South Korea is expected to join a small circle of countries that operate nuclear-powered submarines after receiving approval from the United States for the supply of restricted nuclear fuel.
There is however no clarity on the production site of the submarines.
US President Donald Trump has said on Truth Social that Seoul would manufacture its nuclear-powered submarine in "the Philadelphia Shipyards, right here in the good ol' U.S.A."
But South Korean President Lee Jae Myung told a news conference on Wednesday the issue "still needs continued negotiation".
"From our perspective, producing them (nuclear submarines) there is extremely difficult realistically," he said.
"I fully understand the desire to do it, but we need to consider realistically whether it is truly feasible," he added.
He underlined Seoul's position was always to produce the submarines domestically.
"What we asked for was not 'build it for us' or 'give us the technology'," said Lee.
"Our position was simply, we will build it with our own technology, so just allow fuel supply for what is currently banned."
US nuclear submarine technology is considered among the most sensitive and tightly guarded military secrets.
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