Power equipment makers race to expand US capacity amid AI boom
Summary
HD Hyundai Electric, LS Electric and Hyosung Heavy Industries are expanding U.S. production and securing supply contracts as AI data center construction drives demand for power equipment. HD Hyundai Electric is building a second Alabama plant, while LS Electric is expanding U.S. operations and Hyosung is increasing capacity at its Memphis plant and establishing local circuit-breaker production. The companies also reported or were projected to report higher third-quarter earnings, with North American demand supporting sales.
Key Facts
- HD Hyundai Electric’s Alabama expansion is scheduled for completion in April and is expected to increase extra-high-voltage transformer capacity by about 50 percent, with production capability for transformers rated up to 765 kilovolts.
- HD Hyundai Electric reported third-quarter revenue of 1.18 trillion won and operating profit of 284.5 billion won, increases of 18.5 percent and 15.1 percent year-on-year.
- LS Electric reported third-quarter revenue of 1.88 trillion won and operating profit of 233.5 billion won, up 54.4 percent and 131.7 percent year-on-year, while North American revenue reached a quarterly record of around 500 billion won.
- LS Electric plans to invest $240 million in its U.S. manufacturing operations by 2030, including expanding its Utah switchgear plant and developing its Bastrop, Texas, campus.
- Hyosung Heavy Industries established a joint venture with Quanta Services in June to produce extra-high-voltage circuit breakers locally, and is investing $300 million to expand its Memphis transformer plant.
Major power equipment makers ramp up capacity as data center demand drives orders
HD Hyundai Electric CEO Kim Young-ki, left, and Georgia Transmission President Barbara Hampton pose with commemorative plaques at an event marking HD Hyundai Electric's 1,000th extra-high-voltage transformer at its North American manufacturing unit in Alabama, July 31. Courtesy of HD Hyundai Electric
Power equipment makers are expanding U.S. production and securing major supply contracts as the artificial intelligence (AI) data center boom drives demand for equipment ranging from high-voltage transformers to distribution gear, intensifying competition among suppliers for major contracts.
HD Hyundai Electric, LS Electric and Hyosung Heavy Industries are stepping up investments in local manufacturing to meet the growing demand from U.S. tech companies building out AI data centers.
HD Hyundai Electric is building a second plant in Alabama, scheduled for completion in April. The expansion is expected to boost its extra-high-voltage transformer production capacity by about 50 percent and enable it to manufacture transformers rated up to 765 kilovolts.
In July, the company secured a 1.12 trillion won ($836.8 million) supply contract with a global technology company, comprising 567.3 billion won of power equipment and 553.9 billion won of distribution equipment for data center construction.
It reported revenue of 1.18 trillion won and operating profit of 284.5 billion won in the third quarter on Tuesday, up 18.5 percent and 15.1 percent, respectively, from a year earlier.
Revenue from distribution equipment and new businesses jumped 85.8 percent year-on-year, supported by stronger North American sales, rising demand for distribution transformers from the semiconductor industry and contributions from a battery energy storage system (BESS) project in Korea.
LS Electric, which posted record quarterly earnings in the third quarter last week, has been securing major U.S. supply contracts for distribution equipment.
Earlier this month, it announced an 185.3 billion won deal to supply 38-kilovolt high-voltage switchgear and distribution transformers to a data center in Pennsylvania, followed by a separate 169 billion won contract to supply distribution solutions to a North American tech giant on Oct. 19.
LS Electric Chairman Koo Ja-kyun and employees pose at the company's switchgear plant in Utah in this undated photo. Courtesy of LS Electric.
The company reported third-quarter revenue of 1.88 trillion won and operating profit of 233.5 billion won, up 54.4 percent and 131.7 percent, respectively, year-on-year. Revenue from switchgear rose 120 percent, while sales of extra-high-voltage transformers increased 106 percent. North American revenue reached a quarterly record of around 500 billion won.
LS Electric plans to invest $240 million across its U.S. manufacturing operations by 2030, including expanding its switchgear plant in Utah and developing its Bastrop, Texas, campus into an integrated hub for manufacturing, research and development, and customer service.
“With a stable earnings base and orders increasingly gaining momentum amid the AI-driven power infrastructure supercycle, we expect to enter a period of sustained high growth,” an LS Electric official said.
Hyosung Heavy Industries is similarly strengthening its U.S. manufacturing footprint. In June, it established a joint venture with the U.S. infrastructure solutions provider Quanta Services, securing a local production base for extra-high-voltage circuit breakers, a first for a Korean power equipment maker.
The company is also expanding capacity at its transformer plant in Memphis, Tennessee, through a total investment of $300 million. Last month, it secured 386.5 billion won in extra-high-voltage transformer orders, underscoring continued demand for its products in the U.S. market.
Hyosung Heavy Industries is projected to post third-quarter revenue of 1.92 trillion won and operating profit of 263.1 billion won, up 18 percent and 19.7 percent, respectively, year-on-year.
Despite cost pressures in its construction business, analysts estimate that operating profit in its heavy industries division rose 43.9 percent to 281.6 billion won, driven by increased shipments of high-margin products, including extra-high-voltage transformers to North America.
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