LS Group Chairman Koo Ja-eun says power equipment bottleneck will persist, eyes Europe and Middle East

LS Group Chairman Koo Ja-eun said the current bottleneck in the power equipment sector is likely to persist for the long term — and that this represents a major opportunity for LS.

Speaking in an interview published in the latest issue of the Federation of Korean Industries' magazine "All Together" (No. 8), Koo said the global power equipment market has entered a supercycle driven by the rapid expansion of generative AI infrastructure and surging demand to replace aging power grids in the United States. He added that lead times for ultra-high-voltage transformers — the period from order placement to shipment — have stretched to more than three years.

Koo attributed the prolonged bottleneck to the industry's steep barriers to entry. "The power industry demands advanced technical expertise, rigorous quality certification and a pool of skilled specialists — all of which make it extremely difficult for new players to break in," he said.

He said LS is well positioned to capitalize on the situation. "If we secure competitiveness in quality and delivery, we can rapidly expand our market share in a space long dominated by European and American companies," Koo said. "However, the window of opportunity will not stay open indefinitely, so the speed at which we build supply capacity and how aggressively we respond to market demand will determine success or failure."

Koo identified North America as LS's most important global strategic hub, citing an explosion in power infrastructure demand driven by the proliferation of AI data centers.

Key LS affiliates LS Cable & System and LS Electric have been racking up orders from AI data center projects across North America. Gaon Cable, a subsidiary of LS Cable & System, recently announced it will supply bus ducts — power distribution equipment — worth 200 billion won ($146 million) to an AI cloud data center project in the United States. LS Electric is set to provide AI data center power equipment to a major North American big-tech company in a deal valued at $165.72 million.

Riding the wave of orders in North America, LS Cable & System and LS Electric are both moving to establish and expand local production bases in the region. LS plans to invest $3 billion in the US market by 2030 to meet future demand.

Koo said LS is also looking beyond North America. "We are keeping a close eye on the post-conflict reconstruction and large-scale rebuilding opportunities that will emerge in Europe and the Middle East once current geopolitical risks subside," he said. "When international conflicts end and the work of rebuilding destroyed power infrastructure begins in earnest, the gap between companies that prepared in advance and those that did not will become immediately apparent."

Koo also stressed the importance of localizing key raw materials and diversifying supply chains. "Diversifying the supply chain for critical raw materials is a national imperative if K-battery and power infrastructure are to maintain their leadership in global markets," he said. "LS is actively pursuing rare-earth materials for secondary batteries — including permanent magnets — as a next-generation business."

As part of that effort, LS Cable & System has selected Chesapeake, Virginia as a candidate site for a new rare-earth permanent magnet factory and is conducting a feasibility study. LS Eco Energy, a subsidiary of LS Cable & System, agreed in March with Australia's Lynas — the world's second-largest supplier of rare-earth raw materials — to begin mass-producing rare-earth metals within the year.

"Particularly in critical minerals such as rare earths, where China accounts for more than 90 percent of supply, if Korea's industry can independently build out the entire value chain — from securing oxides to metal processing to magnet manufacturing — we will achieve national-level supply chain resilience that is not vulnerable to external variables," Koo added.