Canada selects Germany’s TKMS for landmark 12-submarine order valued at 20 billion euros

German naval manufacturer Thyssenkrupp Marine Systems (TKMS) has secured the largest contract in its corporate history, a landmark agreement to deliver 12 submarines to the Royal Canadian Navy for approximately €20 billion ($21.7 billion).

Canadian Prime Minister Mark Carney announced the decision on Monday, confirming that Ottawa has selected the TKMS Type 212 CD (Common Design) submarine over the rival KSS-III model offered by South Korea’s Hanwha Ocean, which had also been under close consideration.

As a result of the selection, the navies of Germany, Norway, and Canada will operate the identical class of vessel. The three nations will be able to field an unprecedented combined fleet of 24 Type 212 CD submarines to counter the Russian Navy in the North Atlantic and Arctic oceans.

Beyond the naval contract, TKMS is reportedly laying the groundwork for an additional sweeping bilateral package valued in the tens of billions of euros. This broader economic initiative includes German purchases of Canadian liquefied natural gas (LNG) and the construction of launch facilities in eastern Canada for German space launch vehicles.

These aerospace facilities are intended to grant Ottawa operational independence from US launch infrastructure.

TKMS is experiencing a period of significant growth, further bolstered by fresh orders from the German Navy. Among these domestic programs, the company is developing the F127 frigate, which represents the most expensive defense procurement project in the history of the German armed forces.

Ottawa selects German industrial giant over South Korean rival

Canada has decided to award its long-planned contract for the construction of up to 12 new submarines to the Kiel-based naval specialist TKMS, passing over South Korean competition.

Prime Minister Carney announced the decision on the eve of his departure for the NATO summit in Ankara. Under the terms of the agreement, Ottawa will procure the Type 212 CD submarines, which TKMS produces in joint cooperation with Norway’s Kongsberg Defence & Aerospace (KDA).

Compared to the predecessor Type 212 A class, the Type 212 CD features advanced sensor suites and has been optimized for operations in the harsh environments of the North Atlantic and the Arctic, including under-ice deployments.

In winning the tender, TKMS defeated Hanwha Ocean. The South Korean shipbuilder’s KSS-III model, which carried a significantly lower price tag, was ultimately bypassed.

The total financial volume of the Canadian acquisition is estimated at approximately €20 billion.

The first Type 212 CD submarines are scheduled for delivery in 2033. It remains undisclosed whether the Royal Canadian Navy will take immediate delivery of these initial hulls or face a longer induction timeline.

While final contractual details are still being negotiated, TKMS confirmed that the submarines will be constructed entirely at the German group’s shipyards in Kiel and Wismar. Canada’s industrial contribution to the primary construction will be limited to the supply of specialized non-magnetic steel.

Germany, Canada, and Norway form North Atlantic alliance against Russia

Canada’s selection of the TKMS platform is closely aligned with the primary operational requirements of its maritime forces.

On one front, Ottawa is increasingly focusing on potential northern deployments given its vast Arctic coastline and the ongoing reduction of polar ice cover.

On another, Canadian naval strategy is heavily oriented toward patrols in the North Atlantic. These missions aim to prevent Russian surface combatants and submarines from transiting the Arctic Ocean past Iceland to project power into the wider Atlantic.

With the primary objective of securing the strategically vital Greenland-Iceland-United Kingdom (GIUK) Gap, Germany, Norway, and Canada established a joint “North Atlantic Security Partnership” at the NATO summit in Washington in July 2024. Denmark formally joined the defense coalition in 2025.

The scope of this trilateral operational cooperation is broad. In addition to underwater assets, Germany, Norway, and Canada are acquiring Boeing P-8A Poseidon maritime patrol aircraft to conduct coordinated aerial surveillance over the North Atlantic.

Germany and Norway have already jointly ordered 12 Type 212 CD submarines.

If Canada fulfills its planned acquisition of 12 additional vessels, the three partner nations will eventually operate a highly standardized fleet of 24 identical submarines, streamlining joint operations and maintenance.

Targeting strategic independence from the US

The acquisition of the TKMS Type 212 CD is further supported by extensive industrial offset agreements negotiated between Berlin and Ottawa.

These offset packages are designed to deepen German-Canadian economic integration and industrial cooperation.

Through these initiatives, both nations aim to reduce their respective economic reliance on the United States.

As part of the offset programs, TKMS plans to establish a joint center of excellence for submarine simulation, crew training, and maintenance in partnership with Canadian technology firm CAE.

On Tuesday, German aerospace startup Isar Aerospace signed an agreement with Maritime Launch Services, a Canadian company developing a commercial spaceport near Canso, Nova Scotia.

Beginning in 2028, Isar Aerospace intends to launch its Spectrum launch vehicle from the Nova Scotia facility to deploy small and medium-sized satellites. Historically, Canada has relied entirely on US launch infrastructure for its space access.

Under parallel reciprocal investment frameworks, the German state-backed gas importer Sefe is scheduled to import 1 million metric tons of Canadian LNG annually.

This supply agreement is intended to partially reduce Germany’s reliance on US shale gas imports.

Discussions have also taken place regarding German investments in Canada’s raw materials sector, specifically focusing on securing supply chains for rare earth elements.

TKMS order book swells amid defense procurement boom

The Canadian submarine contract provides significant commercial momentum to TKMS.

As of March 31, the company reported a record-high order backlog of €20.6 billion.

In the first half of the 2025/26 fiscal year, TKMS reported a 10% increase in revenue to €1.17 billion. While this remains substantially below the volumes recorded by German defense prime Rheinmetall—which grew its revenue by approximately 8% to €1.94 billion in the first quarter of 2026 alone—it highlights the broader defense boom lifting the naval specialist.

TKMS recently rose to 61st place in the Stockholm International Peace Research Institute (SIPRI) global ranking of the world’s largest defense contractors.

The company is anticipating further export orders. In late June, TKMS celebrated the christening of the third Tamandaré-class frigate being built for the Brazilian Navy in Itajaí, Brazil.

One vessel in the class has already been delivered, a second is scheduled to begin sea trials this year, and a fourth is currently under construction.

The Brazilian government is reportedly planning to place an follow-on order for an additional four TKMS frigates.

To manage this sharp increase in naval production, TKMS has been in ongoing negotiations to acquire the adjacent German Naval Yards facility in Kiel.

However, Rheinmetall has also expressed strong interest in acquiring the same shipyard to support its newly established maritime division.

US technology remains central to defense systems

TKMS is positioned to benefit heavily from domestic procurement programs initiated by the German Navy.

Following the cancellation of the F126 frigate project, TKMS secured contracts to build new MEKO A-200 class frigates as a rapid alternative.

The initial phase of the program involves the construction of four hulls at a cost of €6.63 billion, with a follow-on option for an additional four vessels valued at €5.3 billion.

These domestic surface combatant contracts, alongside the Canadian submarine program, are not yet reflected in the record €20.6 billion backlog reported on March 31.

Concurrently, development continues on the F127 next-generation frigate program, which TKMS is executing in partnership with the Naval Vessels Lürssen shipyard (acquired from Rheinmetall).

The German Navy currently plans to procure eight F127 frigates to serve as its primary air defense combatants over the coming decades.

Total program costs are estimated to exceed €26 billion, which naval analysts note makes the F127 the most expensive procurement project in German naval history.

However, the program has faced criticism regarding its planned air defense suite, which relies on Standard Missile interceptors and the SPY-6 radar system.

Both systems are manufactured by the US defense contractor RTX (formerly Raytheon), maintaining a significant degree of technological dependence on Washington.

Defense analysts point out that there are currently no equivalent European alternatives to these US systems, and note that Germany will remain reliant on US satellite and GPS networks for the next decade.

While a transition to European systems, such as the Iris-T interceptor family manufactured by Germany’s Diehl, could eventually offer strategic independence from the US, experts estimate that this technology will not be sufficiently mature for high-end naval air defense applications until the mid-2030s.