LS, Taihan enjoy soaring global cable demand amid AI boom

Employees work at LS Cable & System's plant in Gumi, North Gyeongsang Province, in this 2020 file photo. Courtesy of LS Cable & System

Korean cable makers are increasing their output rapidly to meet the soaring global demand amid the need to replace worn-out equipment and construct more data centers worldwide due to the popularity of generative artificial intelligence, according to industry officials, Monday.

LS Cable & System (C&S) said in its recent regulatory filing that the size of its backlog of orders surpassed 5 trillion won ($3.7 billion) during the first quarter, up from 3 trillion won a year earlier. The size of Taihan Cable & Solution’s backlog of orders also jumped 25 percent to 1.9 trillion won.

As a result, LS C&S began to run its Gumi factory in North Gyeongsang Province at full capacity to prevent delays in the supply of bare copper wires and cables for various voltages ranging from low to extra-high.

LS Eco Energy, the company’s Vietnamese subsidiary, even asked its employees to work overtime to satisfy the growing demand.

The capacity utilization rate of Taihan’s Dangjin plant in South Chungcheong Province also reached 87 percent.

In the past, cable makers regarded the first quarter as an off-season because their customers placed more orders during the second half.

However, LS C&S’ first-quarter operating profit rose 22 percent year-on-year to 73 billion won, while LS Eco Energy posted an operating profit of 9.7 billion won, up 84 percent from the previous year.

“The worldwide establishment of electrical grids has sharply increased the demand for cables,” LS Eco Energy CEO Lee Sang-ho said. “We anticipate the largest annual earnings this year.”

Taihan’s first-quarter operating profit soared 63 percent year-on-year to 28.8 billion won, the largest since the second quarter of 2010. Its revenue was 788.5 billion won, up 12.02 percent year-on-year and the largest since the second quarter of 2011.

“We will continue improving our earnings by winning more orders for highly value-added products,” a Taihan official said. “We will enhance our corporate value by winning orders for strategic products, such as submarine cables and high-voltage direct current cables.”

Yuanta Securities analyst Son Hyun-jeong said she expects the latest super-cycle in the electric power industry, which came for the first time in 15 years, to be more powerful than previous booms in the past.

“In addition to the replacement of worn-out equipment, construction of data centers and power plants using renewable energy created the recent demand,” the analyst said.