Complete Sell-Out of Delivery Volume by 2026
U.S. big tech companies, which are securing power supply, are snapping up transformers. The surge in supply requests has led to a shortage of transformers, with production unable to meet demand. Domestic transformer manufacturers such as HD Hyundai Electric are selectively participating in bids.
According to the industry on the 31st, HD Hyundai Electric recently participated in a bid for ultra-high voltage transformers in the U.S. being conducted by one of Google, Meta (formerly Facebook), or Amazon. Although they want to participate in all bids to secure orders, considering that their factories are already running at full capacity, they judged that meeting delivery deadlines would be difficult.
A company official said, "The transformer shortage phenomenon is continuing mainly in the U.S.," adding, "Delivery schedules are fully booked until 2026, and we are trying to secure orders for volumes after that."
Transformers, along with power cables, are seeing increased demand as power needs for artificial intelligence (AI) data centers grow. Additionally, the demand is being fueled by the replacement of aging power grids in the U.S. and the U.S. government's clean energy infrastructure expansion policies.
Although demand has increased beyond production capacity, orders continue unabated. An industry insider said, "Even though customers are aware of the transformer shortage, they are competitively placing orders," adding, "Since transformers tend to be reused with the same product once used, orders cannot be stopped just because work is delayed."
Competition among big tech companies to secure AI data centers is intensifying. In March, Amazon announced it would invest $150 billion (about 200 trillion won) over the next 15 years in AI data centers, while Microsoft (MS) and OpenAI also plan to invest $100 billion (about 137 trillion won) over six years.
With the acceleration of power grid modernization projects in the U.S., transformer demand continues to grow. On the 28th (local time), the White House announced policies to promote energy grid modernization involving the federal government and 21 state governments. The White House plans to replace existing transmission lines with high-voltage lines. Companies engaged in power cables and power businesses, including HD Hyundai Electric, LS Cable & System, LS Electric, Taihan Electric Wire, and Hyosung Heavy Industries, are expecting record-high North American order performances this year.
The price of ultra-high voltage transformers used in AI data centers ranges from 2 billion to 4 billion won per unit. The manufacturing period typically takes about one year. Companies are diversifying by entering not only the ultra-high voltage transformer market but also the distribution transformer market.
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