Contracts and North American sales
LS ELECTRIC is using shortages of power equipment in the United States as an opportunity to expand business with major technology customers and establish a basis for repeat orders. As growing data center investment increases demand for power distribution equipment, the company has secured additional orders from existing customers and long-term supply contracts, moving beyond market entry to expand supply volumes. Whether it can turn a temporary supply shortage into a long-term customer base through expanded local production capacity and reliable delivery will be critical to future growth.
According to industry sources on November 4, LS ELECTRIC has secured a series of major supply contracts in the US data center market this year. On October 13, it disclosed that its US subsidiary, LS ELECTRIC AMERICA, had signed a contract worth 185,257,180,000 won for a fuel-cell power equipment supply project in Pennsylvania. In accompanying materials, it said cumulative orders from Bloom Energy had exceeded $500 million within 1 year and 6 months of the start of their collaboration.
Business with major technology customers has expanded from one-off orders to long-term supply contracts. On October 19, LS ELECTRIC signed a contract worth about 168.9 billion won to supply data center power distribution solutions to a major US technology company. The contract runs for 2 years, from 2027 through 2028, and its value was calculated based on volumes scheduled for supply in 2027. It differs from an individual project order in that it secures future supply volumes in advance.
The increase in orders was also reflected in North American business results. LS ELECTRIC's consolidated revenue for the third quarter of this year rose 54.4% year on year to 1.8778 trillion won, while operating profit increased 131.7% to 233.5 billion won. North American revenue reached a record of about 500 billion won, up 25% from the previous quarter. The order backlog at the end of the third quarter was about 7 trillion won, with new orders for the quarter totaling about 1.6 trillion won.
Demand and repeat orders
Rising US demand for power equipment has supported North American results. Data center investment, expansion of manufacturing facilities and replacement of aging grids are combining to grow the market. An LS ELECTRIC representative identified construction of US battery, semiconductor and automobile plants beginning around 2018 to 2020 as the starting point for demand growth. Demand for power distribution facilities at new factories was subsequently supplemented by grid replacement and artificial intelligence (AI) data center investment.
US utilities' investment plans also indicate growth potential in the power infrastructure market. According to the Edison Electric Institute (EEI), US investor-owned electric utilities recorded capital expenditure of $178.2 billion in 2024, an all-time high. These companies plan capital expenditure exceeding $1.1 trillion over the 5 years from 2025 through 2029. Expansion of manufacturing production sites and electrification, alongside AI and data centers, are cited as investment drivers.
In this market, LS ELECTRIC is expanding its business primarily in power distribution equipment. Transmission carries electricity generated at power plants over long distances, while distribution supplies electricity to end users such as factories and data centers. Data centers need switchgear and distribution transformers to provide reliable electricity to servers and cooling equipment. LS ELECTRIC is supplying packages of related products to increase order values per customer.
When entering the market, demonstrating quality, delivery reliability and after-sales service capabilities is important. Because power equipment directly affects facility stability and safety, customers are reluctant to change existing suppliers. An industry representative explained that newcomers had often supplied supplementary volumes to customers served by large US companies. As existing suppliers became unable to meet demand on their own, opportunities arose for new suppliers to enter.
After securing new customers, maintaining business through repeat orders is considered a key task. Follow-up orders depend on demonstrating quality and delivery capabilities in the first transaction. Growth in cumulative orders from Bloom Energy and the 2-year supply agreement with a major technology company are examples of existing business generating follow-up orders. Expanding the product range beyond switchboards to include transformers could provide scope to increase the company's share of supply to individual customers.
Local production capacity and profitability
Meeting growing orders also requires expanded local production capacity. LS ELECTRIC is strengthening its production base around its Utah facility and Bastrop campus in Texas. The Utah facility manufactures switchboards and circuit breakers, among other products, and aims to complete its expansion in the second half of 2027. Local production could help reduce shipping times and logistics costs while meeting customer preferences for US sourcing.
Whether production expansion translates into better financial performance depends on utilization rates and profitability. If expansion lags order growth, delivery delays could damage customer trust. However, excess capacity remaining after demand slows would increase the burden of fixed costs. Volumes secured through contracts should be distinguished from capacity added in anticipation of future orders, with utilization and profitability examined together.
Ultimately, LS ELECTRIC's US business has moved beyond acquiring new customers to pursuing repeat orders and a broader supply scope with existing customers. Third-quarter North American revenue growth, additional Bloom Energy contracts and the long-term supply agreement with a major technology company demonstrate expansion of its customer base. Attention should now focus on the speed at which the order backlog converts into revenue, local factory utilization rates and the scale of additional orders from existing customers. While US power infrastructure investment continues, timely expansion of local production capacity and conversion of new customers into long-term accounts are expected to determine whether growth can be sustained.
An LS ELECTRIC representative said, "Previously, we were closer to a supplementary supplier serving customers of established large companies in the US market, but we have now moved somewhat beyond that stage. Supply chain problems created opportunities for new companies to enter, and the size of the market means there is substantial room for growth."
Original Korean article: ngetnews.com
English brief by Korea Wind Intelligence, koreawindintel.com
