Shares of major Korean power equipment makers are rising after the government announced that 1,500 trillion won in corporate investment will flow into three mega projects: semiconductors, artificial intelligence (AI) data centers, and physical AI. Korean power equipment companies have seen their stock prices surge this year as rising demand from expanding global AI data center investment coincided with the timing for replacing aging power grids in North America. On top of this, the emergence of a nationwide plan to invest in advanced industries is drawing market demand, analysts said.
According to the Korea Exchange, LS Electric (010120.KS) was trading at 263,000 won as of 9:37 a.m. Monday, up 10.50% from the previous trading day. HD Hyundai Electric (267260.KS) rose 7.00% to 1.04 million won, while Hyosung Heavy Industries (298040.KS) changed hands at 3.779 million won, up 9.71%. These companies are among the top developers and producers of power equipment both in Korea and globally.
On the 29th of last month, the government announced that approximately 1,500 trillion won in corporate investment is planned for three mega projects: semiconductors, AI data centers, and physical AI. For new semiconductor investment, Samsung Electronics (005930.KS) and SK hynix (000660.KS) will each invest 400 trillion won, or 800 trillion won in total, in the Honam region to build a total of four memory chip production plants (fabs). For AI data centers, 550 trillion won will be invested in building a total of 8.4 GW of capacity in the first phase in cooperation with SK, GS, and Naver. All of these facilities will create enormous demand for electricity and related equipment, which could lead to earnings growth for power equipment producers.
Korean power equipment companies' stock prices have continued their steep climb this year. The main backdrop is rising demand stemming from AI data centers. Hyosung Heavy Industries recorded 4 trillion won in new orders in the first quarter of this year, of which the U.S. market accounted for more than 70%. HD Hyundai Electric also secured 2.646 trillion won in new orders in the first quarter, driven by growth in the U.S. market. This was the largest amount on a quarterly basis in the company's history. LS Electric also recently won a new 320 billion won order to supply North American data centers.
Power grid replacement projects are also driving demand growth. As the replacement cycle for aging power grids arrives in the United States, demand for various power equipment such as transformers is on the rise. "Rising demand stemming from AI data centers is combining with the U.S. power grid replacement projects, and the Korean power equipment industry is enjoying a boom," a securities industry official said. "If the mega projects are realized, the earnings uptrend could steepen."
