HD Construction Equipment is expanding investment in its engine business. That is because demand for engines is surging in the recently booming defense industry and artificial intelligence (AI) sector.
According to the industry on the 5th, HD Construction Equipment plans to invest 155.8 billion won in its engine business this year, up about 80% from a year earlier. The funds will be used to build mass-production facilities and purchase research and development (R&D) equipment. Chief Executive Moon Jae-young of HD Construction Equipment said at a briefing early this year that the company aims to achieve 2.5 trillion won in revenue in the engine institutional sector by 2030.
HD Construction Equipment logged a record high 1.3264 trillion won in revenue in the engine institutional sector last year. Fourth-quarter revenue was 294.4 billion won, up 15.1% from a year earlier. This year's revenue is estimated to reach 1.453 trillion won, up 10%.
HD Construction Equipment expects demand for power-generation engines to increase. For emergency power engines, sales are expected to be made mainly to AI data centers in North America. In addition to diesel and gas, the company will develop and mass-produce extra-large engines. The DX37 is slated for January next year, and the DX77 and DX51 products are scheduled to be developed by Feb. 2028 and Feb. 2029, respectively.
Defense engines also have the potential for expanding demand as geopolitical tensions continue worldwide. HD Construction Equipment makes the engine mounted on the K2 tank. In January, HD Construction Equipment signed a supply contract with Hyundai Rotem for engines to be used in K2 tanks for export to Poland.
Choi Gwang-sik, an analyst at Daol Investment & Securities, said, "There are high expectations that HD Construction Equipment's engine sales will increase further, as Hyundai Rotem is pursuing additional orders not only in Poland but also in Peru, Iraq and Romania."
HD Construction Equipment is increasing capital expenditures to meet rising demand. The expansion of the Gunsan plant, which can mass-produce defense and power-generation engines, will be completed in the first half of this year. With this expansion, annual production capacity for defense engines will rise from 120 units to 240. The newly built 3-megawatt (MW) class extra-large power-generation engine is expected to produce 1,250 units a year. Before the expansion, HD Construction Equipment's annual power-generation engine production stood at about 16,000 units.