(Bloomberg) — South Korea’s top power equipment maker, HD Hyundai Electric Co., is accelerating its US expansion, betting that demand for transformers and switchgear will surge as the artificial intelligence “supercycle” drives a new wave of power consumption.
The company cites a convergence of drivers — AI and data centers, a revival in US manufacturing, aging grid infrastructure and the shift to renewables — that is spurring large-scale grid investment. Those trends are pushing HD Hyundai to deepen its American footprint in what it sees as a prolonged industry upcycle.
“We believe this supercycle will last much longer than expected,” Kang Sungsoo, president of HD Hyundai Electric America, told Bloomberg News in an interview.
HD Hyundai holds an estimated 15% to 20% share of the US high-voltage transformer market and operates the country’s largest ultra-high-voltage transformer plant in Alabama. It is in talks with five or six of the world’s top “Big Tech” firms, with some supply agreements already signed and initial shipments set to begin as esoon as later this year.
“Some of them have tripled their volume requirements compared to 2024 to support new data centers and on-site power generation,” Kang said without naming the companies.
To meet rising orders, the company broke ground Friday on a second plant at its 130,000-square-meter (32-acre) Alabama site. The $200 million project, due for completion in April 2027, is expected to lift annual production capacity by 50% and increase annual revenue by about 200 billion won ($136 million), equivalent to roughly 5% of last year’s sales.
“The additional capacity from the new plant is already sold out for years, so we’re not concerned about what some call an AI bubble,” Kang said ahead of the groundbreaking ceremony.
Kang dismissed concerns that AI-related power demand may be nearing a peak, saying current growth is still largely driven by reshoring, grid upgrades and renewable expansion. The AI impact will intensify as large-scale data centers come online later this year.
Hyundai Electric shares have almost quadrupled in the past year — making it one of the biggest gainers in Kospi’s big rally. The surge underscores a widening supply gap as AI-linked data centers proliferate and the US faces a shortage of domestic transformer capacity.
The new facility will be one of the few domestic producers of 765-kilovolt transformers, critical for long-distance, extra-high-voltage transmission. Hyosung Heavy Industries Corp., which operates a plant in Memphis, is currently the only other US-based supplier.
The Alabama operations also provide insulation from trade volatility, as the company sources most key materials, including copper and steel plates, within the US.
HD Hyundai developed the 765-kilovolt transformer in South Korea in the late 1990s for nuclear reactors. The equipment has since become a preferred choice for US grid operators transmitting power from remote plants to energy-intensive data centers, said Kang Jinho, president of HD Hyundai Power Transformers USA.
In September, the company secured a 278 billion won deal with Texas’s largest utility to supply 765-kilovolt transformers, its largest single order on record.
HD Hyundai supplies at least 30 of the biggest US utilities, and Kang Sungsoo said the company will review later this year or early next whether further capacity expansion is warranted.
“We’re one of the few manufacturers able to meet the safety, quality and technical standards customers require,” he said. “The market is expanding, and we intend to capture the most attractive opportunities.”
