The Future of Canadian Submarines: Weighing New Partners

Image Credit: Hanwha Ocean

The choice between competing submarine partners extends beyond platform performance to encompass long-term industrial development and Canada's role in a far-reaching maritime security environment.

June 16, 2026

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Confronted with U.S. hostility from the second Donald Trump administration, including a tariff war and ‘51st state’ provocations, the Government of Canada has recalibrated its relationship with the United States and pursued a path to greater self-reliance. To achieve this national interest, Prime Minister Carney ambitiously declared that “we are building that strength at home.”¹

Nowhere is this ambition more visible than in Canada’s efforts to strengthen its maritime defence capabilities. Canada is surrounded by three oceans, and much of what protects those waters depends on detecting and deterring what remains hidden underwater. The Government of Canada has sought to modernize the Royal Canadian Navy (RCN) by replacing its aging submarine fleet to address capability gaps and better navigate evolving security dynamics across two critical maritime domains in the Indo-Pacific and the Arctic.

The Department of National Defence (DND) officially launched the Canadian Patrol Submarine Project (CPSP) in July 2024.² The procurement bid aims to acquire “up to 12 conventionally-powered, under-ice capable submarines”³ to replace four Victoria-class fleet and advance the operational reach of the RCN across different coasts. Following the shortlisting of two contenders in August 2025⁴ and submission of final proposals in March 2026, a final partner selection is expected by the end of June 2026.

Beyond fleet renewal, CPSP represents a strategic inflection point: a decision that will improve not only undersea capability, but also facilitate Canada’s long-term defence industrial development under the government’s Industrial and Technological Benefits (ITB) Policy framework.⁵

Beyond fleet renewal, CPSP represents a strategic inflection point: a decision that will improve not only undersea capability, but also facilitate Canada’s long-term defence industrial development.

Public Services and Procurement Canada (PSPC) shortlisted two contenders in August 2025: Hanwha Ocean of South Korea and TKMS of Germany. Subsequent bidding instructions outline the key evaluation criteria: submarine sustainment package, which entails Maintenance, Repair, and Overhaul (MRO) (50%); platform capability (20%); company’s financial capacity (15%); and industrial benefits under the CPSP contract (15%).⁶

Both proposed submarine platforms — Hanwha Ocean’s KSS-III Batch II and TKMS’s Type 212CD — offer differing potential to deliver long-term industrial benefits and fulfill Ottawa’s sustainment requirements. As Canada weighs its options, Hanwha Ocean offers both strong platform capabilities and greater potential to advance Canada’s defence-industrial base over the submarine lifecycle. A grounded, interest-based assessment indicates that forging this new partnership will strengthen Canada’s sovereign capabilities as well as its strategic positioning across the Indo-Pacific and the Arctic.

Operational Strengths

As a part of DND’s announcement of CPSP, it declared that Canada seeks to “acquire a larger, modernized submarine fleet to enable the Royal Canadian Navy to covertly detect and deter maritime threats, control our maritime approaches, project power and striking capability further from our shores, and project a persistent deterrent on all three coasts.”⁷

These priorities are measurable by breaking them down into four categories: (1) fleet size, platform design, and delivery timeline; (2) stealth, endurance, and under-ice capability; (3) lethality and long-range strike capability; and (4) interoperability with allies.

Hanwha Ocean can claim a relative advantage when evaluated against the RCN’s most pressing task: the urgency to replace aging submarines and prevent a potential undersea capability gap. In this context, production maturity and delivery certainty emerge as decisive factors.

Hanwha Ocean’s KSS-III platform, also known as the Dosan Ahn Chang-ho class,⁸ is already in service with the Republic of Korea Navy, with the first Batch-II vessel completed and currently undergoing sea trials.⁹ While both bidders nominally meet Canada’s 2035 delivery target of the first submarine, Hanwha Ocean offers a more confident and accelerated timeline, committing delivery of the first submarine by 2032, four by 2035, and the full fleet of twelve by 2043.¹⁰

In contrast, TKMS’s Type 212CD remains at an early stage in its production cycle and faces timeline constraints caused by its substantial existing order book, including 12 submarines planned for the German and Norwegian navies.¹¹ While TKMS initially provided firm delivery timelines only for the first two submarines — projected for 2034 and 2037 — it has since recommitted to delivering four boats by 2036, partly by reallocating one submarine each from existing German and Norwegian Navy orders.¹² While this may accelerate near-term delivery, it still leaves greater uncertainty around the production schedule and delivery timeline for the remainder of the fleet.

Beyond delivery, the KSS-III Batch-II also aligns more closely with Canada’s defence posture toward enhanced lethality and assertive power projection. As the RCN seeks not only to defend Canada’s sovereignty but also to deter adversaries across expansive maritime domains collectively with security allies and partners, the platform’s larger hull and integrated vertical launch system (VLS)¹³ provide a significant operational advantage.¹⁴ The hull size is well-suited for ice-breaking surfacing and deep water operations, while the VLS — engineered to support submarine-launched ballistic missiles (SLBMs) — enables greater payload diversity, rapid strike capability, and long-range precision engagement.

However, this advantage is not without trade-offs. TKMS’s Type 212CD offers clear strengths in Arctic optimization and NATO interoperability. Its non-magnetic Amanox steel enhances performance in extreme cold and corrosion resistance,¹⁵ while its hull is well-suited for under-ice navigation. Moreover, TKMS benefits from a deep NATO integration supported by the ORCCA Combat Management System¹⁶ and institutional frameworks such as the EU’s Security Action for Europe (SAFE).¹⁷ This positions it as a lower-risk option for allied operations and Arctic missions.

However, the limitations of the KSS-III Batch-II are better understood as adaptable rather than structural. While its HY-100 steel is less optimized for Arctic conditions, proposed mitigation measures can reduce associated risks and can be further improved through sustainment. Although South Korea lacks the same depth of NATO integration, its rapid growth as a major defence exporter — ranking second in arms supply to NATO members between 2021 and 2025¹⁸ — signals an increasing alignment with NATO standards and an expanding interoperability over time.

An interest-based assessment of platform requirements positions Hanwha as a more operationally advantageous platform for Canada. It is able to do so not by outperforming Germany across all categories, but by more effectively addressing key CPSP categories, particularly timely delivery and enhanced lethality that strengthen naval capability.

Industrial Benefits and Strategic Autonomy

In February 2014, the Government of Canada introduced the Industrial and Technological Benefits policy, administered by Innovation, Science, and Economic Development Canada (ISED), to leverage long-term industrial benefits from defence procurement.¹⁹ The policy is centered on the Value Proposition (VP), a weighted component of bid evaluation that assesses bidders’ economic commitments to Canada across five key pillars: (1) work in the Canadian defence industry; (2) Canadian supplier development; (3) research and development (R&D); (4) skills development and training; and (5) exports.²⁰

The continued application of the ITB Policy aligns with the broader direction of Canada’s defence agenda. On February 20, 2026, Prime Minister Carney announced the launch of Canada’s Defence Industrial Strategy,²¹ marking a significant step toward realizing his earlier commitment to “strategic autonomy.”²² Alongside rearming the Canadian Armed Forces, including the RCN, the strategy aims to rebuild defence capacity and reinvest in the domestic defence industry. These are objectives reinforced through the ITB framework.

In this context, the five VP pillars of the ITB Policy serve as a critical and interest-based benchmark for assessing defence-industrial partnerships under the CPSP.

Across the first four pillars, Hanwha Ocean presents a more flexible and immediately deployable model. With the initial KSS-III Batch-II submarine completed production, Hanwha Ocean guarantees a credible transfer of structured in-service support (ISS)²³ capabilities, including Maintenance, Repair, and Overhaul (MRO)²⁴ activities, shipyard infrastructure development, and training of domestic workforce and submarine crews within Canada.

In addition, Hanwha’s extensive network of Canadian partners, trilateral industry-academia collaborations,²⁵ and demonstrated localization strategies in other customer countries²⁶ indicate deep industrial integration, proactively engaging Canadian firms — small and medium enterprises (SMEs), Indigenous businesses, and research institutions — into submarine supply chains.

In contrast, TKMS’s strengths lie in long-term R&D through its launch of the Canadian Defence & Dual-Use Innovation Ecosystem (CDDE)²⁷ and in formalized Indigenous partnerships, reflecting the growing significance of Indigenous sovereignty to Canada’s Arctic context. However, much of its offering remains prospective and developmental. As its sustainment ecosystem has yet to be operationalized, its immediate contribution to Canada’s defence industry is limited.

But the trade-offs are most clearly pronounced when developing Canada’s export potential. Germany’s proposal stands out in institutional integration and export market access, notably through Canada’s participation in the SAFE initiative within established European defence supply chains. This provides a more stable, rules-based pathway for Canada to learn from European partners, train its domestic workforce through joint procurement, and gradually develop the capacity to compete in high-standard European markets.

On the other hand, Hanwha Ocean’s approach, while broader and more ambitious, raises questions about the depth of integration across its wide partner network, as well as the absence of a multilateral framework comparable to SAFE for direct market access.

These limitations are better understood as manageable risks rather than structural constraints, given Hanwha’s proven track record in localization and export-oriented industrial expansion. Notable examples include the AS9 variant of the K9 Thunder self-propelled howitzer (SPH) for Australia and the HOMAR-K variant of the K239 Chunmoo multiple rocket launcher system (MRLS) for Poland, both adapted to national requirements and supported by localized production.

Reflecting this approach, Hanwha’s partnership²⁸ with Canada’s Automotive Parts Manufacturers’ Association (APMA) and Algoma Steel would, conditional on winning the CPSP award, establish a Canadian-owned manufacturing facility for military vehicles and systems. This includes domestic production of K9 SPH, which has been proposed under the Canadian Army’s Indirect Fires Modernization (IFM) program²⁹ and integrates Canadian-made steel into defence manufacturing and submarine sustainment. This creates opportunities for Canadian firms to co-develop and produce customized variants with South Korean defence firms across multiple defence sectors, thereby strengthening their export credibility without reliance on European partners.³⁰

Industrial benefits are a critical component of an interest-based judgment of Canada’s search for new defence partnerships. Understanding which proposed partners can credibly develop Canada’s defence supply chains, exportability, and strategic autonomy is key.

An Interest-Based Choice

The CPSP embodies the broader significance of “building strength at home.” It begins not only by equipping the RCN with modernized submarine capabilities to safeguard national sovereignty, but also by leveraging procurement as a strategic tool to reinforce Canada’s position across the Indo-Pacific and the Arctic.

The choice between competing submarine partners extends beyond platform performance to encompass long-term industrial development and Canada’s role in a far-reaching maritime security environment. While a critical assessment of the competing proposals from TKMS and Hanwha Ocean remains essential, the outcome will depend on the Government of Canada’s ability to translate procurement into sustained operational readiness and industrial competitiveness through concrete commitment and implementation.

A measured and interest-based approach to new partners will determine how effectively Canada can reduce its overreliance on the United States, strengthen sovereign capabilities, and assert strategic autonomy.

Author

Jarine Kim

Jarine Kim is Director of Research at the Canada Korea Business Council. She holds a Master of Global Affairs from the Munk School of Global Affairs & Public Policy at the University of Toronto. Her research focuses on Canada-Korea relations, defence-industrial cooperation, and Indo-Pacific security.

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