The artificial intelligence data center expansion is driving renewed demand for traditional heavy industrial equipment, including transformers and switchgear.
HD Hyundai Heavy Industries has secured orders totaling 1.5831 trillion Korean won for power generation facilities serving U.S. data centers as of this month. In the first half of the year alone, LG Electronics’ orders for AI data center cooling solutions have surpassed 600 billion Korean won. Hyundai Steel has also recently secured contracts to supply steel materials for seven new data centers. Meanwhile, Korean Air reported a 46.1% year-over-year increase in second-quarter cargo sales, driven by robust demand for AI-related freight.
The artificial intelligence boom is reshaping traditional heavy industries—including shipbuilding, steel, home appliances, construction machinery, and logistics—far beyond the immediate ecosystems of NVIDIA, big tech firms, and semiconductor manufacturers. As AI data centers proliferate globally, consuming massive amounts of continuous power and generating intense heat, an unprecedented trickle-down effect is rippling through the traditional heavy and chemical sectors tasked with building and operating them.
HD Hyundai Heavy Industries’ independently developed HiMSEN medium-sized engine has seen explosive demand after U.S. technology giants, grappling with grid saturation emergencies, turned to it for backup power generation. Originally designed for marine propulsion, the engine’s versatility proved critical. Following an April agreement with U.S.-based Apieron Energy Group valued at 627.1 billion Korean won, HD Hyundai Heavy Industries announced a partnership this month with Corban Energy Group worth 956 billion Korean won. These deals bring total year-to-date orders for data center power generation engines to 1.5831 trillion Korean won.
◇ 180,000 to 200,000 tons of steel required for 1GW data center
The iron and steel sector has adopted a new benchmark: ‘180,000 to 200,000 tons of steel per 1 gigawatt (GW) data center.’ A 1GW-class AI facility draws power comparable to a nuclear reactor, necessitating ultra-heavy structural frameworks, H-beams, and precision piping. In response, Hyundai Steel established a dedicated task force (TFT) in March and began constructing a “package steel supply chain” encompassing energy storage systems (ESS), power grid infrastructure, and core facility frameworks. The company has already locked in supply agreements for seven new data centers. POSCO is similarly expanding its order pipeline by supplying high-corrosion-resistant coated steel plates and specialized transformer steel materials.
LG Electronics has capitalized on what the industry calls the “war against heat.” As GPU performance scales, server rack temperatures spike, pushing conventional air-cooling systems to their operational limits. To address this, LG developed a 600kW-class coolant distribution unit (CDU) that mounts a cooling plate directly onto semiconductor chips while circulating chilled water. The system earned NVIDIA’s quality certification last month. Having secured over 600 billion Korean won in cooling solution contracts during the first half of the year, LG Electronics targets multi-trillion won projects later this year.
◇ AIDC special effects spreading to traditional heavy industries
The ripple effects are extending into foundational infrastructure and broader supply chains. Caterpillar, the world’s largest heavy equipment manufacturer, reported a 24% year-over-year jump in second-quarter sales to $20.5 billion (approximately 28.3 trillion Korean won). The growth stems from heightened demand for excavators and bulldozers, which are essential not only for site grading but also for constructing reinforced foundations capable of supporting dense arrays of servers, power units, and cooling infrastructure. The aviation sector is equally buoyed. Korean Air’s second-quarter cargo revenue reached 1.5419 trillion Korean won, marking a more than 40% increase from the prior year. High-value, time-sensitive shipments such as semiconductors and server components continue to prioritize air freight despite elevated rates.
In the United States, demand for industrial real estate to temporarily house oversized generators and transformers prior to installation is accelerating. Link Logistics, North America’s largest logistics real estate firm, allocated 15% of its new annual leases to data center and ancillary equipment storage. Each 1GW facility requires a dedicated assembly and storage warehouse near the site, spanning roughly 25 soccer fields (approximately 56,000 pyeong). What began as a software and silicon-driven AI revolution is now evolving into a sprawling physical industrial ecosystem, drawing upon the foundational capacity of the real economy—from power infrastructure and steel production to heavy machinery and logistics.