[비즈한국] Hanwha Systems272210 is facing difficulties with its overseas new business investments. Despite ambitious entry into these ventures, there is no significant breakthrough in sight regarding profitability. Some point out that the time has come to make strategic choices, including liquidating businesses with poor performance.
Compared to other Hanwha Group subsidiaries, Hanwha Systems is smaller in scale and receives relatively less attention. Nevertheless, it is considered one of the most aggressive subsidiaries in pursuing new business investments. It has shown active initiatives, such as preemptively investing in future innovation technologies like Urban Air Mobility (UAM) and actively exploring overseas markets.
Hanwha Systems operates in three main business areas: defense, ICT, and new business, with the defense sector accounting for the overwhelming majority of its revenue. The new business segment is divided into satellite communication antennas, digital platforms, and UAM.
Hanwha Systems has been actively promoting these new businesses for about four years, with a primary focus on overseas markets. In early 2020, it acquired a stake in the U.S. UAM technology company Overair, and in the same year, it established a European subsidiary in the U.K. to acquire the satellite communication antenna company Phasor Solutions (now Hanwha Phasor). Furthermore, it established H Foundation, a holding company for digital platform businesses in Singapore, and invested in U.S. satellite antenna company Kymeta and U.K. space internet company OneWeb in 2021.
However, the strategically invested UAM business and the aviation satellite communication antenna business were slated for early withdrawal this year. In total, Hanwha Systems has poured approximately 1 trillion won into capital contributions and other investments for new businesses over the past three years. This includes 485.7 billion won in the satellite sector, 359.7 billion won in digital platforms, and 117.6 billion won in UAM.
The investment in the U.S. UAM specialist Overair ultimately ended in failure. After an initial investment of about 28 billion won in December 2019, Hanwha Systems invested an additional 150 billion won alongside Hanwha Aerospace012450, raising their stake to 45.2% to co-develop urban air taxis. However, with accumulated losses deepening—posting a net loss of 77 billion won last year and 59.4 billion won in the first half of this year—the asset value turned negative, and Hanwha Systems liquidated its stake last July. Nonetheless, Hanwha Systems emphasized that it has not folded the UAM business itself and it remains ongoing.
Hanwha Phasor, a key player in the satellite field, is also in a dire situation. After acquiring the U.K.-based satellite antenna company Phasor Solutions for about 70 billion won in 2020 and renaming it Hanwha Phasor, the company recorded a net loss of 16.3 billion won as of the first half of this year. Consequently, on the 12th, Hanwha Systems closed Hanwha Phasor's U.K. headquarters and its U.S. branch. Hanwha Phasor had been developing Electronically Steerable Antennas (ESA) that enable high-speed communication at sea, on land, and in the air, focusing specifically on satellite antennas for aircraft.
Initially, Hanwha Systems hoped to integrate this technology into in-flight video services or telematics (wireless internet services for vehicles) for autonomous cars. However, as the profitability of the aviation satellite communication market proved lower than expected, the company pivoted toward ground-based satellite antenna businesses tailored to the domestic defense market, a technology area where Hanwha Systems already possesses expertise.
The situation is also bleak for its investment in the U.S. satellite antenna company Kymeta, in which it invested 33.5 billion won to secure a 6.22% stake. Although its financial status for the first half of this year has not been disclosed, Kymeta posted a net loss of 139.6 billion won last year, the largest among the companies Hanwha Systems invested in.
In the digital platform sector, fintech firm Vanilla Studio and blockchain specialist Enterprise Blockchain also recorded net losses of 540 million won and 44 million won, respectively, through the first half of this year. However, Vanilla Studio, which has been slated for business closure, has managed to halve its deficit compared to the previous period.
An official in the defense industry remarked, "It is difficult to guarantee immediate profitability from new business investments. However, successive investment failures adversely affect a company's financial structure and trigger investor distrust. It is time to re-examine the overall investment system, such as by strengthening verification procedures."