As Global Electricity Demand Surges, Korean Power Equipment Firms Enter Boom Cycle

As global electricity demand surges, Korean power equipment manufacturers are experiencing a boom in orders. In particular, demand for key facilities such as ultra-high voltage transformers is rapidly increasing in the U.S. market. Despite tariff risks, Korean companies are accelerating local investment and expanding production facilities.

According to industry sources on the 21st, the Korean power equipment industry has entered a super-cycle, with near full-capacity operation driven by rising sales in high-margin North America. HD Hyundai Electric’s average operating rate in Q1 reached 95.9%, while Hyosung Heavy Industries recorded an average of 94.19% for the same period.

Order backlogs have also reached record highs. HD Hyundai Electric and Hyosung Heavy Industries have backlogs of KRW 9.51 trillion and KRW 10.83 trillion, respectively. Notably, U.S.-bound orders make up a significant portion, with North America accounting for 38% of HD Hyundai Electric’s Q1 sales and approximately 65% of its backlog.

In line with growing power demand, companies are actively expanding investments in the U.S. The Federal Energy Regulatory Commission (FERC) projects that U.S. electricity demand growth will rise from 2.6% in 2023 to 4.7% by 2028. In 2023 alone, U.S. private utilities invested more than USD 170 billion in power generation and infrastructure—nearly double the level seen during previous CAPEX expansion periods.

While tariff risks loom large, the ultra-high voltage transformer market remains supply-constrained, giving sellers strong pricing power. Many industry insiders believe that, even if tariffs materialize, the added costs can be partially passed on to buyers through higher sales prices. Indeed, the U.S. is experiencing a "shortage phenomenon," where supply falls short of soaring demand, intensifying the imbalance in the market.

In response, Korean firms are working to establish local production systems in the U.S., making them less vulnerable to tariff policies. HD Hyundai Electric plans to invest KRW 185 billion to build a second plant in Alabama by 2027, aiming to manufacture 765kV-class ultra-high voltage transformers. Hyosung Heavy Industries is also considering expanding production at its Memphis plant from 130 to 250 units annually—almost doubling capacity. This comes just a year after investing KRW 70 billion to increase output to 160 units per year, indicating a swift response to rising local demand.

Industry executives are also engaging in diplomatic efforts with U.S. policymakers to address tariff-related challenges and strengthen Korea-U.S. cooperation. Kim Young-ki, CEO of HD Hyundai Electric, is ramping up lobbying efforts in the U.S. In Q1, he spent approximately KRW 170 million through the U.S. law firm Squire Patton Boggs on lobbying related to "trade issues affecting power transformers and Korea-U.S. bilateral trade relations."

Hyosung Chairman Cho Hyun-joon also attended the Cherry Blossom Summit in Washington, D.C. at the end of March, where he met with former Trump administration officials including Energy Secretary Chris Wright, HUD Secretary Scott Turner, and U.S. senators. His active engagement in informal diplomacy underscores the strategic importance of the U.S. market.

BNK Securities researcher Lee Sang-hyun commented, "Although uncertainties related to tariffs and a potential slowdown in AI data center investment are rising, the industry has not yet felt a significant impact. With lead times stretching over four years and aging infrastructure needing replacement, coupled with growing electrification demand, the current boom cycle is likely to continue."

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