AI Data Center Power Infrastructure Supercycle and Outlook for Korean Companies
As the core bottleneck in the AI industry shifts from hardware to power supply, the power infrastructure market has entered a long-term boom. Driven by North American data center demand, Korean equipment companies like HD Hyundai Electric and LS Electric are seeing significant growth in orders.
In the second half of 2026, the primary bottleneck in the global technology market has shifted from computing hardware to power supply. As artificial intelligence (AI) models become more advanced, power consumption per server rack in data centers has grown exponentially, making the acquisition of physical infrastructure—such as transformers and distribution systems—the top priority for big tech companies.
Power Bottlenecks and Structural Shifts in Capital Expenditure
The constraint on building AI infrastructure is transitioning from securing chips to connecting to the power grid. Grid interconnection wait times in major hub regions have increased to an average of two to five years, driving massive capital inflows into power infrastructure facilities. Market analysts estimate that trillions of dollars will be invested in grid modernization, cooling systems, and industrial construction by 2028. Notably, order lead times for ultra-high-voltage transformers and switchgear—essential for operating data centers—have lengthened, providing clear earnings visibility for relevant manufacturers.
Order Trends of Korean Power Infrastructure Companies
Major Korean power equipment companies are directly benefiting from a supercycle driven by the global replacement cycle of power grids converging with AI data center demand. In particular, aging grid replacement demand in the North American market has led to structural earnings growth.
HD Hyundai Electric: Expansion in Ultra-High-Voltage Transformer Orders
HD Hyundai Electric recently revised its 2026 order target upward by 22.8% to $5.185 billion. This is primarily due to the explosive demand for 765kV ultra-high-voltage transformers required by global data centers. To meet continuous orders from the North American market, the company is expanding production capacity at its Ulsan and Alabama, U.S. plants. At the group level, HD Hyundai is strengthening its infrastructure value chain by securing large-scale power generation engine supply contracts for data centers.
LS Electric: Increasing Order Backlogs and Transition to DC Distribution Grids
LS Electric is breaking historical performance records with an order backlog exceeding 2.7 trillion won. Along with growing revenue from ultra-high-voltage transformers centered on the North American market, the company is proving its competitiveness in the direct current (DC) distribution infrastructure sector, which enhances power efficiency for high-density data centers. Through partnerships with construction firms like GS E&C, LS Electric is leading the development of next-generation DC power infrastructure and diversifying its profitability.
Investment Implications
Current power infrastructure investments are not a short-term theme but a long-term capital expenditure (Capex) trend expected to continue into the 2030s. Moving beyond simple semiconductor cycles, industrial-scale infrastructure investments for physical grid construction are underway. However, as global supply shortages of essential raw materials like high-voltage insulation and specialty copper wire intensify, individual companies' supply chain management capabilities and the speed of production expansion will be key variables determining their future corporate value.