Distribution equipment capacity and investment
South Korean power equipment companies are expanding beyond the booming extra-high-voltage transformer market into power distribution as a future source of growth.
Growing investment in artificial intelligence (AI) data centers and semiconductor plants is increasing demand not only for transmission equipment that brings in large amounts of electricity from power plants, but also for distribution equipment that allocates that electricity within facilities.
HD Hyundai Electric, LS ELECTRIC and Hyosung Heavy Industries are expanding production capacity and technology investment in medium- and low-voltage transformers, switchboards and circuit breakers. Their strategy is to secure growth opportunities beyond extra-high-voltage power equipment while developing integrated supply capabilities covering transmission and distribution.
This trend was also evident in HD Hyundai Electric's third-quarter results. Revenue from distribution equipment and new businesses reached 325.1 billion won in the third quarter of 2026, up 85.8% from a year earlier.
Deliveries of distribution transformers increased, particularly to domestic semiconductor production facilities, while sales of medium- and low-voltage circuit breakers for data centers grew in North America. Recognition of 125 billion won in revenue from a battery energy storage system (BESS) project on Anjwa Island in Sinan, South Jeolla Province, awarded in 2025, also contributed to revenue growth.
The previously established smart factory for medium- and low-voltage circuit breakers in Cheongju has also moved into full operation. Increased capacity has raised sales of distribution equipment, including vacuum circuit breakers (VCBs) supplied to North American data centers and other customers.
To meet rising demand, HD Hyundai Electric has decided to invest an additional 198 billion won in its Cheongju distribution campus. It aims to increase annual revenue by 250 billion won by establishing a smart factory and automated logistics facilities.
LS ELECTRIC, a long-established supplier in the distribution sector, is also growing rapidly.
LS ELECTRIC's switchboard revenue reached 541.6 billion won in the third quarter of 2026, up 119.8% from 246.4 billion won a year earlier. Revenue from its mass-produced distribution equipment also rose 31.6% to 305.8 billion won.
Switchboards distribute incoming electricity among equipment within a facility and protect equipment by cutting off power when abnormal currents occur. They are regarded as essential equipment for AI data centers, which need to use large amounts of electricity reliably around the clock.
LS ELECTRIC recently signed a long-term agreement worth 168.9 billion won to supply data center distribution solutions to a U.S. big tech company. The agreement runs from 2027 through 2028, with 38-kilovolt high-voltage switchboards to be supplied first.
Following the high-voltage switchboards, the company is also discussing additional supplies of low-voltage switchboards, distribution transformers and gas-insulated ring main units (RMUs).
It is also strengthening its North American production and supply system. Using production sites in Cedar City, Utah, and Bastrop, Texas, it is establishing a system that can handle sales, design, manufacturing and after-sales service locally.
Direct current distribution for data centers
Hyosung Heavy Industries is also developing data center distribution technology as a next-generation business.
Hyosung Heavy Industries recorded consolidated revenue of 1.7406 trillion won and operating profit of 243.5 billion won in the third quarter of 2026. These figures increased 7.2% and 10.8%, respectively, from a year earlier.
At CIGRE 2026, an International Council on Large Electric Systems event held in Paris, France, in August 2026, Hyosung Heavy Industries presented direct current distribution solutions for data centers alongside high-voltage direct current (HVDC) transmission technology.
The technology supplies direct current electricity inside data centers using the company's independently developed solid-state transformer (SST). It focuses on reducing losses associated with conventional power conversion and improving data center power efficiency.
Demand extends from transmission to internal distribution
The three power equipment makers are strengthening their distribution businesses because of the structure of grid development and changes in big tech companies' purchasing practices.
Delivering electricity generated at power plants to data centers and industrial complexes requires transmission, in which voltage is increased for long-distance transport. Distribution then lowers the voltage of electricity arriving at a site and allocates it for use in buildings, servers and production equipment.
In the early stages of AI data center construction, the priority was securing transmission-side equipment such as extra-high-voltage transformers and circuit breakers to bring in large amounts of electricity from outside. As data center construction gathers pace, demand is also increasing for internal power equipment such as switchboards, medium- and low-voltage transformers and circuit breakers.
This does not mean demand for transmission equipment is declining. Rather, the scope of power infrastructure investment is expanding from transmission grids to distribution networks inside facilities.
Big tech companies' increased use of long-term supply agreements to prepare for shortages is also supporting growth in the distribution market. Some customers are choosing package orders that combine extra-high-voltage power equipment, distribution transformers and circuit breakers.
For power equipment makers, this means greater opportunities to move beyond supplying individual products and provide integrated supplies covering everything from a data center's external power grid to its internal equipment.
An HD Hyundai Electric representative said, "Unit prices and profitability are substantially higher for extra-high-voltage power equipment, where there are few global suppliers. However, demand for distribution equipment is also highly likely to expand substantially, following replacement of aging transmission grids and new transmission projects."
The representative added, "Production capacity and revenue are increasing as the Cheongju smart factory for medium- and low-voltage circuit breakers enters operation. We decided to invest in a second-phase expansion to respond to continued demand growth."
Original Korean article: inews24.com
English brief by Korea Wind Intelligence, koreawindintel.com
