Big Tech Secretly Inspected the World's Only '100% DC Factory'... "It Started as a 1.9-Billion-Won Gamble" [Solving AI Power Shortages with DC] 2

Inside LS ELECTRIC's Cheonan DC Factory
Fewer DC-AC conversions, lower power losses
Big Tech eyes data demonstrating improved power efficiency

At LS ELECTRIC's Cheonan plant on October 14, a massive container-shaped factory came into view just inside the main gate. It is the world's first DC factory, which began full-scale operations after shipping its first next-generation power conversion system (PCS), the "G2," in August. While Korea Electric Power Corporation (KEPCO) verifies the grid's ability to supply direct current, this facility tests how efficiently electricity can be used in a factory.

A view of the DC factory at LS Electric's Cheonan facility. Oct. 14, 2026. Photo by Kim Hyunmin.

The key is to reduce the number of power conversion stages. In conventional AC-based factories, electricity must be converted to DC to store it in batteries or operate some equipment. Electricity generated by solar panels is also converted to AC for transmission, then converted back to DC by the equipment. Each conversion results in power loss.

The DC factory has a microgrid, a small-scale power network, built outside the facility. A solid-state transformer (SST) converts the 22.9 kV AC power received from KEPCO into 750 V DC and supplies it to the manufacturing line, lighting, and heating and cooling equipment. Rooftop solar panels and an energy storage system (ESS) are also connected to the same DC network.

By reducing the need to convert electricity at each piece of equipment, the system lowers power loss. The SST, which consolidates the functions of a house-sized main transformer and power conversion equipment into modules the size of a chest of drawers, also reduces the space required for installation.

"The SST converts the electricity received from KEPCO directly to the desired DC voltage in a single step, without an intermediate transformer," said Bae Chaeyoon, head of LS ELECTRIC's Fundamental Technology Research Group. "For a gigawatt-scale hyperscale data center, even a 1% improvement in power efficiency can cut annual electricity bills by nearly 10 billion won. Applying an SST can raise efficiency by about 3%."

A DC microgrid built outside the DC Factory at LS Electric's Cheonan plant. The 22.9 kV AC power received from KEPCO passes through the facility, where it is stepped down and rectified to 750 V DC. Oct. 14, 2026. Photo by Kim Hyunmin.

That is why big tech companies operating artificial intelligence (AI) data centers are taking an interest. A number of global companies have visited the Cheonan plant to inspect its equipment. NVIDIA, which has proposed 800 V DC as the power distribution standard for next-generation AI data centers, is also considered a potential customer.

"The basic functions and circuit configuration of the Cheonan facility align with NVIDIA's direction," Bae said. "We are scaling up the design to meet the power demands of hyperscale data centers." He added that raising the plant's current voltage of 750 V to 800 V is within the design's allowable range, so the facility can accommodate the change by adjusting its settings.

Inside the cleanroom at LS ELECTRIC's DC factory. The production line for the next-generation power conversion system (PCS) "G2," whose initial batch shipped in early August, is now running. 2026.10.14 Photo by Kim Hyunmin

After passing through an air shower, visitors entered a factory equipped with DC-specific systems, from its ceiling lights onward. Assembly of the PCS G2 was underway in a cleanroom where temperature and humidity are kept constant. Of the six production processes, four use articulated robots and AI to position parts and tighten bolts. The remaining processes, which involve workers, use a system that illuminates the locations of the required parts.

The clean room inside LS ELECTRIC's DC factory. The production line for the next-generation power conversion system (PCS) “G2,” whose first batch was shipped in early August, is now running. Oct. 14, 2026. Photo by Kim Hyunmin

In the testing lab at the end of the production line, finished products were supplied with DC power for extended periods in a high-temperature, high-humidity environment to check for problems. "The PCS inspection equipment and this testing lab consume the most power in the factory," Bae noted. "Because they use DC power continuously, we can clearly see the impact of reducing conversion losses."

On the 14th, PCS G2 undergoes an initial operational reliability test in the early-life testing lab, the final checkpoint on the LS ELECTRIC DC factory production line. Photo by Kim Jinyoung, reporter.

Screens in the DC control room displayed power flows among the KEPCO grid, the SST, solar panels, and the ESS in real time. At the time, the factory was consuming about 377 kW, with the G2 production line accounting for 67.3%, or about 254 kW. "We operate everything from the equipment that controls power flows to the energy management system (EMS) using our own technology," Bae said.

Bae Chaeyoon, head of LS Electric's Fundamental Technology Research Group, explains the process steps at the DC Factory. October 14, 2026. Photo by Kim Hyunmin.

Bringing the factory into operation also required taking on investment risks. Since DC power distribution was being introduced to a mass-production line before global standards and domestic safety regulations were in place, any disruption could have led to financial losses. The publicly reported investment was around 14 billion won, but the construction budget initially approved was about 1.9 billion won.

LS ELECTRIC Chairman Koo Ja-kyun gave the project his support. "I submitted the proposal with the idea of starting with a minimum budget," Bae said. "But Chairman Koo instead told us, 'Invest more, whether it's 5 billion or 10 billion won, and try building a bigger factory.'"

Rather than renovate an existing building, the task force decided to build a modular container factory on a lawn at the site. The decision took production schedules and equipment procurement into account. Procuring 70% of the entire system in-house also helped speed up construction and reduce costs.

Bae Chaeyun, head of the Fundamental Technology Research Group at LS Electric, is interviewed at the company’s Cheonan plant. Oct. 14, 2026. Photo by Kim Hyunmin

"We had equipment available for use after completing government-funded projects, and the high proportion of equipment sourced in-house helped us save on initial costs," Bae said. "After the chairman's decision in August 2025, the researchers were practically living at the site, and we completed the installation in just four months."

NVIDIA's subsequent proposal to adopt 800 V DC power distribution also opened up an opportunity to extend the factory's real-world testing experience to data centers. According to market research firm Wise Guy Reports, the global DC power distribution market is projected to grow at an average annual rate of 10.6% to reach $6.06 billion (about 8 trillion won) by 2030.

Bae said he expects order opportunities to increase because LS ELECTRIC began work on the technology early, but stressed that other companies also need to participate. For DC power distribution to spread, equipment and devices from a range of manufacturers must be developed alongside power supply systems, he said.

"Those that built open ecosystems, rather than closed monopolies, have ultimately won," he said. "Other manufacturers need to enter the DC equipment market and help grow it. That will also accelerate the transition to AI data centers."

Products ready for shipment are stacked inside the DC Factory at LS Electric's Cheonan plant. 2026.10.14 Photo by Kim Hyunmin.

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