[Report] The Secret Behind LS Cable's Multi-Billion Undersea Cable Contracts Lies All in Donghae

On the 19th, Visiting LS Cable Donghae Plant
Surge in Submarine Cable Demand Due to Wind Power Popularity
Rising to Global Top 3 with 100% Proprietary Technology
Successive Orders Domestically and Overseas
Considering Expansion into US and Europe

The gangway (cable passage) reminiscent of a railway track connects buildings 1 through 4 at LS Cable & System's Donghae plant. Submarine cables travel through the gangway between the buildings, where conductors are combined, insulators are made, and sheathing is applied, completing a total of six complex processes. The finished products are wound tightly like a twisted braid, dressed in yellow stripes, on a giant turntable to settle in place. After quality inspection, they are transported to Donghae Port located right next to the factory. The products loaded onto dedicated submarine cable transport ships are exported not only domestically but also to various regions such as Taiwan and Vietnam.

This was the scene when visiting LS Cable & System’s facility in Donghae, Gangwon Province, Asia’s largest submarine cable production base, on the 19th. As offshore wind power is gaining attention as a future eco-friendly energy source, LS Cable & System’s submarine cable production facilities were operating nonstop.

A super-large turntable loaded with LS Cable & System's submarine cables.
[Photo by LS Cable & System]

In fact, just ten years ago, the submarine cable market was dominated by European companies. LS Cable & System recognized the growth potential of the submarine cable market from the early 2000s but entering the market was not easy. In 2008, LS Cable & System invested about 300 billion KRW based on its wire business know-how to build the first domestic submarine cable production plant in Donghae, and gradually increased investments to establish its presence.

So far, LS Cable & System has invested approximately 700 billion KRW to sequentially expand the plant to buildings 2 and 3 in Donghae, and in May, completed the submarine cable building 4, Asia’s largest HVDC (High Voltage Direct Current) submarine cable dedicated factory. As a result, it has risen to become the world’s third-largest submarine cable company, following Italy’s Prysmian and France’s Nexans.

The secret to LS Cable & System, a latecomer, making it to the top tier lies in successfully domesticating the production line with 100% proprietary technology. In particular, the company shows confidence in the core competitive edge of submarine cables, which is making cables as long as needed. Since fewer joints in submarine cables minimize data and power loss, the technology to produce long cables without defects serves as a benchmark for a company’s technical capability. Kim Jin-seok, head of LS Cable & System’s Equipment Efficiency Team, said, "When there is a large temperature difference like these days, machines change conditions according to temperature, making defects more likely. If defects occur, all the cables produced must be discarded. But we have the know-how to prevent defects from occurring."

The size of the factory’s turntables also indicates how long cables the company can produce. At the Donghae plant, about 30 turntables, including the world’s largest 10,000-ton turntable, proudly stand.

LS Cable's submarine cables are made with 100% proprietary technology, successfully localizing the production line.
[Photo by LS Cable]

LS Cable & System’s technological prowess is translating into orders. Due to the difficulty of repairing submarine cables once laid, customers are flocking to LS Cable & System, which produces high-quality cables.

Recently, LS Cable & System won a 113 billion KRW ultra-high voltage cable project from the Singapore Power Authority. LS Marine Solution was selected as the preferred bidder for the submarine cable project of the Anma Offshore Wind Power Project in Jeonnam and established a sales base in Taipei, Taiwan. The company expects that orders for submarine cable materials and construction projects in Taiwan, estimated to reach a total of 4.5 trillion KRW, will begin in earnest by the end of this year. LS Cable & System Asia, responsible for the Vietnam business, recently signed a memorandum of understanding (MOU) with PTSC, a subsidiary of PetroVietnam, the state-owned oil and gas company, to cooperate on submarine cable projects. The Vietnamese government is currently promoting the construction of about 6 gigawatts (GW) of offshore wind farms by 2030 through the '8th National Power Development Plan (PDP8).'

In the first half of this year, the company recorded sales of 26.5 billion KRW, operating profit of 7 billion KRW, and net profit of 6.2 billion KRW, achieving the highest operating and net profits in the past 20 years, significantly improving its performance.

LS Cable plans to target the global submarine cable market through synergies with LS Marine Solutions and LS Cable Asia.
[Photo by LS Cable]

LS Cable & System plans to strengthen the manufacturing-construction value chain with LS Marine Solution, a submarine cable specialized construction company acquired in August, and to secure a leading position in the rapidly growing ASEAN submarine market by utilizing LS Cable & System Asia. LS Cable & System Asia is also considering building a local submarine cable factory with Vietnam’s PTSC.

The company is accelerating its entry into the U.S. market. LS Cable & System is currently reviewing the construction of a factory in the U.S., with investment decisions imminent. Kim Hyung-won, Vice President of LS Cable & System (Head of Energy and Construction Business Division), explained, "The U.S. wind power market itself has demand exceeding supply, so it inevitably relies on imports. We are in the final stages of selecting a site for the U.S. factory and plan to start at about 50% of the scale of the Donghae plant."

Europe is prioritizing the UK. Vice President Kim said, "Europe has inland areas based on Germany and islands based on the UK, and we are considering advancing from the UK to the inland areas. We believe that submarine cable demand in Europe will continue at least until the early 2030s."