"Power Is the Core of the AI Era"... Gaon Cable Emerges as an AI Data Center Infrastructure Stock

U.S. Production Subsidiary Wins Successive Orders from Global Big Tech

Recently Secured Framework Contracts Worth 1.2 Trillion and 4 Trillion Won

Building a Value Chain with LS Cable and LS Materials

Gaon Cable, once considered a traditional manufacturer focused on medium- and low-voltage cables, is now emerging as a beneficiary of the growing U.S. AI data center market, shifting the market's perception of the company.

According to securities and industry sources on June 2, recent trends in global stock markets show that not only AI semiconductor companies, but also power infrastructure firms essential to building AI data centers are being awarded high premiums. This is due to the surging demand for electricity driven by the advancement of AI models and the expansion of data centers, which has made the stable supply and distribution of power infrastructure increasingly critical.

An industry insider commented, "The core of the AI era is not only semiconductors, but also electricity," adding, "Establishing power infrastructure capable of stably supplying tens to hundreds of megawatts (MW) of electricity is essential, which is why companies specializing in cables, bus ducts, energy storage systems (ESS), and transformers are emerging as new beneficiaries."

In fact, AI data centers consume far more electricity than typical data centers. Next-generation AI data centers based on Nvidia GPUs (graphics processing units) are known to require hundreds of megawatts to over 1 gigawatt (GW) of electricity per campus. As a result, investments in power grids, transformers, power cables, and bus ducts are becoming key elements in data center construction.

LSCUS, Gaon Cable's manufacturing subsidiary in the U.S. Photo by Gaon Cable.

The most significant change for Gaon Cable is the expansion of its data center business centered on its U.S. subsidiary, LSCUS. LSCUS is strengthening its capability to execute data center projects locally in the U.S. and is expanding its business foundation to respond to the rapidly increasing investment demand for AI data centers.

In particular, LSCUS has recently secured a series of contracts to supply bus ducts for data centers to global big tech companies, rapidly expanding its presence in the North American market. According to industry sources, LSCUS recently signed a three-year supply contract worth approximately 1.2 trillion won with a global big tech company and, in addition, secured a five-year long-term supply contract worth about 4 trillion won with another global big tech company.

These contracts are especially significant as they are not just one-off orders, but multi-year framework agreements. Since the supply volume can be increased in line with the client companies' expansion of data center investments and new campus construction, there is an assessment that the actual supply could exceed the contract volume.

AI data centers are characterized by continuous expansion even after their initial construction. Global big tech companies such as Meta, Microsoft, Amazon, and Google are planning to invest hundreds of trillions of won in AI infrastructure over the coming years, and demand for data center power infrastructure is also expected to rise accordingly.

Given that Gaon Cable's consolidated annual revenue is about 2 trillion won, the recently secured long-term contract volumes far exceed twice the company's yearly sales. The company explained that, due to the nature of framework agreements, additional orders are possible depending on the scale of the client companies' data center expansions and investment plans, meaning future supply volumes could grow even further.

Industry insiders forecast that the expansion of AI data centers will not merely drive demand for servers and GPUs, but also lead to overall growth in the power infrastructure market. In particular, the bus duct market—which efficiently distributes large volumes of electricity within data centers—is considered one of the fastest-growing segments going forward.

Within this context, the AI power infrastructure value chain led by LS Cable is drawing attention. LS Cable is expanding its core power infrastructure businesses for the AI era, including ultra-high-voltage cables, submarine cables, HVDC (high-voltage direct current), and bus ducts. The company is also enhancing its penetration of the U.S. market by constructing a submarine cable plant in Virginia and increasing investments in the North American power grid.

LS Materials is also expanding its ultracapacitor business. Ultracapacitors are devices that compensate for sudden power fluctuations and stabilize power quality, and their applications are broadening across data centers, power grids, and the ESS market.

Within the securities industry, there is a growing view that LS Group affiliates are evolving from traditional cable companies into AI infrastructure companies. An industry insider noted, "In the past, beneficiaries of data center growth were viewed as semiconductor companies, but now focus is shifting to infrastructure firms that supply and distribute electricity," adding, "Gaon Cable is likely to be evaluated as an AI data center infrastructure company, not merely a cable manufacturer."

The source also said, "In particular, the long-term supply contracts secured by LSCUS are more than just simple orders," and added, "Given that the company has established a structure that enables it to grow alongside the expansion of global big tech companies' AI investments, the potential for a future revaluation of its corporate value is noteworthy."

This content was produced with the assistance of AI translation services.