Tariffs cripple exports, but this transformer maker carries a full order book from the U.S.

HD Hyundai Electric's ultra-high voltage power transformer [HD HYUNDAI ELECTRIC]

 
[NEXT CHIP]
 
For decades, semiconductors and automobiles have dominated Korea’s exports, driving growth and defining its global trade identity. But as shifting global dynamics and mounting uncertainties over U.S. tariffs unsettle traditional trade patterns, a new industrial order is taking shape. Sectors such as shipbuilding and defense are emerging as the next engines of growth. In our “Next Chip” series, we examine the rise of these industries and their potential to reshape Korea’s economic future.
 
Despite sweeping economic upheaval exerted by the Trump tariffs on Korea’s entire industrial landscape, HD Hyundai Electric is quietly thriving — with its production capacity fully booked through the first half of 2031.
 
Tariffs pose little concern in the transformer industry — an essential electrical apparatus facilitating the transfer of energy between alternating-current circuits — particularly as demand for power soars due to the rapid expansion of AI and data centers.
 
Transformers are now one of Korea's top 10 export items, with HD Hyundai Electric's operating profit surging 112 percent to 669 billion won ($478 million) last year. Its share price, which was around 20,000 won per share in 2022, is now trading at over 460,000 won. 
 

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“Some clients are even willing to cover the tariffs themselves just to secure supply,” said Ohk Kyung-seok, senior vice president of HD Hyundai Electric's power equipment sales, who previously spearheaded the company’s U.S. subsidiaries during a recent interview with the Korea JoongAng Daily. 
 
“Big Tech giants have ostensibly queued up for their turn, but as our current capacity is fully allocated, we have no room to accommodate additional orders.”
 
The United States has become a key battleground for HD Hyundai Electric, Korea's largest manufacturer of high-voltage transformers essential to power plants, industrial complexes and data centers. Holding over 15 percent of the U.S. high-voltage transformer market, the company decisively outperforms established European competitors such as Schneider Electric and Siemens.
 

Ohk Kyung-seok, senior vice president of HD Hyundai Electric's power equipment sales, talks during an interview with the Korea JoongAng Daily at the company's R&D center in Seongnam, Gyeonggi, on Aug. 18. [HD HYUNDAI ELECTRIC]

Supply can't keep up amid U.S. expansion
For power system providers, expansion into the United States is never optional but imperative. The United States represents the company’s largest and most vital market, accounting for an unprecedented 40 percent of total revenue in the first half of 2025.
 
Complementing its existing manufacturing facility in Alabama, the company plans to increase its U.S. production capacity by 30 percent by the end of 2026. Current capacity, which allows for the production of around 110 ultra-high voltage transformers, is set to scale up to 150 units.
 

“Since the former Joe Biden administration, the renewable energy sector, spanning solar and wind power, has experienced significant growth, leading numerous renewable energy developers to require advanced transformers,” Ohk said.
 
“Unlike in the past, mega data center operators, known as hyperscalers, are shifting toward purchasing critical electrical equipment on their own directly without going through EPC [Engineering, Procurement, and Construction] contractors,” he added. “We maintain collaborative partnerships with almost all top-tier tech firms, though we can't name them at the moment." 
 
HD Hyundai Electric recently opened a new sales subsidiary in Texas, a state where tech titans like Microsoft and Google maintain multiple high-capacity data centers and Tesla operates a gigafactory. It has also supplied six transformers to Samsung Electronics’ chip facility in Taylor, Texas.
 
Its order volume reached $996 million in the second quarter, a 13.2 percent year-on-year increase, bringing the cumulative total for the first half to $2.33 billion. The company’s order backlog hit $6.55 billion, up 24.7 percent compared to the same period last year.
 
Global electricity consumption is projected to surge to 590 terawatt-hours (TWh) by 2026, equivalent to adding Germany's entire annual electricity usage. Power equipment is estimated to account for approximately 8 to 10 percent of total data center investment.
 

HD Hyundai Electric's ultra-high voltage power transformer factory in Alabama [HD HYUNDAI ELECTRIC]

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Aging grid standing by 
Even if the current surge in data center demand tapers off, the power equipment industry is firmly on a path of sustained long-term growth.
 
North America's aging power infrastructure has entered a critical phase of renewal. A 2020 report by the U.S. Department of Energy (DOE) revealed that nearly 70 percent of large power transformers across the country have been in service for more than 25 years, while the average life expectancy is somewhere between 38 and 40 years.
 
Underscoring the urgency of modernization, the DOE announced on Aug. 16 that it would guarantee loans totaling $22.9 billion to support grid modernization initiatives across eight major utility companies.
 
"A substantial surge in replacement demand for aging infrastructure is anticipated once ongoing projects reach completion,” Ohk said. “We are poised to secure an unprecedented order backlog in the North American market this year.”  
 
The U.S. National Renewable Energy Laboratory urged that the supply of transformers must be increased by 160 to 260 percent of the 2021 level by 2050. 
 
Ohk said this game-changing industry enjoys remarkably strong prospects — provided the company retains a team of seasoned professional engineers.
 
"One of our North American clients told us last year that as long as a certain engineer remained at HD Hyundai Electric, they would do business only with our company, praising our engineers for meeting their exacting design specifications with speed and precision," he said.
 
“No matter how complex or demanding a client’s design modifications may be, we accommodate them all, while adhering strictly to delivery deadlines,” Ohk added, saying that the limited responsiveness of European manufacturers turns clients to them.
 
In the realm of ultra-high-voltage transformers, design is an essential cornerstone. Specifications and engineering requirements must be meticulously tailored to suit the surrounding power grid, facility conditions and the unique energy demands of the client. The price of a single unit can range anywhere from 5 billion won to as much as 20 billion won.
 
HD Hyundai Electric operates five R&D centers globally. Core design functions are managed by engineering teams based in Ulsan, who provide 24/7 support to ensure continuous and responsive service across all projects.
 

HD Hyundai Electric executives and Alabama state government officials take a photo celebrating the opening of the company's manufacturing plant in the U.S. state in July 2024. [HD HYUNDAI ELECTRIC]

BY SARAH CHEA [chea.sarah@joongang.co.kr]