South Korea's top 5 power equipment and cable firms set to break W30tr in sales, W3tr in operating profit for first time

South Korea's three leading power equipment makers — HD Hyundai Electric, Hyosung Heavy Industries and LS Electric — along with the country's two major cable companies, LS Cable & System and Taihan Cable & Solution, are on track to collectively surpass 30 trillion won ($22.1 billion) in sales and 3 trillion won in operating profit this year for the first time. The outlook for record earnings is being driven by a surge in demand for power infrastructure as global technology giants pour money into data centers and AI systems.

According to securities industry estimates, the five power infrastructure companies are forecast to post combined sales of 32.29 trillion won and operating profit of 3.78 trillion won this year, up 23.4 percent and 46.8 percent, respectively, from last year's 26.24 trillion won in sales and 2.58 trillion won in operating profit.

HD Hyundai Electric and Hyosung Heavy Industries are each expected to cross the 1 trillion won operating profit threshold for the first time, with forecasts of 1.23 trillion won and 1.13 trillion won, respectively. LS Electric's operating profit is projected at 720 billion won, a 68.8 percent increase from last year's 426.4 billion won. Over the same period, LS Cable & System and Taihan Cable & Solution are expected to grow operating profit by 63.8 percent to 471 billion won and by 78.1 percent to 229 billion won, respectively.

The strong earnings outlook is backed by a steady stream of major contract wins. HD Hyundai Electric signed a long-term framework agreement in July with a global technology company for the supply of distribution and power equipment worth up to 1.12 trillion won. Hyosung Heavy Industries recently secured a contract to supply ultra-high-voltage transformers worth 386.5 billion won to two US technology firms, while LS Electric last month won a project to supply power equipment for an AI data center worth around 230 billion won.

The two cable leaders, LS Cable & System and Taihan Cable & Solution, each signed contracts in June with Singapore's power authority to supply ultra-high-voltage cable systems worth 140 billion won apiece. Gaon Cable, a subsidiary of LS Cable & System, has also landed a series of cable supply deals for power plant projects being developed by US technology companies.

The rally in power equipment and cable companies has been driven by AI. As global technology giants continue to invest in data centers and related infrastructure, demand for the power equipment and cables needed to keep AI systems running reliably has surged.

Ultra-high-voltage transformers and cables — the flagship products of South Korean manufacturers — command strong demand, yet only a handful of companies worldwide are capable of producing them. This supply bottleneck has allowed domestic firms to secure high profit margins by leading with these products.

The upward momentum shows little sign of slowing. Order backlogs remain deep, and the global market for power equipment and cables continues to expand on the back of AI investment. While some analysts have recently raised questions about the pace of AI spending, long-term investment in the sector is widely expected to continue, suggesting demand for power equipment and cables will remain robust for the foreseeable future.

Market research firm Fortune Business Insights projects the global transformer market will grow from $80.8 billion this year to $158.5 billion by 2034, expanding at an average annual rate of 8.78 percent. The high-voltage cable market is forecast to grow from $39.8 billion to $65.9 billion over the same period.

South Korean power equipment and cable companies are aggressively expanding capacity to meet market demand. HD Hyundai Electric has been investing $200 million since early this year to build a second North American factory for ultra-high-voltage transformers, a project that will boost its production capacity for such equipment by 50 percent upon completion. Hyosung Heavy Industries and LS Electric are also pursuing expansions of their North American production facilities to meet demand from local customers.

LS Cable & System is investing around 1 trillion won to build what would be the largest submarine cable factory in the United States. Gaon Cable is investing $50 million to more than double the cable production capacity of its US subsidiary. Taihan Cable & Solution is constructing a second submarine cable factory in Dangjin, South Chungcheong Province, with the aim of beginning operations next year.