LS Cable & System to invest 1.3 trillion won in capex this year to address AI-driven power demand
Bird’s-eye rendering of LS Cable & System’s submarine cable plant in Chesapeake, Virginia, United States. (Photo prvided by LS Cable & System)
LS Cable & System will deploy more than 1 trillion won (approximately $667 million) only for facility investments. The strategy is aimed at ramping up production of cables and related products to meet rising demand amid an AI-induced power crunch, and at accelerating entry into new businesses represented by rare earths.
According to industry sources on March 25, LS Cable & System plans to invest 1,288.1 billion won in facilities this year, an increase of 61.7% from last year’s 796.8 billion won.
Part of the investment exceeding 1 trillion won will be used to build LS Cable & System’s U.S. submarine cable plant. Since last year, the company has been constructing a plant of about 70,000㎡ in Chesapeake, Virginia. Upon completion, it will be the largest submarine cable plant in the United States. The company’s total investment in constructing the plant alone is $681 million.
Funds will also be allocated to expand LSCMX, the manufacturing subsidiary in Mexico. LSCMX plans to invest a total of 230 billion won to increase production facilities for bus ducts, a power distribution system, and to establish a new production line for automotive wires. It is also expected to support the rare earth metals business being pursued by subsidiary LS Eco Energy. Last year, LS Eco Energy decided to invest 28.5 billion won in the rare earth metals business.
LS Cable & System has carried out a series of large-scale facility investments over the past two to three years. In 2023, it invested 190 billion won in Donghae, Gangwon-do, to complete Asia’s largest high-voltage direct current (HVDC) submarine cable plant. Last year, it completed additional expansion within the Donghae submarine cable plant. With that expansion, LS Cable & System’s HVDC production capacity increased more than fourfold compared with the previous level.
The company’s bold investment is primarily intended to respond proactively to the AI-driven power cycle. As AI growth heightens the need for power infrastructure capable of generating large amounts of electricity, demand for cables and related products has naturally increased. In particular, the number of customers seeking extra-high-voltage cables that can transmit large volumes of power stably is rising.
Last year, LS Cable & System won submarine cable and extra-high-voltage cable projects worth several hundred billion won in markets such as Taiwan and Singapore. It also signed bus duct supply contracts with U.S. customers. On the back of consecutive orders, the company secured an order backlog of 7.63 trillion won as of the end of last year. LS Cable & System judged that capacity additions are necessary to cope with orders expected to increase going forward.
The strategy is also to accelerate entry into new businesses. The rare earth business that LS Cable & System is pursuing is conducted only in a handful of countries, including China, Japan, and the United States, due to the high technical difficulty of the rare earth metallization process. If it succeeds in commercial production, LS Cable & System’s position in the global minerals market will be solidified.
The company’s investments are expected to continue. Capital expenditure is necessary to secure an advantageous position in power infrastructure tenders and to sustain performance in new businesses.
LS Cable & System is currently reviewing a plan to build a rare earth permanent magnet plant in Chesapeake, Virginia. Rare earth magnets are components required across advanced industries such as electric vehicles and robots. Through its subsidiary LS Eco Energy, the company is considering securing refined rare earth oxides from Vietnam and Australia and producing products in the United States.
Jung Suk-yee
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