Hyosung Heavy Industries, along with HD Hyundai Electric and LS Electric, the three domestic power equipment companies, are going all out to expand production in the United States. The move aims to meet demand from the expansion of artificial intelligence (AI) data centers and the replacement of aging power equipment.
According to the power equipment industry on the 21st, recently Hyosung Heavy Industries' subsidiary Hyosung HICO signed a contract to establish a joint venture, "Hyosung HICO Breaker (HYOSUNG HICO BREAKER, LLC)," with a subsidiary of Quanta, a U.S. energy infrastructure solutions corporations.
The joint venture is set to produce extra-high-voltage circuit breakers from 72.5 kilovolts (kV) up to 800 kV at Quanta's plant in Canonsburg, Pennsylvania, starting in October. This will enable production of both extra-high-voltage transformers and extra-high-voltage circuit breakers in the United States.
It takes four stages—"generation → transmission → substation → distribution"—to use electricity produced at a power plant by plugging into an outlet. The voltage of electricity generated by nuclear, thermal, and solar power is not high, at around 10–24 kV. Therefore, to send electricity over long distances, the voltage is raised to extra-high levels such as 154 kV, 345 kV, and 765 kV to reduce power loss. Instead, near city centers, extra-high-voltage electricity is dangerous, so the voltage must be lowered.
Transformers raise and lower voltage, and extra-high-voltage transformers are installed at substations right next to power plants or at large substations on city outskirts. Circuit breakers are a kind of "safety switch" that operate when a leakage or short circuit occurs, and they are installed at the inlets and outlets of electricity at power plants and substations and at both ends of transmission lines.
Hyosung Heavy Industries is currently the only Korean power equipment company that designs and manufactures 765 kV extra-high-voltage transformers at a local plant in the United States. It is the Memphis plant in Tennessee acquired from Mitsubishi Electric in 2019. Hyosung Heavy Industries has embarked on expanding the Memphis plant to respond to rising power demand driven by the AI boom. If the second-phase expansion, launched in 2024, is completed within the year, the company plans to more than double its extra-high-voltage transformer production capacity.
The third-phase expansion, which Hyosung Heavy Industries released in November last year, is scheduled for completion in 2028. A Hyosung Heavy Industries official said, "Through the third-phase expansion, our goal is to increase production capacity by more than 50% compared with the total capacity that will be secured after the second-phase expansion."
HD Hyundai Electric also plans to produce 765 kV extra-high-voltage transformers in the United States starting next year. HD Hyundai Electric directly manufactures 345–500 kV units at its Montgomery plant in Alabama, but has mainly produced 765 kV units at the Ulsan plant and exported them to the United States. When the second Montgomery plant, which broke ground in March this year, is completed in April next year, the company will introduce 765 kV testing and production facilities to challenge the stronghold of Hyosung Heavy Industries.
LS Electric is focusing on switchgear (circuit breakers and switch disconnectors) that distribute and control high-voltage electricity supplied to AI data centers and large buildings in the U.S. market. At its plant in Utah in the western United States, it produces switchgear, and in Bastrop, Texas, in the south, it has been producing medium- and low-voltage power equipment and switchgear for delivery to big tech corporations' data centers since last year.
Power equipment companies are increasing investment to expand local production in the United States because of the U.S. market's strong growth potential. According to market research firm Global Market Insights, the U.S. transformer market is projected to more than double from $12.2 billion (about 18.4074 trillion won) in 2024 to $25.7 billion (about 38.7762 trillion won) in 2034. Local production in the United States also offers the advantage of saving on logistics costs.
An official at a power equipment company said, "If you have a plant on site, you can respond quickly from production to delivery," and added, "Having a local production base is also advantageous for building partnerships."