AI Devours Power Grid: US Faces Alarm Over Equipment Shortage

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based customized news recommendation and summarization service" developed with the support of the Korea Press Foundation. It selects and provides six customized news items for each reader type.

1. Submarine Ultra-High-Voltage Cables Sold Out for 4 Years... Substation Transformers Ordered 5 Years Ahead

- Key Summary: Due to the explosion in AI data center demand, the power grid equipment supply crunch in the US is becoming severe. According to consulting firm Wood Mackenzie, demand for generator step-up transformers surged 274% between 2019 and 2025, and delivery times surpassed 160 weeks (about 3 years and 1 month) as of the first quarter of this year, while delivery for high-voltage circuit breakers also jumped from 77 weeks in 2023 to 125 weeks in the second half of last year. Submarine ultra-high-voltage cable makers Prysmian, Nexans, and NKT are fully booked with orders through 2029, and Allianz Research projected that the supply shortage rate for key power equipment reaches about 30%, forecasting that roughly half of the approximately 12 GW of data center capacity planned in the US this year will be delayed or canceled. Wood Mackenzie observed that US data center power capacity will expand from about 24 GW currently to 110 GW by 2030, with the data center share of the power equipment market surging from less than 2% in 2020 to as much as 40% by 2030.

2. "HBM4 Prices to Double Next Year... Samsung-SK Hynix Bargaining Advantage to Continue"

- Key Summary: Taiwan's DigiTimes reported, citing multiple industry sources, that HBM4 (fourth-generation high-bandwidth memory) prices will surge from about $2 per Gb (gigabit) in the second half of this year to more than $4-5 next year. HBM4 has a total production cycle of 4-6 months, up to twice as long as the 3-3.5 months for DDR5 (fifth-generation double data rate), and its initial yield is also low, which is assessed to intensify upward price pressure. Meanwhile, as large AI customers secure volumes through 3-5 year long-term contracts, the possibility has been raised that roughly half of total production capacity may be prioritized for large customers starting next year. Separately, with DDR5 profit margins exceeding 80% at some suppliers this year, Samsung Electronics and SK hynix are reallocating some production capacity to DDR5, which is also cited as a variable fueling HBM price increases.

3. "Explosive Demand to Continue via KV Caching... Memory Is No Longer a Cyclical Industry"

- Key Summary: SK Group Chairman Chey Tae-won diagnosed at the commemoration ceremony for SK hynix's Nasdaq ADR listing that the semiconductor industry no longer moves according to an oversupply-driven cyclical structure. He stressed that the gap between demand and supply is widening further as demand for KV caching (key-value caching, an optimization technique in which large language models store previous computation results in memory for reuse) explodes with a surge in AI token usage. Chey also mentioned the possibility of introducing new business models such as "Memory as a Service" (MaaS), and forecast that Chinese companies will catch up rapidly by expanding their capital expenditure capacity through returning to profit and IPOs (initial public offerings). Regarding whether to invest in a US plant, he stated that investments timed to election schedules or specific terms are not under consideration, and that he would decide based on customers' supply security demands and market size.

4. Adding Server Racks Completes AIDC Supply Puzzle... "Securing Competitiveness Beyond Foxconn"

- Key Summary: LG Electronics (066570.KS), leveraging its cooling technology and mechanical engineering capabilities, has succeeded in developing a prototype AI server rack (a server aggregation device) conforming to Nvidia's next-generation platform "Vera Rubin" specifications, and is conducting reliability evaluations in the second half of this year with the goal of mass production next year. Market research firm MarketsandMarkets forecast that the AI server rack market will grow at an annual average of 34% over the next five years, reaching $448.6 billion (about 672 trillion won) by 2030. LG Electronics has developed its own "direct-to-chip (D2C)" cooling device that flows coolant near the chip to directly reduce heat, and Nvidia CEO Jensen Huang assessed during his visit to Korea that "LG's cooling technology is essential for GW-class data centers." The LG Group is building supply capabilities across the entire AI data center (AIDC) construction process by adding server rack manufacturing to its "One LG" turnkey strategy, which combines LG Electronics' chillers, LG Energy Solution's (373220.KS) batteries, and LG CNS's data center construction capabilities.

5. Samsung to Operate First Yongin Fab in 2029... "Achieving 1 Million Wafers Per Month in Output"

- Key Summary: Samsung Electronics is pushing to move up the operation of the first fab (semiconductor production plant) at the Yongin Semiconductor National Industrial Complex from the original 2031 to 2029, two years earlier. Current wafer production capacity is around 650,000 units per month, and following 920,000 units per month in 2028, total production capacity is expected to reach more than 1 million units per month once the first Yongin fab begins operation. Accordingly, the government plans to move up the start of construction of a nearby 3 GW LNG (liquefied natural gas) power plant and shorten the schedule for power and water supply. Last month, Samsung Electronics announced plans to invest 2,030 trillion won in the construction of the Pyeongtaek-Yongin semiconductor cluster and 400 trillion won in two Gwangju fabs, and the industry expects capital expenditure (CAPEX) to increase 30-40% annually over the next three years.

6. Yang Jong-hee: "Money Move Is an Opportunity to Boost WM Competitiveness"

- Key Summary: KB Financial Group Chairman Yang Jong-hee ordered about 270 group executives to redesign the business structure in response to AI transformation and money moves (fund movements) at the "2026 Second-Half Group Executive Workshop" held in Sacheon, South Gyeongsang Province. The workshop focused on discussing the medium- to long-term management strategy for 2027-2029, with key agenda items including the redesign of WM (wealth management) and pension business models, strengthened corporate investment banking (CIB) collaboration, and accelerated group AI transformation. Yang stressed, "Money move is an opportunity to boost the competitiveness of WM and asset management, and productive finance will be a turning point that expands the role of KB's CIB and small- and medium-sized enterprise business." Meanwhile, KB Kookmin Bank will, starting on the 13th, offer basic livelihood recipients and the near-poor class...