South Korea's ultra-high-voltage transformer exports top W1tr for first time in first half

South Korea's exports of ultra-high-voltage transformers surpassed 1 trillion won ($672 million) in the first half of this year for the first time on record, driven by an explosion in demand for power infrastructure needed to run large-scale AI data centers. With transformer demand showing little sign of cooling in the near term, the country's major power equipment makers are expected to keep racking up large orders.

Korea Customs Service trade statistics show South Korea exported $701.52 million worth of ultra-high-voltage transformers — those with a capacity exceeding 10,000 kilovolt-amperes — in the first half of this year, up 6.7 percent from $657.49 million in the same period last year. It was the first time first-half exports of the product crossed the 1 trillion won threshold since the customs service began tracking the data.

The record reflects the rapid growth of the AI industry, which requires enormous amounts of electricity. As data centers and other AI infrastructure have proliferated, demand for ultra-high-voltage transformers has risen in step.

Despite the surge in demand, only a handful of companies worldwide can produce ultra-high-voltage transformers — among them South Korea's three major power equipment makers: HD Hyundai Electric, LS Electric and Hyosung Heavy Industries. The product requires advanced, high-value manufacturing technology.

The supply shortage has kept the three Korean firms busy with a steady stream of orders. LS Electric signed a $70.26 million supply contract with a US energy infrastructure company in April for ultra-high-voltage transformers.

Hyosung Heavy Industries recently signed a long-term supply agreement with AusNet, the transmission network operator in Australia's Victoria state, covering ultra-high-voltage transformers and other power equipment. The deal is expected to be worth 310 billion won. HD Hyundai Electric, after securing a series of power equipment orders including ultra-high-voltage transformers, revised its annual order target up 22.8 percent — from $4.22 billion to $5.185 billion.

Export growth is expected to continue. Power infrastructure projects are advancing aggressively, particularly in the United States where global big-tech companies are concentrated, keeping a steady flow of customers seeking ultra-high-voltage transformers.

Aging power grids in the United States, Europe and other major markets are also lifting demand. About 40 percent of the EU's power grid consists of equipment more than 40 years old. The United States faces a similar challenge: according to the US Department of Energy, more than 70 percent of the American grid is over 30 years old.

Against this backdrop, market research firm Fortune Business Insights projects the global transformer market will grow from $80.8 billion this year at a compound annual rate of 8.78 percent, reaching $158.47 billion by 2034.

Power equipment makers are expected to post strong earnings on the back of these favorable conditions. As the ultra-high-voltage transformer market has shifted in favor of suppliers, rising product prices are boosting profitability across the sector.

HD Hyundai Electric's second-quarter operating profit is forecast at 285.1 billion won, up 36.3 percent from 209.1 billion won in the same period last year. Over the same period, LS Electric's operating profit is projected at 160.7 billion won — a 48 percent increase — while Hyosung Heavy Industries is expected to post 280.6 billion won, up 70.8 percent.