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Long-Term Boom Expected for Power Equipment Industry Amid Surging Data Center Electricity Demand
"Re-Rating Opportunities Expand Beyond Market Leaders to Value Chain Latecomers"

With the advent of the artificial intelligence (AI) era, the global power infrastructure market is entering a new supercycle. As the expansion of AI data centers drives a surge in electricity demand, supply shortages are intensifying across the entire spectrum of power equipment—including transformers, switchboards, and cables—leading to rapid revaluation of the performance and corporate value of related companies. In particular, while major power equipment firms have already seen sharp gains, attention is increasingly shifting toward latecomers that have not yet received full recognition from the market.

Park Heecheol, a researcher at Kyobo Securities, commented, "The core resources of the AI era are computing power and electricity," adding, "Investment in AI infrastructure has not slowed, and the need to secure massive computing power—and the electricity to run it—is only expected to intensify in the future."

Indeed, global Big Tech companies continue to ramp up their investments. Following recent earnings announcements, projected capital expenditures (Capex) for the next 12 months have been revised upward for key hyperscalers such as Amazon, Google, Microsoft, and Meta. In particular, Google Cloud is not only expanding its AI investments but also improving profitability, fueling the view that a virtuous cycle of AI infrastructure investment is now fully underway.

The pace of power consumption growth at AI data centers is also accelerating. Looking at NVIDIA GPUs—a representative AI accelerator—each new generation of products demands significantly higher power per rack. Compared to the previous Hopper-based racks, Blackwell-based racks require about 3.3 times more power, and the forthcoming Rubin series is expected to require roughly 1.5 times more power than Blackwell.

Park explained, "Even though energy efficiency continues to improve, the shift to inference-scale stages such as agentic AI has greatly intensified the need for computing power," adding, "Structural increases in power consumption at AI data centers are expected."

According to the International Energy Agency (IEA), half of the new electricity demand in the United States is coming from data centers, and by 2028, data centers are projected to account for about 12% of total U.S. electricity usage. Globally, data center power consumption is expected to rise from around 416 terawatt-hours (TWh) in 2024 to as much as 1,264 TWh by 2030.

As power demand soars, the power equipment industry has entered an unprecedented boom. Expansion of power generation facilities is inevitably accompanied by the construction of transmission and distribution networks. On top of this, demand for replacing aging grids is also increasing, leading to a rapid rise in orders for transformer, switchboard, and cable companies.

Park stated, "Upgrading outdated power grids alone can improve energy efficiency by about 20%. The power equipment sector now faces a mega-boom driven both by the increase in new power sources and replacement demand for aging infrastructure."

The problem lies in supply. The power equipment industry has a labor-intensive and inelastic supply structure, making it difficult to quickly expand capacity even as demand surges. In fact, the average lead time for ultra-high-voltage transformers has increased from the previous 1–2 years to around 4 years. As a result, global power equipment companies are operating in a strong seller’s market, commanding high valuations.

For the past two years, the average trading volume of Korea’s three leading heavy electrical companies increased by about 238% compared to the previous three-year average, while their market capitalization expanded by an average of approximately six times. Backlog of orders is also expected to rise to about three times the 2022 level by the end of this year, even before the full onset of AI-driven demand.

However, the market is now shifting its focus beyond mere market leaders to latecomers. Park noted, "While the power equipment sector is demonstrating high valuations as a fast-growth industry, the inelastic supply structure means that opportunities for related value chains and second-tier companies will be significant," diagnosing, "Latecomers offer extremely attractive investment potential."

He cited the following conditions for the re-rating of latecomers: verification of technological and business capabilities; the spread of bottlenecks in the value chain; supply shortages among leading firms; and the potential for substantial profit leverage. He particularly emphasized that securing order references in the North American market and entering the global value chains of major companies will be key variables.

Kyobo Securities identified SNC and KBI Metal as representative beneficiaries in this sector.

SNC is a company specializing in shipbuilding and marine equipment that originated from the electrical team at Samsung Heavy Industries. The firm has competitive strengths in switchboards, ship automation systems, and eco-friendly solutions, and recently has been expanding its business scope to include the terrestrial power market.

In particular, collaboration with the global power equipment giant ABB is cited as a core growth driver. SNC has acquired ABB's switchboard production partner certification, giving it the qualification to directly design, assemble, and sell ABB power equipment in international markets.

Park commented, "ABB's production partner status is proof of SNC's technological capability to design and manufacture high-reliability power equipment meeting international standards, going beyond simple product assembly," adding, "Expansion into domestic and overseas data center markets using the ABB network is anticipated in the future."

ABB itself is also benefiting directly from the expansion of its data center business. ABB announced that, in the first quarter of this year, orders for its electrification division increased by 44% year-on-year, while orders in the data center segment grew by more than 100%. This is driven by soaring demand for medium- and low-voltage distribution systems as power density in AI data centers rises.

SNC has recently succeeded in securing Hanwha Ocean as a new major client, in addition to Samsung Heavy Industries. The company plans to expand its production capacity by about 2.5 times through the expansion of its second Busan plant, Geoje Marine Center, and the Nantong plant in China.

Kyobo Securities forecasts that SNC's sales in 2027 will reach KRW 192.1 billion, representing a 20.8% increase year-on-year, with operating profit rising by 35.5% to KRW 27.2 billion.

KBI Metal is also attracting attention as a beneficiary of the expanding AI power grid. KBI Metal has built a value chain spanning copper wire, electric cables, and transformers. Based on its existing non-ferrous metal processing business, it has recently expanded into electric cables and transformer production, strengthening its business portfolio.

In particular, KBI Metal is expanding its cable business in North America through its subsidiary KBI KosmoLink. The U.S. market accounts for about 40–50% of its sales, and exports of electric cables to the U.S. are rapidly increasing.

Park explained, "With a vertically integrated value chain from copper wire to electric cables, a clear improvement in fundamentals is expected. Through the integration of its portfolio—from raw material procurement to final product manufacturing—cost competitiveness and profit resilience are expected to expand."

KBI Metal recently acquired Wonyoung Hi-Tech, a transformer maker that had been undergoing rehabilitation proceedings. Through this, the company aims to proactively respond to North American grid replacement demand and expanding investment in AI data centers.

Kyobo Securities estimates that KBI Metal’s consolidated sales in 2026 will reach KRW 985 billion, a 29.9% increase year-on-year, with operating profit rising by 13.7% to KRW 27.7 billion.

Park emphasized, "With the boom in power equipment likely to continue alongside ongoing AI investment, now is the time to pay attention to latecomers that can narrow the valuation gap with market leaders."