipsed by the $25 billion in 2023 earnings reported by the Russian arms makers that SIPRI analyzed.

The institute didn't account for seven of the Russian enterprises that it listed in the Top 100 for 2022, saying that at this time, their "individual revenue data could not be obtained."

Liang wrote that the Russian defense industry has become increasingly opaque and that two major state-controlled firms — antiaircraft system maker Almaz-Antey and the Tactical Missiles Corporation — were no longer sharing their revenue data.

"Both companies probably have seen a significant rise in their revenue as they produce equipment categories in high demand due to the war such as air defense systems, artillery and missiles," Liang wrote.

SIPRI did cover two Russian state-owned firms: United Shipbuilding Corp and Rostec, a giant defense conglomerate that ranked seventh worldwide and oversees many arms producers.

SIPRI analysts said they normally wouldn't include data from Rostec, but listed it this time because it controls many of the arms manufacturers they could no longer gather data on.

The state-owned entity controls manufacturing for aircraft, electronic warfare systems, helicopters, and battle tanks.

Rostec's arms revenue grew 49.3% in 2023 to $21.7 billion, up from $14.5 billion in 2022, per SIPRI.

Meanwhile, United Shipbuilding Corp, which owns about two dozen shipyards and plants across Russia, paced behind the global revenue growth rate. It earned $3.7 billion in arms revenue in 2023, just 1.9% up from 2022.

• Ukraine is recalling a batch of 120mm mortar shells that soldiers said are defective.
• Ukrainian media reported that around 100,000 locally made rounds were affected.
• It's a notable hiccup in Ukraine's aspirations to rapidly scale up its ammo-producing industry.

Ukraine's defense ministry issued a recall of 120mm artillery shells this week, citing defects in a recently delivered batch of rounds.

In a statement on Tuesday, the ministry said it was investigating incidents of "abnormal activation" of the shells from the last three weeks.

Officials didn't say exactly how many rounds were affected, but Ukrainian media reported that 100,000 shells would be recalled.

The defective 120mm rounds — light artillery shells that Ukraine typically uses in mortars — were first reported in early November by Censor.Net, a local media outlet run by journalist Yuriy Butusov.

The outlet posted a video appearing to show a Ukrainian soldier complaining that the shells often failed to detonate and would sometimes fly only a short distance from their mortars.

Only about one in 10 rounds would fire and explode effectively, the soldier estimated.

Local broadcaster TSN also reported on Monday that soldiers said rounds would get stuck in their mortar barrels, and that their units were often receiving shells with wet powder charges.

Also called bounce or cheese charges, these are explosives meant to propel the mortar round out of its tube.

Butusov, who runs Censor.Net, published a separate video on his personal YouTube channel on Monday, saying that a commander told his outlet that several Ukrainian brigades were ordered to remove 100,000 shells from the front lines.

TSN and Ukrainian investigative journalist Yuriy Nikolov reported the same figure, with Nikolov writing that they were worth about six months of use.

Local reports also said that the rounds were domestically made by Ukroboronprom, a key ammunition manufacturer owned by the state.

The firm said in February 2023 that it partnered with an undisclosed NATO country to produce 120mm shells, but it's unclear if the defective rounds came from this joint venture.

Ukroboronprom and the Ukrainian Defense Ministry did not respond to requests sent outside regular business hours by Business Insider.

In its Tuesday statement, the defense ministry said it was looking into the causes of the defects, including "low-quality powder charges or violations of the storage conditions of ammunition."

Officials also said they would replace the defective rounds with imported ammunition, but did not elaborate.

Fedir Venislavskyi, a Ukrainian parliamentary member on a defense committee, told public broadcaster Suspilne that the rounds may have been affected by recent colder and more humid weather.

"In dry weather, these mines did not produce any failures," he told the outlet.

An unnamed defense ministry official also told Suspilne that the ammunition issues were limited to a single batch out of several already delivered by the manufacturer.

Kyiv has placed heavy emphasis on producing its own artillery rounds after its forces were starved of shells for months during a US Congress lock-up of American aid earlier this year. Globally, Ukraine's allies have also struggled to quickly scale up production of artillery shells.

On November 19, Ukrainian President Volodymyr Zelenskyy said domestic factories had produced 2.5 million artillery shells and mortar rounds in 2024 alone.

Quantity has been especially critical for Ukraine, which is facing a grinding Russian advance in the east that's relied on mass manpower, gear, and ammunition to chip away at the front lines.

Meanwhile, the ammo recall has sparked questions domestically about quality control and Ukraine's procurement process, with local outlets calling the incident a "scandal" of "low-quality goods."

Last year, Ukraine was hit by two major procurement scandals when its defense officials were accused of overpaying for food and low-grade winter jackets.

The defense ministry said a criminal investigation was launched for the 120mm case, but added that it wouldn't disclose further details due to sensitive military information.