MHI's selection over Germany’s Thyssenkrupp Marine Systems represents a pivotal achievement for Japan’s defense export ambitions, especially after a failed 2016 bid to provide submarines to Australia. The winning bid offered stealth capabilities and 32 vertical launch missile cells—outperforming its German rival. According to MHI, factors such as proven performance, lower crew requirements, and radar avoidance design influenced Australia’s decision. The first three ships will be built in Japan, with the remaining eight to be constructed in Western Australia. Deliveries are scheduled to begin in 2029, with service entry in 2030.

MHI’s shares rose 4.5% in Tokyo following the announcement. The company views the deal as a financial and symbolic boost after a 4% fall in order intake in Q2 2025, with Chief Financial Officer Hiroshi Nishio stating that it would help lift sales in upcoming fiscal years. Japan’s Defense Minister Gen Nakatani expressed strong support, noting it was a major step in joint military collaboration between Tokyo and Canberra.

Australia Aims For Fast-Tracked Fleet Modernization

Australian Defence Minister Richard Marles said the Mogami-class vessels would form the backbone of a more capable and lethal naval surface fleet. Compared to Australia’s aging Anzac-class ships, the new frigates will offer expanded operational capabilities with smaller crews. Australia’s revised procurement plan follows a 2024 strategic reassessment that found the current surface fleet inadequate for evolving threats. Canberra opted for an “off-the-shelf” acquisition model, with partial overseas construction to speed up delivery.

The navy's surface fleet is expected to grow from 11 ships in 2024 to 26 by the mid-to-late 2040s—the largest since World War II. The shift in strategy also reflects growing uncertainty over U.S. support and increasing military pressure from China. Both Japan and Australia have intensified joint exercises, signaling a broader Indo-Pacific alignment in defense policy.