The signal from local ballots
According to the Korea Herald, the US midterm elections revealed growing voter opposition to the construction of data centers. Of 41 local measures related to the facilities in 10 states, 28 proposed restrictions ranging from construction bans to temporary moratoriums and stricter rules, according to Ballotpedia data cited by the source. Residents' concerns include electricity costs, water consumption, noise, and emissions from emergency generators. A Gallup poll in May, also cited by the newspaper, indicated that about 70 percent of US respondents opposed the construction of data centers for artificial intelligence in their communities.
The Korean suppliers' numbers
This opposition directly affects one of the main growth engines for major South Korean suppliers such as HD Hyundai Electric, Hyosung Heavy Industries, and LS Electric. Their combined order backlogs, according to the source, have reached about 37.9 trillion won, equivalent to about $27.9 billion, on the back of electricity demand. Hyosung Heavy Industries is identified as the main beneficiary of the infrastructure expansion by US big tech companies thanks to its expertise in ultra-high-voltage transformers and circuit breakers. In the third quarter, the heavy industry division recorded a record backlog of 18.9 trillion won, with the North American market accounting for 60 percent of the total.
HD Hyundai Electric has order backlogs of $8.84 billion, including a 1.12 trillion won supply deal signed with a major global technology company. LS Electric has a backlog of 7.04 trillion won, of which 2.25 trillion won is tied to distribution boards. These figures show how much the sector depends on the North American market and, by extension, on the resilience of data center projects.
Risks to future orders and ongoing plans
Industry sources cited by the newspaper identify new regulatory barriers and possible delays in project timelines as the main risks for Korean manufacturers. During a webinar held by the Korea Financial Investment Association, Bloomberg Economics chief economist Tom Orlik warned that state governors could interpret the election results as a signal to impose new restrictions. He added that Korea and Taiwan, among the biggest beneficiaries of the AI boom, could be the hardest hit if the momentum stalls, specifying that the impact would not concern orders already in the pipeline but expectations for future orders and long-term profitability.
An industry source said it had not yet received notices of delays from customers but was closely monitoring any regulatory developments. The newspaper also notes that Korean suppliers are vulnerable to operational delays just as they are expanding production capacity: HD Hyundai Electric is expanding the Ulsan transformer plant and the Cheongju facilities, Hyosung Heavy Industries is carrying out a $157 million upgrade in Memphis, and LS Electric a $250 million expansion in Utah.
The same article reports that on Friday semiconductor stocks lost about 10 percent in the morning, dragging the Kospi below the 5,000-point threshold, after a sharp selloff in major technology stocks on Wall Street following the elections. Based on the available material, it remains to be verified whether the local measures are actually approved and what impact they may have on already signed contracts: the source does not provide confirmation in this regard.
