US declares national emergency over power grid security

Trump signs executive order Wednesday banning some foreign electrical equipment

Move widely seen as targeting China over digital backdoor concerns

Korean firms with US production facilities poised to benefit

Hyosung, HD Hyundai, LS expanding local manufacturing footprint

An aerial view of Hyosung Heavy Industries' ultra-high-voltage transformer factory in Memphis, Tennessee. [Hyosung Heavy Industries]
An aerial view of Hyosung Heavy Industries' ultra-high-voltage transformer factory in Memphis, Tennessee. [Hyosung Heavy Industries]

A US move to subject foreign-made electrical equipment used in its power grid to national security scrutiny is expected to benefit South Korean companies rather than hurt them. With electricity demand surging on the back of AI and data center expansion, Korean firms that have already established a foothold in the North American market are well-positioned to capitalize on tightening local security and procurement standards.

President Donald Trump signed an executive order Wednesday declaring a national emergency under the International Emergency Economic Powers Act and the National Emergencies Act, banning the purchase, import, transfer and installation of certain foreign-made equipment, according to Reuters and other media outlets. The White House said the order would prohibit the purchase and installation of specific foreign-made bulk power system equipment, including related critical software and digital components that could pose cybersecurity or operational risks. The ban covers transformers, large generators, ESS, inverters and high-voltage circuit breakers.

The Trump administration's sweeping move to block foreign equipment from the power grid is widely interpreted as targeting China. The order specifically cited concerns about digital backdoors in foreign equipment that could allow remote access from outside. Last year, US authorities investigating equipment connected to the country's power grid discovered unauthorized communications devices embedded in some Chinese-made solar inverters, raising fears of possible remote manipulation.

According to the International Energy Agency, China accounts for roughly 80 percent of global battery and solar inverter manufacturing. A 2020 US Commerce Department investigation found that the United States had imported large volumes of Chinese-made large power transformers over the preceding decade. However, according to NH Investment Securities, China's share of transformer imports into the US last year was limited to single digits across all power capacity categories, ranging from 1.3 percent to 7.3 percent. US utility companies have been scaling back their reliance on Chinese imports, while China has reportedly been routing exports through local production subsidiaries in Mexico and elsewhere.

A rendering of LS Electric's planned expansion in Utah. [LS Electric]
A rendering of LS Electric's planned expansion in Utah. [LS Electric]

Against this backdrop, analysts say South Korean companies are unlikely to fall under the scope of the executive order, and that demand will continue to grow given the US market's supply shortage. Korean power equipment makers have been expanding their US production facilities, and some in the industry see the latest American measures as a potential catalyst for a rebound. "Having built local bases in advance to prepare for measures like the US Inflation Reduction Act has become a major competitive advantage," one industry official said.

Hyosung Heavy Industries currently operates a factory in Memphis — the only facility in the United States capable of producing 765-kilovolt transformers — and plans to expand it further. Once completed, the Memphis plant's annual production capacity is expected to grow from around $400 million to approximately $600 million by 2028. HD Hyundai Electric is expanding its transformer factory in Montgomery, Alabama. Total investment in the second Alabama plant reached 385.2 billion won ($279 million) as of the end of the first half of this year, and the expansion is expected to increase local production capacity by about 50 percent. LS Electric is strengthening supply chain stability and delivery competitiveness from bases in Utah and Texas.

Meanwhile, South Korea's exports of ultra-high-voltage transformers to the United States have been rising sharply. According to Korea International Trade Association export-import statistics, 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 export value reaching $738.28 million. That represents an 83 percent surge from the 2024 export value of $403.45 million. From January through July this year, cumulative export volume reached 2,639 tons, with export value totaling $595.58 million — already surpassing 80 percent of the full-year 2025 figure, driven by soaring demand from the AI boom.


keg@heraldcorp.com