Surge in orders for power generation from U.S. Big-Tech Firms
Expanding ‘HiMSEN Engine’ plant in Onsan
HD Hyundai is expanding the application of its engines from ships to land-based facilities. This is driven by U.S. AI data centers facing challenges in securing sufficient power, thus leading to increased demand for medium-sized engines, which are originally designed for ships, in land-based power generation.
According to the industry, HD Hyundai Heavy Industries’ engine and machinery division recorded USD 2.499 billion in orders during the first half of this year, reaching 91.6% of its annual target. As of the end of June, the order backlog stood at USD 7.818 billion, which is roughly three times the engine and machinery division’s sales from last year.
As orders piled up, the company also expanded its production capacity. HD Hyundai Heavy Industries will invest KRW 833.6 billion into constructing a new ‘HiMSEN Engine’ plant with an annual production capacity of 3GW on a 215,000 square meter site in Onsan-eup, Ulju-gun, Ulsan. HiMSEN Engine is a four-stroke medium-sized engine developed in-house by HD Hyundai. Although primarily supplied for ship propulsion and power generation, demand is now expanding into the onshore power generation market, including from AI data centers.
The existing HD Hyundai Heavy Industries Ulsan plant will focus on producing HiMSEN Engines for ships, while the new Onsan plant and the HD Hyundai Engine facility in Yeongam, Gwangju, Jeollanam-do, will serve as a major production hub for HiMSEN Engine for onshore power generation.
Demand has surged in the United States. Last April, HD Hyundai Heavy Industries signed a supply contract worth USD 425 million for a 684MW capacity unit with Aperion Energy Group. In August, it secured an additional contract worth USD 674 million for a 1,000 MW capacity from Kovan Energy Group.
HD Construction Equipment is also elevating its engine business, which has served as a stable cash cow, to a future growth pillar. In the second quarter of this year, the engine division posted an operating profit margin of 15.3%, with cumulative operating profit for the first half of the year exceeding KRW 100 billion.
The company is expanding its market reach while increasing engine output. The small engines under 1MW manufactured at the Incheon plant are designed as backup power sources for use during blackouts. Meanwhile, the new Gunsan plant, scheduled for completion in late October, will produce ultra-large diesel engines in the 1~3MW range, with an annual production capacity of 1,250 units.
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