Korean power equipment makers are winning a string of large contracts as power demand surges from artificial intelligence (AI) data centers and major countries accelerate the overhaul of their transmission grids.
HD Hyundai Electric (267260.KS) said Tuesday it signed a long-term supply contract worth up to 1.1212 trillion won for distribution and power equipment with a global big tech company. By product, the deal comprises 553.9 billion won in distribution equipment and 567.3 billion won in power equipment, with actual orders to be placed sequentially through 2028 in line with the client's North American data center construction schedule.
The contract carries significant meaning in that it supplies distribution equipment and power equipment together in a package form. Supplying the two product groups as a bundle improves design consistency and reduces risks in delivery, quality, and after-sales service management. Because a package order requires a product portfolio and technological capability spanning the entire power value chain, the company explained the win demonstrates that HD Hyundai Electric has earned recognition for its competitiveness overseas.
Demand for data center power infrastructure has been expanding rapidly in North America. According to the International Energy Agency (IEA), global data center power consumption is expected to more than double from 415 TWh in 2024 to 945 TWh in 2030. In particular, data centers in the United States are expected to account for about half of the total increase in power demand through 2030.
HD Hyundai Electric's new orders in the first quarter of this year reached $1.797 billion, a record high on a quarterly basis, with $1.315 billion secured in North America alone. The company estimates that demand for transformers and reactors in North America alone will reach 2 trillion to 3 trillion won annually. In the United States, analysts say growth potential is very large as AI data center demand, aging power grid replacement, and new transmission grid investment converge simultaneously.
Hyosung Heavy Industries (298040.KS) is also winning large contracts overseas one after another. Hyosung Heavy Industries signed a long-term supply contract for power equipment including ultra-high-voltage transformers and reactors with AusNet, the sole transmission grid operator in Australia's state of Victoria. Through the contract, worth about 310 billion won, it will exclusively supply ultra-high-voltage power equipment to Victoria's transmission grid over the next five years. This follows a 142.5 billion won energy storage system (ESS) project won in Queensland in March. Hyosung Heavy Industries ranks first in Australia's ultra-high-voltage transformer market share.
The Australian government is ramping up a 20 billion Australian dollar (about 20 trillion won) "national grid overhaul" project to resolve grid instability arising from the transition to renewable energy and to expand large-scale long-distance transmission grids. In particular, given local conditions where renewable energy generation complexes are far from urban demand centers, making long-distance transmission essential, the introduction of power solutions such as high-voltage direct current (HVDC) transmission is urgently needed.
"Australia is one of the most dynamic markets in the world in terms of the speed and scale of energy transition," Hyosung Chairman Cho Hyun-joon said. "We will expand cooperation to next-generation grid solutions such as HVDC and static synchronous compensators (STATCOM)."
In North America, Hyosung Heavy Industries' cumulative orders in the first half reached 2.5 trillion won, and its subsidiary Hyosung HICO recently established a joint venture with Quanta, a major U.S. power infrastructure engineering, procurement, and construction (EPC) company, to begin targeting the North American ultra-high-voltage circuit breaker market in earnest.
Earlier, LS Electric's new orders from North American big tech this year approached 1.2 trillion won, far exceeding its full-year performance last year (800 billion won). As orders flooded in, LS Electric recently decided to invest 250 billion won to significantly expand its production facility located in Utah, United States.
With power equipment prices rising amid a combination of supply shortages and product sophistication, the earnings outlook for domestic power equipment companies has also brightened further. According to financial information provider FnGuide, the combined revenue of the three firms — HD Hyundai Electric, Hyosung Heavy Industries, and LS Electric — is expected to reach 17.9596 trillion won this year, up 19.6% from the previous year. Operating profit is projected to grow 38% to 2.9947 trillion won, raising expectations of surpassing 3 trillion won in annual operating profit.
