HD Hyundai Heavy bets $747 million on power generation engines and SMRs to fuel AI electricity demand

HD Hyundai Heavy commits $747 million to power generation expansion

HD Hyundai Heavy Industries has announced a strategic investment of 1.07 trillion won ($747 million) to establish new manufacturing facilities for power-generation engines and small modular reactors (SMRs) in South Korea1

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. The company disclosed in a regulatory filing Thursday that this investment in power businesses aims to strengthen its position in the AI infrastructure market as surging electricity demand from AI data centers reshapes global energy requirements. The South Korean industrial giant has already secured substantial contracts, signing data center power generation equipment supply deals with U.S.-based Aperion Energy Group worth 627.1 billion won in April and Corban Energy Group worth 956 billion won in August1

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New HiMSEN engine plant to deliver 3GW annual capacity

Of the total investment, HD Hyundai Heavy will allocate 833.6 billion won to construct a new production base for its HiMSEN engines in Ulsan, designed to achieve an annual production capacity of 3 gigawatts1

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. The facility will span 215,000 square meters and house an engine assembly and testing plant, a crankshaft machining plant, and supporting production infrastructure. Construction is scheduled to begin in the first quarter of 2027, with operations expected to commence in May 20282

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. When completed, HD Hyundai expects to secure 4 gigawatts of total annual production capacity for land-based power generation engines by combining output from the new Ulsan plant with its existing HD Hyundai Engine facility in Yeongam1

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. The company plans to concentrate land-based power generation at these two sites while maintaining marine engine production at its existing Ulsan shipyard.

SMR manufacturing plant targets emerging nuclear market

HD Hyundai Heavy will invest 238.6 billion won to build a dedicated SMR manufacturing plant for producing main equipment used in small modular reactors1

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. The facility will be constructed adjacent to HD Hyundai Heavy Industries' existing shipyard compound in Ulsan, with completion targeted for the first half of 20292

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. This investment positions the company to capitalize on significant market expansion, as the OECD projects the global SMR market will grow to 150 gigawatts by 20501

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. Currently, only limited order volumes for SMR component production have been confirmed with manufacturers worldwide, indicating substantial room for growth as nations seek cleaner, more flexible nuclear power solutions to meet AI electricity demand.

Strategic positioning for the AI era power surge

The investment reflects HD Hyundai Heavy's proactive response to the unprecedented power requirements emerging in the AI era. "The investment is aimed at securing core competitiveness in power generation engines and SMRs, which are emerging as new power sources in the AI era," an HD Hyundai Heavy Industries official stated1

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. The company emphasized its goal to respond proactively to surging electricity demand and establish an early foothold in the global AI infrastructure market1

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. With data centers consuming massive amounts of electricity to train and operate AI models, power generation has become a critical bottleneck for AI development. HD Hyundai's dual approach—combining gas-powered HiMSEN engines for immediate capacity needs with small modular reactors for long-term clean energy solutions—positions the company to serve diverse customer requirements across the rapidly expanding AI infrastructure sector.