AI boom drives demand for distribution equipment at HD Hyundai Electric's smart factory

HD Hyundai Electric's new distribution equipment factory in Cheongju, South Korea, is a testament to the company's strategic pivot towards automation and artificial intelligence to meet surging demand, especially from AI data centers. The facility, which began operations in November, integrates its facility, logistics, and data systems into a cohesive 'smart factory' model.

Inside the factory, robots are more active than humans in the finished product warehouse, transporting materials and finished goods. Automated testing processes, which involve the circuit breakers being opened and closed approximately 30 times to check durability, are conducted without human intervention. Vision cameras on robots meticulously inspect products for missing components like holes and bolts, contributing to a high level of automation, reportedly 65% on the first floor and 95% on the second.

The company's emphasis on automation is driven by the need to produce over 50,000 types of circuit breakers with varying specifications quickly and accurately. "The demand for distribution equipment is also increasing along with investments related to artificial intelligence," said Lee Chang-ho, vice president at HD Hyundai Electric. "The next wave of demand in the power equipment market will be in distribution."

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The demand for distribution equipment is also increasing along with investments related to artificial intelligence. The next wave of demand in the power equipment market will be in distribution.

While the boom in AI data centers initially focused on ultra-high voltage transformers and high-voltage switchgear for power transmission, the need for distribution equipment is growing as electricity is stepped down and distributed within data centers. This includes distribution transformers, distribution boards, and circuit breakers. The complexity and number of these devices increase closer to the end-user, making efficient production crucial.

HD Hyundai Electric aims to gain a competitive edge in this intensifying market, where rivals like LS Electric and global players like Eaton and Schneider Electric are also expanding their capabilities. The Cheongju facility has already increased the annual production capacity of medium and low-voltage circuit breakers by about 70%, from 5 million to 8.5 million units, and significantly improved delivery times. The company plans to further expand production capacity and increase the proportion of distribution equipment sales to 30% by 2030, viewing it as a key to enhancing performance stability.

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The company plans to expand the production capacity of medium and low-voltage circuit breakers to 13 million units by 2030 and increase the proportion of distribution equipment sales from the current 10% range to about 30%, complementing the performance structure centered on ultra-high voltage power equipment. We expect the distribution equipment sector to play a pivotal role in enhancing performance stability.