"Overwhelmed by Orders: Korea’s Power Big 3 Raise 2024 Order Target by 40% to 25.7 Trillion Won"

Supply Shortages Push Factory Utilization Above 100%
Global Expansion of Data Centers Drives Demand
“Boom Likely to Continue Through Next Year”

This year, the annual order targets of Korea’s “Big 3” power equipment companies have surpassed 25 trillion won. Within just half a year, these companies have raised their targets by more than 40% from what they had initially set at the beginning of the year. Amid a surge in global artificial intelligence (AI) data centers and the aging of power grids, order requests have flooded in, far exceeding the domestic power companies’ production capacity. As a result, a steep performance upturn—dubbed the “power supercycle”—is expected to continue into next year.

According to industry sources and public disclosures as of August 26, Hyosung Heavy Industries has recently raised its annual order target in its heavy industries division from 8.4 trillion won to 12 trillion won, a 43% increase. This is said to reflect the explosive demand for 765 kV ultra-high-voltage transformers and 800 kV circuit breakers, which are key for transmission. LS ELECTRIC has also significantly raised its annual order guidance—from the previous 4 trillion won to as much as 6.5 trillion won—after expanding its customer base beyond big tech companies to large local firms.

Previously, HD Hyundai Electric also raised its annual order guidance from about 5.82 trillion won to about 7.2 trillion won shortly after announcing a major long-term supply contract worth 1.1 trillion won with a global big tech (large information technology company) last month. The combined annual order targets of these three power companies now total approximately 25.7 trillion won, about 41% higher than the previous target of 18.2 trillion won.

With orders pouring in, these companies are scrambling to maximize their factory operations. In the first half of this year, Hyosung Heavy Industries’ heavy industries division posted an average factory operation rate of 104.5%, far exceeding the manufacturing sector’s optimal rate of 80–85%. At HD Hyundai Electric, domestic facility operation rates have also reached 95.1%, effectively hitting their upper limit.

An industry official explained, “Generally, factory operation rates above 80% are viewed as the upper threshold in manufacturing. If companies are running at over 100%, it indicates a severe shortage situation, to the point where working overtime and weekends still isn’t enough to keep up with the flood of incoming orders.”

Experts generally agree that this supplier-driven market in the power industry will continue for the time being. The rise of gigawatt-scale data centers—each consuming as much electricity as a medium-sized city—is driving up demand for power equipment from big tech customers. In particular, the aging power grid across the United States and the lag in transmission infrastructure development compared to generation infrastructure are both widely seen as causing supply and demand disruptions.

In Korea as well, large-scale grid investment is on the horizon, with the government’s “Great Leap Mega Project” amounting to 1,500 trillion won, and national top-level plans such as the 12th Basic Plan for Long-term Electricity Supply and Demand (“Jeon-gibon”). Under this plan, the target power demand for 2040 has been updated by more than 24 GW, to a maximum of 165.0 GW, signaling further major expansion of the power grid.

Hanwha Investment & Securities commented, “It takes an average of 10 years to establish new transmission networks, so it is unlikely that the grid bottleneck will be resolved in the short term. With demanding AI data centers now requiring continuous 24-hour power supply amid these limited transmission conditions, grid congestion may become the longest-standing bottleneck yet.”

An industry source said, “Both the United States and Korea are facing data center friction and power grid shortages—problems that are exerting industrial pressure that leaves no more room for delaying grid expansion. Structural long-term growth in the power infrastructure industry is likely to continue at least until next year, when expansions at the Big 3’s factories start to come online in earnest.”

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