Following the announcement of the contract, shares of Mitsubishi Heavy Industries saw a notable increase, reflecting positive investor sentiment.

Mitsubishi Heavy Industries has secured a monumental $10 billion contract to construct warships for the Australian navy, triumphing over its German rival, ThyssenKrupp Marine Systems.

This contract marks the largest defense industry agreement between Japan and Australia and is a significant moment in their bilateral relations, following the AUKUS nuclear-powered submarine program announcement in 2023.

The new fleet will consist of 11 upgraded Mogami-class frigates, designed for undersea warfare and air defense, aimed at securing maritime trade routes and protecting Australia's northern approaches.

The upgraded Mogami-class frigates boast a remarkable 10,000 nautical mile range, a 32-cell vertical launch system, advanced radar technology, and a reduced crew size of just 90, compared to the 170 required for the aging Anzac-class frigates.

Japan's commitment to deliver the first upgraded warships to Australia before they are available for its own navy played a crucial role in influencing the decision in their favor.

To avoid the pitfalls experienced with the Hunter-class frigate program, the Australian government plans to have the first three frigates built overseas with minimal design changes.

Negotiations with Mitsubishi Heavy Industries are expected to be finalized within the year, ensuring that the first frigate enters service by the end of the decade.

The construction plan includes building the first three vessels in Japan, with the remaining eight to be constructed in Western Australia, creating nearly 10,000 jobs and enhancing local shipbuilding capabilities.

The decision to select the Mogami-class frigate was based on factors such as cost, capability, and timely delivery to address gaps identified in Australia's strategic defense review.

The Japanese government views this contract as an opportunity to strengthen defense ties with Australia amid growing regional tensions.

This decision confirms that Japan's advanced Mogami frigate design will replace Australia's aging Anzac-class ships, which have been in operation since World War II.