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Korea’s Transformer Industry Sees Growth Amid Renewable Energy Boom

by Anna

The Korean transformer industry is experiencing a significant surge in demand, fueled by the global expansion of renewable energy initiatives and the rise of artificial intelligence (AI). This trend has bolstered exports, showcasing the advanced technology and manufacturing capabilities of domestic transformer producers. As a result, companies are now prioritizing high-value orders, boosting their profitability.

According to data from the Korea Customs Service released on November 7, exports of ultra-high-capacity transformers (those exceeding 10,000 kVA) from January to September totaled approximately $670 million (940 billion won), representing a 40% increase from the same period last year ($480 million). This figure also marks a 2.5-fold rise compared to 2022’s total of $264 million, highlighting the industry’s sustained growth beyond its initial boom.

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Although seasonal fluctuations led to a dip in exports during July and August, sales rebounded in September, surpassing $100 million in value. The ongoing global shift toward renewable energy and the expansion of data centers, driven by the AI revolution, have significantly increased the demand for electricity and, consequently, transformers. Korean transformers are particularly esteemed for their efficiency, technological sophistication, and robust production capabilities, contributing to continuous strong sales.

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The United States, currently in the process of upgrading its existing transformer infrastructure, has imported roughly $223 million worth of Korean ultra-high-capacity transformers this year, making up nearly 33% of Korea’s total transformer export volume. Saudi Arabia follows closely, importing $203 million worth for the Neom City project and other eco-friendly urban developments.

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Europe has also emerged as a vital new market. Investment in transmission networks across the continent is growing at an annual rate of 8.6%, projected to reach $57 billion by 2030. This expansion has spurred a corresponding rise in transformer demand. Notably, exports to Northern European countries like Norway and Finland, which had no recorded imports last year, have exceeded $60 million this year. The UK has become the leading European importer, purchasing $51 million worth of Korean transformers by September—up more than 40% from last year’s $35 million total.

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“Domestic transformers are recognized for their superior efficiency and durability, and with the ongoing production expansion, capacity has been secured,” said an industry representative. “With urgent demand for transformers spreading beyond the U.S. and Middle East to Europe, Korea’s market share is naturally increasing.”

This spike in demand is allowing companies to select higher-quality orders, which has led to improved profitability compared to previous years. HD Hyundai Electric, a leader in producing ultra-high-capacity transformers, reported an operating profit margin exceeding 20% for two consecutive quarters, a significant jump from the low 10% range reported a year earlier. Hyosung Heavy Industries’ power equipment division also experienced growth, with its operating profit margin reaching 14% in the third quarter, marking a steady yearly rise.

“Domestic transformer companies have secured more than five years’ worth of work, cementing a strong supplier-dominant market. Countries in dire need of transformers are even offering premiums to expedite production,” noted another industry official.

By the end of the third quarter, HD Hyundai Electric’s order backlog reached $5.399 billion (approximately 7.4 trillion won), a 36% increase from the previous year. Hyosung Heavy Industries reported a similar uptick, with its order backlog rising by 30% to 7.3 trillion won.

In addition, the export value per transformer has also surged. While the total export volume of ultra-high-capacity transformers up to September reached about 44,000 tons—a 25% increase from last year’s 35,000 tons—the corresponding export value rose at an even greater pace.

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