Hanwha Techwin, a Korean defense manufacturer, said Monday that it has signed a parts supply deal worth 241 billion won ($204 million) with Korea Aerospace Industries Ltd., the country's sole aircraft manufacturer.

The deal is designed to localize parts of the engine for Korea's next-generation fighter jets, Hanwha Techwin said in a regulatory filing.

In May, Korea picked U.S. company General Electric as the preferred bidder to supply engines for the KF-X project. KAI said Hanwha Techwin is set to import GE engines and localize some of them, and assemble the engines before delivering them to the South Korean government for the project.

The KF-X project calls for building 120 locally made twin-engine combat jets. Korea plans to deploy the new planes starting in the mid-2020s to replace its aging jet fleet of F-4s and F-5s. Shares of Hanwha Techwin closed up 2.94 percent at 47,200 won on the Seoul bourse on Monday.

Hanwha Group took over Samsung Techwin, the defense manufacturing unit of Samsung Group, and renamed it Hanwha Techwin last year. (Yonhap)