"Power Equipment Alone Is Not Enough"...HD Hyundai Electric Moves to Preempt AI-Driven Distribution Equipment Demand

Demand for Distribution Equipment Expands with AI Data Center Proliferation

Strengthening Package and Solutions Business with Distribution Campus as a Base

Achieving an Average 93% Factory Automation Rate and 75% Production Line Efficiency

HD Hyundai Electric is accelerating the expansion and automation of its production capacity in response to the surge in global power demand driven by the proliferation of artificial intelligence (AI) data centers. In particular, as the market for distribution equipment—which distributes and manages electric power—grows rapidly alongside the demand for ultra-high-voltage transformers and other power equipment, the company is pursuing a strategy of expanding its business scope from a focus on standalone products to integrated packages and solutions.

Changho Lee, Vice President of HD Hyundai Electric, held a press briefing on the 25th at the Chungbuk Cheongju Distribution Campus and answered questions. HD Hyundai Electric

Changho Lee, Vice President of HD Hyundai Electric, held a press briefing on the 25th at the Cheongju Distribution Campus in Chungbuk, saying, "In the past, the U.S. market was mainly focused on replacing aging power facilities, but starting this year, power demand from AI data centers is increasing explosively. Alongside the expansion of demand for power equipment, demand for distribution equipment is also growing," he said.

Recently, as the construction of AI data centers and semiconductor factories accelerates, the power equipment market—including ultra-high-voltage transformers and circuit breakers—is said to be entering a supercycle. Vice President Lee stated, "Quality is a given, but securing supply chains and speed have become core competitive advantages. Just like the Gold Rush during the American Westward Expansion, competition among companies to secure the market is fierce," he explained.

Regarding the growth rate of data center-related business, he said, "Both orders and sales are expected to increase by about 10–20% compared to last year. Starting this year, we expect the share of data center projects to reach a meaningful double-digit percentage." The market the company is currently focusing on the most is the North American data center market, including the United States and Canada. For power equipment, HD Hyundai Electric's market share in North America stands at approximately 25–30%, effectively placing the company in a leading position.

A view of the distribution campus in Cheongju, Chungbuk. HD Hyundai Electric

The company expects the expansion of AI data centers to lead to increased demand for distribution equipment. This is because data centers require not only large-scale power equipment for upper-level systems—such as ultra-high-voltage transformers and circuit breakers—but also a variety of distribution equipment, including switchboards and distribution transformers, to distribute electricity to individual facilities.

HD Hyundai Electric is responding to this growth in demand by establishing automated and integrated production systems. In particular, the company plans to use the Cheongju Distribution Campus as a base to expand its product packaging and solutions business. Vice President Lee said, "Rather than focusing only on standalone product sales, we will respond to global package demand based on synergies between products. In line with the expansion of AI-related demand, we are continuously increasing our production capacity," he explained.

In terms of factory automation, the automation rate of the low-voltage line has increased from the previous average of 70% to the current 95%, and production line efficiency has risen from 58% to 75%. The company plans to raise production line efficiency to over 90% by 2030.

HD Hyundai Electric cited delivery lead time competitiveness as its strength over competitors. Vice President Lee said, "For 38kV-class vacuum circuit breakers (VCBs) for local U.S. data centers, the usual delivery lead time is known to be more than one year. We have recently secured major contracts by offering delivery times at less than half that of our competitors," he said.

The company also highlighted its integrated supply capability as a differentiator. Vice President Lee emphasized, "From the perspective of project owners, it is more efficient to receive packages of power equipment supplied as a single package, rather than engineering multiple products separately. Our one-stop service and technical support are our competitive advantages," he said.

Earnings improvement is expected to become full-fledged starting next year. Vice President Lee said, "As the approximately KRW 180 billion long-term supply contract for distribution transformers with a U.S. power company was completed last year, it may appear that sales growth has slowed. However, with a large number of data center projects underway this year, we expect sales growth to become full-fledged starting next year," he said.

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