Korea's three major power equipment makers — Hyosung Heavy Industries (298040.KS), HD Hyundai Electric (267260.KS) and LS Electric — secured more than 7 trillion won ($5.1 billion) in new orders in the first quarter, pushing their combined order backlog past 32 trillion won. The replacement of aging US power grids, combined with new artificial intelligence (AI) data center construction, is driving strong demand for Korean-made transformers and switchgear.
According to the power equipment industry on Tuesday, Hyosung Heavy Industries' power equipment division booked 4.1745 trillion won in new orders in the first quarter. Its total order backlog reached 15.1 trillion won, the first time a Korean power equipment maker has surpassed the 15 trillion won mark.
The figure far exceeded securities industry forecasts, with the company's flagship 765-kilovolt (kV) ultra-high-voltage transformer technology underpinning the achievement. The 765 kV ultra-high-voltage transformer is a power device with high design complexity, requiring high-voltage insulation technology and rigorous testing and verification processes.
A 787.1 billion won contract signed in February with a US transmission grid operator to supply 765 kV ultra-high-voltage transformers and reactors is the largest single-project deal ever recorded in Korea's power equipment industry. "We currently supply about half of the 765 kV ultra-high-voltage transformers installed on US transmission grids," a Hyosung Heavy Industries official said. "We have maintained the No. 1 market share in that segment since the early 2010s."
HD Hyundai Electric also posted a record $1.797 billion (approximately 2.646 trillion won) in new orders in the first quarter, securing 42.6 percent of its annual order target of $4.222 billion in just three months. Its order backlog at the end of the first quarter stood at $7.888 billion (11.6174 trillion won).
Lee Sang-hyun, an analyst at BNK Investment & Securities, said of HD Hyundai Electric, "The company has accumulated a record order backlog, fully securing mid- to long-term earnings visibility." He added, "Based on explosive pent-up demand, the company is selectively taking orders with specifications and unit prices most favorable to itself, leading to gradual price increases. The expanding share of high-voltage circuit breakers for North America and the Middle East — a high-margin product line — is defending and lifting overall margins."
Another notable development is HD Hyundai Electric's 680 billion won order won through a group-level onshore power generation consortium (engine-motor package), formed in line with the expanding trend of self-generation at data centers. HD Hyundai Electric's generator portion in the project accounts for about 6 to 10 percent.
LS Electric booked 627.1 billion won in new orders in the first quarter, bringing its order backlog to 5.6425 trillion won. In April, the company signed a 170 billion won switchgear supply contract with Amazon Web Services (AWS) and a 319 billion won distribution solution supply contract with Bloom Energy, raising expectations for second-quarter and subsequent earnings.
Lee Min-jae, an analyst at NH Investment & Securities, said of LS Electric, "The North American data center customer base is thickening, and product diversification is also emerging from alternating current (AC) power equipment to direct current (DC) power equipment."
