Korea Investment Securities on September 16 upgraded its rating for transformer manufacturer Hyosung Heavy Industries to 'overweight.' The firm noted that concerns about the re-entry of Chinese equipment into the market have eased due to an executive order from the Trump administration, which has alleviated fears of a slowdown in high-voltage transformer demand.
Jang Nam-hyun, a researcher at Korea Investment Securities, stated, "Large-scale data centers must secure stable grid power in the long term, even if they have their own power sources. Recently, data center operators have begun to bear the costs of investing in transmission networks and substation facilities themselves."
Hyosung Heavy Industries has also been securing significant contracts in the North American market. On September 15, the company announced two contracts for the supply of high-voltage transformers in the U.S., involving 765kV and 345kV transformers, with a combined contract value of 386.6 billion won. The market views these large orders as alleviating some concerns about a 'peak-out' in transformer demand.
The upward trend in high-voltage transformer demand is expected to continue for the time being. Jang emphasized, "In addition to the need for replacing aging power grids, the expansion of regional transmission networks due to the construction of AI data centers by big tech companies will lead to ongoing shortages in high-voltage transformers. Consequently, the order backlog growth for domestic power equipment companies, including Hyosung Heavy Industries, HD Hyundai Electric, and LS Electric, is also expected to persist."
* This article has been translated by AI.
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