Power infrastructure stocks in South Korea surged on the 10th driven by expectations that artificial intelligence (AI) data center expansion will trigger sharp electricity demand growth. Gaon Cable rose 9.46% to close at 254,500 won, while Daehan Cable gained 8.81%, LS Electric 6.92%, LS 4.94%, and HD Hyundai Electric 4.42%. The rally reflects investor response to concerns that power grid shortages could delay data center construction. Global AI data center investment growth is driving demand for transformers, distribution equipment, and power cables across the entire electricity infrastructure, as massive power supply becomes essential for data center operations beyond initial construction.
Power Infrastructure Stocks Rise on AI Data Center Electricity Demand
According to Korea Exchange on the 11th, Gaon Cable closed at 254,500 won on the previous day, up 22,000 won (9.46%). Major power infrastructure stocks showed uniform strength: Daehan Cable (8.81%), LS Electric (6.92%), LS (4.94%), and HD Hyundai Electric (4.42%).
Seo Sang-young, researcher at Mirae Asset Securities, stated that "the reason for cable stock increases is because power grid shortage problems are being highlighted in the AI data center expansion process." He explained that "data centers do not end with construction but require massive power supply, and for this, not only power generation facilities but also the power grid in front of them must be built first." He added that "since recent data center construction delay concerns also stem from power grid shortages, related demand has no choice but to increase," and "investment sentiment is reviving as government policy support for power grids continues."
The government announced the 'Republic of Korea Great Leap 3 Major Mega Projects' on the 29th of last month, centered on semiconductors, AI data centers, and physical AI. To stably operate large-scale data centers and advanced manufacturing facilities, not only power generation facilities but also transmission and distribution networks that send produced electricity to demand sites must be expanded.
HD Hyundai Electric Signs 1 Trillion Won Contract and Raises Annual Guidance
HD Hyundai Electric signed a long-term supply contract worth approximately 1 trillion won for data center power infrastructure with a global big tech company on the 2nd. Four days later, the company raised its annual order forecast from $4.2 billion to $5.2 billion, an increase of approximately 24%.
Na Min-sik, researcher at SK Securities, stated that "HD Hyundai Electric's guidance upward revision and large-scale data center orders are not only evidence showing the strength of demand, but the growth rate of Quanta Services' (US power infrastructure company) order backlog is also steepening." He added that "for AI data center construction, power equipment, especially transformers, is the biggest bottleneck."
LS Electric Records 3 Trillion Won in Half-Year Orders
LS Electric is also seeing demand growth translate into order expansion. Following first-quarter orders of 1.1 trillion won, cumulative orders for the first half are estimated to approach approximately 3 trillion won. Analysis suggests the company will likely exceed its existing annual new order forecast of 4 trillion won.
Lee Sang-hyun, researcher at BNK Investment & Securities, explained that "especially, data center contracts with big tech companies are evolving into medium-term fixed contracts and package forms rather than simple one-time deals." He added that "the characteristic of distribution products with short replacement cycles means a high-margin recurring revenue structure that directly converts to current-year sales is being established, which is attractive."
Daehan Cable and Gaon Cable Win Major Power Grid Contracts
Power grid expansion demand is also spreading to cable companies. Daehan Cable won a 45 billion won 330-kilovolt (kV) ultra-high voltage power grid construction project on the 8th to supply electricity to a large AI data center in Australia. Last month, the company also entered the domestic HVDC market for the first time by winning the East Coast-East Seoul Section 2 500kV high-voltage direct current transmission (HVDC) project.
Gaon Cable won medium-voltage (MV) cable orders worth approximately 35 billion won for US AI data center power grids last month, followed by a contract to supply busduct (large-capacity power distribution facilities) worth approximately 60 billion won to a generative AI company's data center through its US subsidiary LSCUS. On the 8th of this month, the company announced it would expand production facilities to begin full-scale supply of 2500㎟-grade ultra-high voltage cables meeting Korea Electric Power Corporation specifications starting next year.
South Korean Government Announces 3 Major Mega Projects
The government announced the 'Republic of Korea Great Leap 3 Major Mega Projects' on the 29th of last month, centered on semiconductors, AI data centers, and physical AI. To stably operate large-scale data centers and advanced manufacturing facilities, transmission and distribution networks that send produced electricity to demand sites must be expanded alongside power generation facilities.
FAQ
What caused Korean power infrastructure stocks to rise on the 10th?
Power infrastructure stocks surged on the 10th due to expectations that AI data center expansion will drive sharp electricity demand growth. Gaon Cable rose 9.46%, Daehan Cable 8.81%, LS Electric 6.92%, LS 4.94%, and HD Hyundai Electric 4.42%. The rally reflected investor response to concerns that power grid shortages could delay data center construction.
What major contracts did HD Hyundai Electric announce?
HD Hyundai Electric signed a long-term supply contract worth approximately 1 trillion won for data center power infrastructure with a global big tech company on the 2nd. Four days later, the company raised its annual order forecast from $4.2 billion to $5.2 billion, an increase of approximately 24%.
What power grid contracts did Gaon Cable and Daehan Cable win?
Daehan Cable won a 45 billion won 330kV ultra-high voltage power grid construction project on the 8th to supply electricity to a large AI data center in Australia. Gaon Cable won approximately 35 billion won in MV cable orders for US AI data center power grids last month and a contract to supply busduct worth approximately 60 billion won to a generative AI company's data center through its US subsidiary LSCUS.
