South Korea's power equipment industry has entered a second phase of its supercycle. Demand previously concentrated on extra-high-voltage transformers is spreading to equipment needed for power networks inside artificial intelligence (AI) data centers, including distribution transformers and switchboards. South Korean power equipment manufacturers, with several years of orders secured, are consequently expanding domestic and overseas production capacity in preparation for sustained demand.
According to industry sources on October 30, Hyosung Heavy Industries recorded consolidated third-quarter revenue of 1.7406 trillion won and operating profit of 243.5 billion won. These increased 7.2% and 10.8%, respectively, from a year earlier. The company maintained year-on-year profit growth despite some heavy industry revenue being pushed into the fourth quarter by logistical disruptions related to conditions in the Middle East and hurricanes in the United States, and despite higher costs being reflected in its construction division.
Earlier, LS ELECTRIC reported record quarterly results, with revenue of 1.8778 trillion won and operating profit of 233.5 billion won, increases of 54.4% and 131.7%, respectively. HD Hyundai Electric also recorded revenue of 1.1799 trillion won and operating profit of 284.5 billion won, up 18.5% and 15.1%. The simple combined revenue of the three companies reached 4.7983 trillion won, with operating profit of 761.5 billion won. Their combined operating profit was approximately 34% higher than a year earlier.
Power equipment boom broadens as distribution demand increases
A notable feature of these results is the broadening scope of the power equipment boom. The initial supercycle centered on a shortage of extra-high-voltage transformers triggered by replacement of aging US power grids and the expansion of renewable energy. More recently, growing investment in AI data centers has also rapidly increased demand in the distribution segment, which delivers power to data centers and servers.
LS ELECTRIC's third-quarter switchboard revenue rose 120% year on year, while extra-high-voltage transformer revenue increased 106% and distribution equipment revenue rose 32%. North American revenue also reached a record of approximately 500 billion won. HD Hyundai Electric likewise recorded an 85.8% increase in distribution equipment and new business revenue as sales of distribution transformers for semiconductor applications and distribution equipment in North America increased.
Korea Customs Service trade statistics show the same trend. Exports of distribution and control panels totaled $802.2 million in the third quarter of 2026, up 39.9% from a year earlier. Exports to the United States surged 103.1% to $400.75 million. This indicates that North American demand is spreading beyond extra-high-voltage transformers to distribution and control equipment.
Procurement practices are also changing as AI data centers grow larger. Particularly among North American big tech companies, long-term package contracts covering power transformers, distribution transformers and distribution equipment are becoming more common, rather than purchases of power transformers alone. To respond to this demand, HD Hyundai Electric has decided to invest an additional 198 billion won in its Cheongju distribution equipment campus. It plans to secure capacity for an additional 250 billion won in annual revenue through the investment.
Hyosung Heavy Industries is also rapidly accumulating orders in the North American extra-high-voltage market. Third-quarter new orders rose 122% year on year to 3.2331 trillion won. Its order backlog increased 71% to a record 18.9 trillion won. It recently signed extra-high-voltage transformer supply contracts worth a combined 380 billion won with two US big tech companies. Although some revenue recognition was delayed, orders supporting future earnings have increased substantially.
Large order backlogs also support expectations that the supercycle will continue. HD Hyundai Electric's order backlog at the end of the third quarter was $8.843 billion, up 4.2% from the previous quarter. Third-quarter new orders fell year on year to $980 million, but this largely reflected the base effect of substantial orders in the first half. LS ELECTRIC is also expanding high-margin North American projects, particularly in AI data centers and extra-high-voltage transformers.
Concerns about a power equipment peak as the market expands
Market participants have raised concerns that the power equipment business cycle could pass its peak if the pace of AI investment growth slows. However, third-quarter earnings and order trends do not yet show clear signs of a slowdown in the industry. Instead, the market appears to be broadening as the boom previously concentrated on extra-high-voltage transformers extends to distribution equipment.
An industry representative said, "AI data centers require not only access to large amounts of power but also equipment to convert and distribute it reliably," adding, "As data center investment coincides with North American power grid replacement demand, power equipment demand continues to expand from transmission into distribution."
Original Korean article: pointdaily.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
