South Korea's major power equipment companies are expected to continue their strong performance in the second quarter. The expansion of artificial intelligence data centers and the demand for North American power grid replacements are driving the conversion of high-margin products such as ultra-high voltage transformers, circuit breakers, and distribution equipment from backlog to sales.
According to industry sources on July 7, the consensus for the second quarter operating profit of four domestic power equipment firms—HD Hyundai Electric, Hyosung Heavy Industries, LS Electric, and Iljin Electric—is approximately 787.5 billion won based on simple aggregation. Individually, Hyosung Heavy Industries is estimated to report 290 billion won, HD Hyundai Electric 285 billion won, LS Electric 158 billion won, and Iljin Electric 54.5 billion won.
Hyosung Heavy Industries, which recorded a backlog of 15.1 trillion won in the industrial sector in the first quarter, is expected to maintain its performance improvement trend in the second quarter. High-margin orders, such as circuit breakers for the U.S. market that were not recognized as sales in the first quarter, are anticipated to be reflected. The fact that Hyosung Heavy Industries' Memphis plant is the only facility capable of producing 765kV ultra-high voltage transformers is also seen as a factor enhancing its competitiveness in North American orders.
HD Hyundai Electric is also expected to continue its performance improvement based on its competitiveness in North American ultra-high voltage transformers. Notably, orders from major North American tech companies are helping to solidify its data center power infrastructure business. Industry experts believe that if HD Hyundai Heavy Industries' medium-speed engine power generation solutions and HD Hyundai Electric's distribution business expansion align, long-term performance will steadily increase.
LS Electric is projected to exceed 1 trillion won in power sector sales, marking a record quarterly performance. It is understood that new orders in the second quarter have surpassed 2 trillion won, raising expectations for performance improvement in the second half of the year. Additionally, to capture demand in Southeast Asia, LS Electric is expanding its factory in Vietnam, which currently generates annual sales of 200 billion won, with a completion target set for November.
Iljin Electric is also expected to see improvements in profitability, particularly in its heavy electrical equipment sector. The effects of expansion following the operation of its Hongseong transformer plant and the conversion of North American high-margin backlog into sales are contributing factors. Furthermore, the company is gaining attention as a key player capable of responding to the expansion of power grid investments, one of South Korea's three major mega projects.
The strong performance of the power equipment sector is underpinned by increased investment in AI data centers. As major tech companies continue to invest in large-scale data centers, the demand for power infrastructure, including transformers, circuit breakers, and switchgear, is rapidly rising. Coupled with the need to replace aging power grids in the U.S., domestic companies are accumulating backlogs focused on high-margin orders for North America.
Industry insiders noted, "The demand in the power equipment market is so strong that even if new orders come in now, it will take at least four years for delivery. With the intersection of AI data center investments, North American power grid investments, and domestic power infrastructure expansion needs, both orders and performance are expected to remain robust for the foreseeable future."
* This article has been translated by AI.
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