TL/DR –
US President Trump has declared a national emergency over power grid security, banning certain foreign-made electrical equipment due to potential cybersecurity risks. The move, which is seen as targeting China, is expected to benefit South Korean companies, which have been expanding their US production facilities. South Korean firms such as Hyosung, HD Hyundai and LS are seen as well-positioned to capitalize on increased demand and tighter security standards.
US National Emergency Spells Opportunity for South Korean Power Firms
South Korean companies stand to gain from a recent US move to tighten national security scrutiny on foreign-manufactured electrical equipment for its power grid. As the demand for electricity skyrockets due to the expansion of AI and data centers, Korean firms with a presence in the North American market could benefit significantly from the tightening of local security and procurement standards.
On Wednesday, US President Donald Trump enacted an executive order under the International Emergency Economic Powers Act and the National Emergencies Act. This order, as reported by Reuters and other media, prohibits the purchase, import, transfer, and installation of certain foreign-made electrical equipment. The White House said the order is aimed at curtailing the acquisition and installation of foreign-made bulk power system apparatus, including related critical software and digital components that could pose cybersecurity or operational risks. The ban includes transformers, large generators, ESS, inverters, and high-voltage circuit breakers.
The order is widely seen as a move against China, citing concerns about digital backdoors in foreign equipment that could enable remote control from external locations. In the previous year, US authorities found unauthorized communication devices in some solar inverters made in China, sparking fears over potential remote interference.
China is responsible for approximately 80% of global battery and solar inverter manufacturing, according to the International Energy Agency. A 2020 investigation by the US Commerce Department revealed that over the past decade, the US had imported significant quantities of Chinese-made large power transformers. However, NH Investment Securities reported that China’s share of transformer imports into the US last year only accounted for single digits across all power capacity categories, ranging from 1.3% to 7.3%. While US utility companies have been reducing their dependence on Chinese imports, China has reportedly been exporting through local production subsidiaries in other regions, including Mexico.
South Korean Companies Poised to Benefit
In light of this situation, industry analysts suggest that South Korean firms are not likely to be affected by the executive order and that demand will likely continue to grow due to the supply shortage in the US market. Korean power equipment manufacturers have been increasing their production capacity in the US, and some industry insiders view the latest US measures as a potential trigger for growth. An industry official stated, “Having built local bases in advance to prepare for measures like the US Inflation Reduction Act has become a major competitive advantage.”
Hyosung Heavy Industries currently runs a factory in Memphis – the only facility in the United States capable of producing 765-kilovolt transformers – and has plans for further expansion. Once complete, this Memphis facility’s annual production capacity is projected to grow from about $400 million to nearly $600 million by 2028. HD Hyundai Electric is also expanding its transformer factory in Montgomery, Alabama. By the end of the first half of this year, total investment in the second Alabama plant stood at 385.2 billion won ($279 million), and the expansion is projected to increase local production capacity by roughly 50%. Meanwhile, LS Electric is improving supply chain stability and delivery competitiveness from bases in Utah and Texas.
South Korea’s exports of ultra-high-voltage transformers to the United States have seen a significant increase. According to data from the Korea International Trade Association, South Korea exported 3,220 tons of ultra-high-voltage transformers (those with a capacity exceeding 10,000 kilovolt-amperes) to the US last year, with the export value reaching $738.28 million. This represents an 83% increase from the 2024 export value of $403.45 million. For the period from January through July this year, cumulative export volume reached 2,639 tons, with the export value amounting to $595.58 million – already surpassing 80% of the total for 2025. This growth is attributed to the increasing demand created by the AI boom.
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