Taiwan's Hai Kun submarine penalties pass NT$60 million as delivery runs 321 days late

Taiwan's prototype indigenous submarine, the Hai Kun, has now missed its contractual delivery date by 321 days, and the late-delivery penalties building up against shipbuilder CSBC Corp, Taiwan have passed NT$60 million, the Liberty Times reported on 17 October. Counting from 1 December 2025 at the contract rate of about NT$190,000 per day, the paper put the running total at roughly NT$60.99 million.

Under the navy's contract with CSBC, the boat was due to be handed over by the end of November 2025. Delivery has slipped because some of the sea-trial and test conditions written into the contract have not yet been met, according to the report.

The navy has already made clear that it will not be rushed. At a defence ministry press conference on 30 September, navy chief of staff Vice Admiral Chu Hui-min said the service would not set a delivery date, that sea testing would follow the test procedures under safety and quality requirements, and that the daily fine of a little over NT$190,000 would keep running until delivery. China Times estimated the total at that point at about NT$58 million.

The money is not being collected yet. Vice Admiral Chiu Chun-jung, now commander of the navy's Fleet Command, explained at an earlier ministry briefing, while he was still navy chief of staff, that the navy books the penalty on paper each day rather than asking CSBC for cash or cheques. The full number of days and the full amount will be settled in one step once the submarine passes all of its sea trials and meets the delivery conditions.

At that settlement the navy plans to use the performance deduction mechanism that is common in government defence procurement. The accumulated fine will be subtracted from the final contract payment owed to CSBC, and only the balance will be paid out. The Liberty Times noted that this spares the builder from finding emergency cash now and removes any risk that the navy is left chasing a contractor that cannot or will not pay.

The scale of the programme puts the figure in context. The prototype construction budget is about NT$49.36 billion. The paper compared the military rate with a common commercial shipbuilding practice of fining one-thousandth of the contract value per day, which on that budget would come to almost NT$50 million a day. By that yardstick the navy's rate is mild, although the military contract counts calendar days, so weekends, public holidays and even typhoon days all add to the total.

The defence ministry and the navy both say the penalty is being applied day by day in line with the law and the contract, and officials have not published any new delivery timetable. The Hai Kun must first pass deep-water submergence and the other remaining tests before the navy will accept it.

For the navy, the fine itself is small next to the cost of the boat. The larger price of each further day is that its newest submarine remains with the builder rather than in service, while the follow-on boats in the indigenous submarine programme wait on the lessons and approvals that only an accepted prototype can provide.

The next marker is the deep-dive test series. Once the Hai Kun clears it and the remaining trials, the settlement of days and money will show the final cost of the delay to CSBC, and the navy will at last have a firm date on which the prototype entered its hands.