IRIA News

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Italy’s largest shipbuilder, Fincantieri, and Germany’s ThyssenKrupp Marine Systems (TKMS) have announced a joint effort to offer the Philippines a next-generation submarine solution as part of its Horizon III military modernization initiative.

The two firms signed an Industrial Cooperation Agreement that outlines their intent to work together under what they describe as “a broader strategic partnership to provide the Philippines’ Navy with advanced submarine capabilities solutions.”

The announcement adds significant momentum to the Philippines’ submarine acquisition program, one of the most ambitious and expensive undertakings in the nation’s military modernization history.

The Philippine Navy has long aimed to enhance its naval capabilities, especially amid growing security challenges in the South China Sea, an area Manila refers to as the West Philippine Sea. With an archipelagic geography and strategic maritime location, the need for robust naval deterrence has become increasingly urgent.

While the idea for the acquisition of submarines was first floated in 2012 under the Revised Armed Forces of the Philippines Modernization Program, it was not until the launch of the Horizon II program that the submarine requirement gained serious traction.

“As part of the Horizon III military modernization initiative, the Philippine Navy aims to enhance its archipelagic defense by acquiring cutting-edge weapon systems. In particular, the introduction of submarines would be a game-changer in securing territorial waters, especially in the South China Sea,” stated a Fincantieri press release.

U212-Class stealth submarine

The Italian-German team is proposing the U212-class submarine, which both companies had previously developed for the Italian Navy under the Near Future Submarine (NFS) program. That program includes four NFS submarines and two larger NFS EVO variants, though the exact model being offered to the Philippines remains unspecified.

Fincantieri touts the U212 NFS as having unique advantages suited for the Philippine Navy’s needs. Key features include air-independent propulsion (AIP), which allows the submarine to remain submerged for extended periods, and Amanox non-magnetic steel, which significantly reduces detectability. These stealth characteristics, the shipbuilder asserts, will provide the Philippines with a “significant strategic advantage.”

The competition to supply the Philippine Navy with submarines has drawn global players. France’s Naval Group, Spain’s Navantia, and South Korea’s Hanwha Ocean are already in the fray, all vying for a slice of the estimated $1.7 billion allocated for the two-boat procurement package, which also includes necessary basing and maintenance infrastructure.

The Cost-Benefit Conundrum

Despite growing geopolitical pressures, the Philippines continues to wrestle with the financial and strategic feasibility of acquiring submarines. While President Ferdinand “Bongbong” Marcos Jr. and other key officials have expressed interest in submarine capabilities, the steep costs and operational requirements present substantial barriers.

“I hope we can have submarines in the future, but presently it is not a priority. We have to beef up first our submarine detection systems, we have to beef up first our anti-submarine capability, our sensors, and even naval shipyards that should be able to maintain these submarines and our ships,” said former Flag-Officer-in-Command, Vice Adm. Toribio Adaci during an interview.

This sentiment underscores a core dilemma that, while submarines offer game-changing capabilities, the Philippines must first address foundational weaknesses in maritime surveillance, anti-submarine warfare, and logistics.

Submarines vs Surface Ships

In recent years, incidents in the West Philippine Sea have become more frequent and volatile, with China stepping up assertive tactics, including the use of coast guard and maritime militia vessels to challenge Philippine maritime patrols and resupply missions.

These developments have led some defense analysts and policymakers in Manila to argue that more immediately deployable platforms, such as frigates, corvettes, and unmanned surface vessels, should take precedence.

Indeed, the Philippine Navy has already prioritized the procurement of new surface ships, radar systems, and maritime patrol aircraft under Horizon III. However, submarine proponents argue that undersea warfare capability would serve as a potent deterrent and an asymmetric counterbalance to the naval might of larger adversaries.

Financing and Strategic Partnerships

While the U212-class submarine offers technical advantages, its selection may hinge as much on financing terms as on capabilities. France and South Korea have already backed their respective national shipbuilders, Naval Group and Hanwha Ocean, with generous financing proposals. Such state-backed incentives are seen as critical in appealing to the Philippines’ constrained defense budget.

Fincantieri and TKMS have yet to announce any government-supported financing structure, but their new industrial cooperation agreement suggests a long-term commitment to the region and potential local manufacturing partnerships that may help offset costs. Such localization could also align with the Philippines’ push for domestic defense industry development.

Future of the agreement

As one of the most expensive defense procurement efforts in Philippine history, the submarine acquisition program represents more than just a military upgrade, it is a test of Manila’s long-term defense planning and its ability to balance geopolitical needs with economic realities.

The growing list of competitors underscores the strategic importance of the Philippines in the Indo-Pacific theater. Whichever company ultimately wins the submarine contract will not only secure a major defense deal but also deepen ties with one of Southeast Asia’s most strategically located maritime nations.

For now, all eyes are on the next moves from Manila, where the Defense Department must weigh multiple factors, from technical capability and financial feasibility to long-term interoperability and strategic alignment, before making a final decision.

As regional tensions continue to rise and the deadline for Horizon III implementation draws nearer, the race to secure the Philippines’ undersea defense future is heating up, with the Italian-German partnership now firmly in the mix.