K-Power Equipment Sets New Export Records... "Securing Technology and Rights Remains a Challenge" [Why&Next]

Surging Infrastructure Investment Driven by AI Demand
"K-Power" Proves Technological Excellence, Emerges as Export Powerhouse
Global Leaders Build Market Barriers Through Patents
Domestic Firms Passive in Securing Overseas Patents
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A boom in exports has arrived for the domestic power equipment market. As of 2023, the export share of nine core power equipment items accounted for 1.7% of total exports, earning the industry a place among the country's "13 major export industries." The power equipment sector is now being evaluated as a new export engine on par with biohealth and secondary batteries.

However, unlike global industry leaders, the domestic power equipment sector has been relatively passive in securing technology rights (such as patents and intellectual property rights) in major countries. This contrasts with the approach of global leaders, who have already established entry barriers in key markets by securing technology rights.

Experts advise that for the domestic industry to maintain long-term prosperity and secure a dominant market position, it is just as important to invest in protecting and managing proprietary technologies as it is to develop advanced technologies.

◆ "K-Power Equipment" Export Boom... Continued Rise in Power Demand = According to the Korea Customs Service on December 10, the export value of power equipment from January to November this year reached 7.13 billion USD, an 11.3% increase compared to the same period last year. Power equipment refers to hardware components such as wires, transformers, electric motors, converters, circuit breakers, generators, connectors, wiring and control devices, and switchgear (nine core items).

Since the emergence of the artificial intelligence (AI) service "ChatGPT" in 2022, the export value of power equipment has reached record highs every year. This is due to the increased scale of infrastructure investment resulting from the normalization of high-power-consuming AI services, as well as the growing global demand for K-power equipment.

In the AI era, stable power supply depends on quality and efficiency. In other words, the export boom of K-power equipment can be interpreted as recognition of its technological excellence and reliability on the global stage.

◆ Global Power Grid Expansion "Ongoing" = According to the "IP Competitiveness Analysis Report of Domestic and Overseas Power Equipment Companies" by the Korean Intellectual Property Office and the Korea Institute of Intellectual Property, the International Energy Agency (IEA) forecasts that global electricity demand will increase by 3.4% annually next year, mainly due to the replacement cycle for aging infrastructure, the transition to eco-friendly power equipment, and the surging demand related to AI data centers.

Wires, transformers, and generators are key assets that make up the power grid. The average service life of global power grid assets is approaching 30 years, nearing the typical asset lifespan of 30 to 40 years. In particular, the average service life of power grid infrastructure in the United States, the largest importer of transformers, is around 40 years, and it is estimated that 30% of transmission lines will need to be replaced within the next decade.

The situation is similar in other major countries. Reflecting this, countries are announcing large-scale infrastructure projects to replace aging power grids, and as a result, global order backlogs for power equipment companies are also increasing.

The growing number of countries accelerating the shift from centralized thermal power systems to renewable energy to achieve global net-zero scenarios is also contributing to the rise in global demand for power equipment.

The expansion of AI data centers is a primary factor driving the increase in global electricity demand. The surge in demand for data centers is being led by big tech companies such as Amazon, Google, Microsoft, and Baidu. These companies are rapidly securing capacity not only in the United States but also in global data centers in Southeast Asia and other regions. This trend supports the expectation that demand related to data centers will continue to surge as AI technology advances and digital services expand.

◆ As Competition Intensifies, Securing Technology Rights Becomes "Essential" = As the global power equipment market grows, competition among global companies is inevitably intensifying. Given this, there is a growing argument that the domestic industry must focus on securing technology rights in major overseas markets, in addition to strengthening technological capabilities.

Recent comparative analysis by the Korea Institute of Intellectual Property found that global industry leaders file, on average, 42.5% of their intellectual property (IP) applications in their home countries. This indicates that they distribute their IP filings across multiple countries, rather than concentrating solely on their domestic markets. This strategy is interpreted as a way to build IP barriers in countries with large power equipment demand, thereby blocking entry by competitors (latecomers).

In particular, the three global leaders in the electrical equipment sector-General Electric (GE, United States), Siemens (Germany), and ABB (Switzerland)-are the most active in protecting technology rights, with between 17,000 and 45,000 valid IP filings each. The share of domestic filings by company was 31.0% for ABB, 34.9% for Siemens, and 49.7% for GE.

In contrast, the domestic power equipment sector has not only filed significantly fewer total applications than global leaders, but most filings have been concentrated within Korea, indicating insufficient efforts to secure overseas rights for proprietary technologies.

Based on valid IP filings and the share of domestic applications, LS Electric had 5,549 filings with 49.4% domestic, Hyosung Heavy Industries had 588 with 65.5% domestic, and HD Hyundai Electric had 476 with 87.8% domestic, showing a large gap compared to global leaders.

Even so, LS Electric, Hyosung Heavy Industries, and HD Hyundai Electric had relatively high numbers of filings among domestic companies. In contrast, mid-sized and small companies such as KP Electric, Korea Cable, and L Powertech either held no patents at all or had fewer than ten filings, all within Korea. This indicates a gap in technology rights protection in the global market.

Kim Beomtae, a research fellow at the Korea Institute of Intellectual Property, pointed out, "Domestic power equipment companies possess advanced technologies, but compared to global leaders, they have been relatively lacking in securing and managing technology rights."

He further advised, "To gain an advantage in the global market, it is necessary to strengthen IP portfolios and diversify IP strategies by filing more international patents, especially in major markets such as the United States and Europe, to protect IP in each target market."