Samsung Techwin to supply airplane engine parts to GE

Samsung Techwin, a South Korean aeronautics and defense technology company, said Monday that it has struck a 470 billion won ($430 million) parts supply deal with U.S.-based General Electric.

The contract will run from 2016 to 2025.

Under the deal, Samsung Techwin will provide 18 types of parts to one of the world’s major airplane engine producers, in collaboration with Pratt & Whitney and Rolls-Royce.

Those parts will be used in the next-generation leading-edge aviation propulsion engine, which is being developed by CFM International, a joint venture between GE and France’s Snecma. The commercial production of LEAP engines will begin in 2016.

“The deal with global airplane engine makers will help the company to promote its technological prowess and to raise its global market penetration,” the company said in a press release.

Last November, Samsung Techwin, won a 1 trillion won ($900 million) bid to supply parts and components to Pratt & Whitney.

With the deal, the defense firm will supply six core parts for a next-generation mid-size jet engine, called the “Geared Turbofan,” that Pratt & Whitney is making.

Industry experts projected a positive outlook for the airplane engine parts business, based on growing demand for new airplanes. According to data compiled by Boeing, around 37,000 new airplanes will be introduced in the market over the next two decades, with about 70 percent of them expected to be mid-sized planes.

Samsung Techwin has tried to ease the market concern over the impact of the shift in managerial control on its businesses.

The defense business arm of Samsung Group was recently sold to Hanwha Group for $765 million.

Hanwha has built competitiveness in defense and weapon business from its foundation in 1952. It holds a 10 percent stake in Korea Aerospace Industries, the developer of the T-50 supersonic trainer jet, in place of Samsung Techwin.

Employees of Samsung Techwin, however, have opposed the merger, due to worries about job security and the effect that the loss of its Samsung association will have on its brand image.

By Seo Jee-yeon (jyseo@heraldcorp.com)