60% of global supply, China’s transformer orders have exploded

Transformers have now become a sought after commodity worldwide.

Musk has previously stated that there are three major factors that will constrain the development of artificial intelligence in the future: chips, power generation, and transformers. Nowadays, chips and power generation are not a problem at all, but transformers are no longer sufficient.

From 2020 to now, the price of transformers worldwide has increased by over 60%, with some even rising by 80%. But even so, there is still a shortage of supply.

At present, Nvidia’s AI chips can be obtained in just a few months, while the average delivery cycle for global transformers is over 2 years, and large transformers can even wait for 4 years. The United States, where the problem is most severe, has a transformer shortage of over 30%.

Once the transformer is gone, it may bring a huge impact to the whole world. Transformers are the heart of the entire power system, and to achieve the conversion from high voltage to low voltage, it is necessary to rely on them. So it’s as small as a phone charger, as big as cars, AI data centers, and power grids. Wherever there is electricity, there must be a transformer.

In recent years, almost all emerging industries that have risen rely on transformers. Previously, a million kilowatt thermal power unit only needed 1-2 main transformers, but a photovoltaic power station of the same scale requires hundreds of transformers.

AI is the same, training large models requires low voltage and high current, and a large number of transformers must be configured throughout the entire computer room. There are also new energy vehicles that require at least five or six transformers per vehicle, which is unprecedented in the era of fuel vehicles.

If there were no transformers, industries such as artificial intelligence and new energy would all be suspended.

But that’s not the most troublesome thing, the most troublesome thing is that even ordinary people may have problems with their clothing, food, housing, and transportation. The power systems in Western countries have generally aged, especially transformers. The US Department of Commerce previously released data that the average lifespan of transformers in the United States is as high as 30-40 years, far exceeding the expected lifespan of 25 years.

Due to the shortage of transformers, many parts of the United States are still delaying the renovation of their power grids. Large scale power outages have started to occur in both Europe and the United States in the past two years, and if they continue to drag on, this may become commonplace in the future.

To solve this problem, China may be the only hope.

Since 2021, China’s transformer exports have been growing rapidly, doubling in just three years. This year, it has directly exploded in sales, with exports reaching over 35 billion yuan in the first nine months, a year-on-year increase of over 52%. More than 60% of transformers in the world now rely on China for supply.

Chinese products not only have low cost and good quality, but also high efficiency. Companies like TBEA and China XD can compress the delivery cycle to 10-12 months, almost twice as fast as foreign investment.

If it weren’t for China’s support from behind, the Western power system would likely have collapsed.

Although international giants such as Hitachi Energy and Eaton are also expanding production, it is almost impossible to completely get rid of this round of transformer crisis without China.

Made in China, this time it’s going to save the world again.