[Power Industry Transformation]③ Three Major Power Equipment Companies Secure 28 Trillion Won in Orders

Boom in Power Companies Driven by Increased AI Investment
Combined Orders of Top Three Power Firms Reach 28 Trillion Won
Record Orders for Extra-High Voltage Transformers, the "Star Product"

Editor's NoteThe power industry is emerging as a leading sector in Korea, following automobiles and semiconductors. For a long time, electricity played only a supporting role in the industrial sector. However, with the surge in demand driven by artificial intelligence (AI) data centers, electric vehicles, and the expansion of renewable energy, the power sector has become a key player in the K-industry, sought after even overseas. The four major domestic power equipment companies, including LS Electric, have secured orders worth 33 trillion won. The industry has established itself as a growth engine contributing to exports and job creation. The power industry is now focused on how to ensure a virtuous cycle structure. Securing direct current-related technology for more efficient power transmission has become a core challenge. This article examines the challenges faced by Korean companies amid the major transformation of the power industry.

The combined cumulative orders of the three major domestic power companies-LS Electric, Hyosung Heavy Industries, and HD Hyundai Electric-reached approximately 30 trillion won as of the third quarter of this year. The rapid expansion of AI data centers has caused a sharp increase in electricity demand, resulting in a situation where the supply of heavy electric equipment cannot keep up with demand. The industry expects this trend to continue for at least the next 10 years.

According to a compilation of quarterly reports from these companies disclosed through the electronic disclosure system on November 26, the cumulative order backlog for the first three quarters of this year totaled 27.5204 trillion won. This represents an increase of about 90.2% compared to the 14.8108 trillion won recorded during the same period in 2023. The order backlog for power companies has grown by more than 30% annually over the past three years.

Since the power equipment industry operates on a made-to-order production structure, the order volume can be regarded as guaranteed work for the coming years. This means all three companies have secured a stable revenue base for the foreseeable future.

Yoo Seunghoon, Professor of Future Energy Convergence at Seoul National University of Science and Technology, stated, "The heavy electric equipment industry, which transmits and distributes electricity, is experiencing a new renaissance. In the United States, electricity shortages are so severe in some areas that data center construction is being delayed due to overwhelming demand." Joo Hyungkyun, Head of Submarine Business Division (Executive Director) at Taihan Cable, also commented, "The supercycle in the power industry is expected to last for at least the next 10 years. Currently, supply is not able to keep up with industry demand at all."

As of the third quarter of this year, LS Electric recorded an order backlog of 4.1 trillion won, an increase of about 200 billion won compared to the previous quarter (3.9 trillion won). Notably, 1.9 trillion won of this is in the ultra-high voltage transformer segment. With new orders and customer expansion in the United States, the company achieved a record-high order backlog. LS Electric's orders related to domestic and overseas data centers this year are close to 1 trillion won, with approximately 800 billion won of that coming from North America alone.

LS Electric's data center power infrastructure business began to accelerate in earnest this year. Since last year, the company has been supplying distribution power equipment to big tech (large information technology companies) and is expanding its business to local distribution networks. Recently, LS Electric signed a contract with a North American AI big tech company to supply high- and low-voltage switchgear and transformers for AI data centers, valued at 132.9 billion won (91.9 million dollars).

The ordering company is a client with whom LS Electric signed power equipment supply contracts totaling 310 billion won from late last year to early this year. Contracts with this single client have exceeded 440 billion won. An industry official commented, "Factory capacity is already fully booked through 2027. In particular, the share of overseas orders is expected to grow even further in the future."