The transformer industry is booming again!
According to recent media research, in places such as Guangdong and Jiangsu, a large number of transformer factories are already in full production, and some of their business orders for data centers are scheduled until 2027.
A reporter from China Times called several listed companies to verify the industry's prosperity. A staff member from Baiyun Electric said that transformers are operated by the company's subsidiary and that there is a growing trend in orders. A staff member from the Board Secretary Office of Baobian Electric stated that the company's orders are relatively saturated, but not to the extent of being in short supply due to excessive demand.
Xu Liang (a pseudonym), an industry insider, told reporters that overall, the demand for transformers is indeed booming, but he has not found any phenomenon where peers have orders scheduled until 2027.
Behind the Rise
From a macroeconomic perspective, the export value of transformers has increased significantly. Relevant data shows that there are approximately 3,000 transformer industry enterprises in China. In 2025, the total export value of transformers in China reached 64.6 billion CNY, an increase of nearly 36% compared to 2024. Among them, exports to Asia increased by 65.39%, exports to Africa increased by 28.03%, and exports to Europe surged by more than 138%. In addition, the average export price of Chinese transformers has also risen to about 20,800 US dollars per unit.
Transformers are fundamental equipment for power transmission and distribution. Known as "voltage regulators," they have been widely used in various fields such as industry, agriculture, transportation, and urban communities since their invention in the 19th century. Previously, this industry was once regarded as a "traditional sunset industry," but now the situation has changed, and the industry's prosperity seems to have significantly improved. What exactly is the reason for this?
Xu Liang stated that transformer exports have indeed increased compared to previous years, mainly due to the concentrated release of two core demands in Europe and the United States: first, the boom in AI has driven a significant growth in electricity consumption in data centers, leading to a continuous rise in demand for power equipment; second, the power grids in Europe and the United States have entered a period of concentrated renovation and upgrading. Power grids in Europe and the United States are generally old, with a large number of equipment that has been in service beyond their intended lifespan. Many grid facilities were originally designed to last only 20 years, but due to being mostly privately owned, their actual service life is often extended to 30 or even 40 years. In recent years, several large-scale power outages have fully exposed the vulnerability of their power grids, forcing the release of demand for equipment renewal and transformation.
Reporters have learned that there are obvious barriers in the European and American markets when it comes to supplier selection. Especially in core areas such as the main grid, out of ideological and national security considerations, Europe and the United States are more inclined to choose local and allied brands, such as products from companies like Siemens, Schneider, and ABB, followed by products from countries like Japan and South Korea. The core reason why China's transformer exports can still achieve growth is that the production capacity of European and American local and allied enterprises is seriously insufficient, making it difficult to meet the surging demand. Against this background, Chinese enterprises have formed an effective supplement in other fields such as distribution networks, thereby promoting the overall export volume of the transformer industry. However, the transformation of power grids in Europe and the United States is a long-term process; it cannot be achieved overnight but is advanced gradually.
Xu Liang told reporters that for the transformer industry, there are also multiple long-term positive factors supporting it in China: first, the smart grid construction specified in the "14th Five-Year Plan"; second, after years of domestic real estate development, a large number of residential communities and supporting distribution network equipment have reached the end of their service life and are gradually entering the replacement cycle, which also brings long-term demand. In Xu Liang's view, the transformer industry will be in a golden development period in the next 10 years.
It is understood that the investment scale of the State Grid during the "14th Five-Year Plan" period will reach 4 trillion CNY, an increase of 40% compared with the "13th Five-Year Plan", which means that China's power grid construction will enter a new cycle of expansion and upgrading. At the same time, China's total social electricity consumption exceeded 10 trillion kWh for the first time in 2025, and the continuously growing electricity demand has also provided a solid foundation for the transformer industry.
Industry performance differentiation
Looking at the performance of the transformer industry, most enterprises have achieved profits, but there are significant differences in performance changes among enterprises, and the characteristics of industry differentiation are prominent.
In the first three quarters of 2025, leading companies in the industry performed steadily. TBEA achieved a net profit attributable to shareholders of 5.484 billion CNY, a year-on-year increase of 27.55%; China XD Electric achieved a net profit attributable to shareholders of 939 million CNY, a year-on-year increase of 19.29%. In addition, the growth rates of net profits attributable to shareholders of Baiyun Electric and Jinpan Technology were also around 20%. However, some companies saw their profits decline. The reporter noticed that in the first three quarters of 2025, Eaglerise achieved a net profit attributable to shareholders of 178 million CNY, a year-on-year decrease of 15.14%; Sanbian Science & Technology had a net profit of 40.155 million CNY, a year-on-year decrease of 48.84%.
Judging from the disclosed 2025 performance forecasts, the differentiation among enterprises has further intensified. According to the 2025 performance express report of SiCNY Electric, the company achieved an operating income of 2.1205 billion CNY, an increase of 37.18% compared with the same period last year; the net profit attributable to shareholders of the listed company was 316.3 million CNY, an increase of 54.35% compared with the same period last year. The 2025 performance forecast of Sanbian Technology shows that the company's profit is 12 million CNY to 18 million CNY, a decrease of 85.10% to 90.06% compared with the same period last year. Baobian Electric expects the net profit attributable to the parent company in 2025 to be about 182 million CNY, an increase of about 88.95% year-on-year.
Xu Liang told a reporter from China Times that different transformer enterprises have different development priorities, which has led to distinctions in their scale patterns. The significant gap in profit margins between enterprises, in addition to being related to their levels, is most crucially influenced by their sales models, customer distribution, and product structures.
He gave examples: some enterprises are highly focused on State Grid orders, with their performance deeply tied to the bidding rhythm of State Grid—when State Grid's bidding volume increases, their performance improves accordingly; when bidding contracts, they face pressure on performance. Some other enterprises have a serious customer dependency, with the proportion of their largest customer even exceeding 50%. Once this customer reduces orders, negotiates prices, or pressures for price cuts, it will have a huge impact on the enterprise's profits. In contrast, the good performance of another group of enterprises stems from two core reasons: first, they originally had a low base and a small market share, so once they secure key major customers, their performance growth will be very significant; second, some enterprises have a diversified layout of products and customer structures. This scattered layout forms a safety line, which can effectively avoid the direct impact of order cuts and price pressures from a single customer on profits. In addition, fluctuations in raw material prices are also a key influencing factor. In particular, the sharp rise in copper prices this year has impacted the profitability of the entire industry. The superposition of multiple factors has led to a significant divergence in the performance of enterprises in the industry, with some enterprises achieving significant growth and others experiencing a sharp decline.
Regarding the performance of the transformer industry in the next few years, Xu Liang stated that he is long-term optimistic about the industry's development trend and expects the overall scale of the industry to continue to grow. However, two major risks need to be focused on: first, the intensification of internal competition in the industry; second, the continuous rise in raw material prices. Both will squeeze corporate gross profit margins, which may lead to a situation in the industry where "revenue increases but profits do not", posing a significant test for the entire industry.
In addition, the reporter learned that currently, the transformer solutions in the data center field are still traditional power supply solutions and have not truly achieved significant volume.
Xu Liang told reporters that in the past two years, the transformer industry mainly relied on new energy businesses such as wind, solar and energy storage to drive sales growth. In the next few years, data centers will become a new growth point. He predicts that related products such as solid-state transformers will not really see a significant increase in volume until 2027 or 2028.
