Why LS Cable & System Won Korea's National Growth Fund

[Korea Financial Times, Jung Jina] LS Cable & System has been selected as the first investment target under the Manufacturing AI Transformation (M.AX) Frontier Project. Through the National Growth Fund, the company will receive roughly KRW 80 billion in low-interest financing over a 10-year term to expand its ultra-high-voltage submarine cable production infrastructure and test bed.

With the Financial Services Commission (FSC) directing roughly KRW 16 trillion toward companies in the physical AI sector, LS Cable & System's selection as the first recipient is seen as reflecting both its standing within Korea's domestic cable industry and its competitiveness in global markets.

FSC Commits KRW 16 Trillion Across Six Physical AI Sectors

According to industry sources on July 3, the FSC held a National Growth Fund Investment Deliberation Committee meeting on June 25, approving infrastructure investment and financing for the Yeongyang County onshore wind power project, along with low-interest loans for companies in the cable and semiconductor value chains.
Earlier, at the second meeting of the Strategy Committee — the National Growth Fund's advisory body — held in April, the FSC had designated support for "renewable energy infrastructure development projects," spanning onshore wind, solar, and other methods, as its second mega-project.

At the June 25 committee meeting, as part of that second mega-project — the "energy infrastructure development project" — the FSC approved the Yeongyang County onshore wind power project while simultaneously approving financing for high-voltage submarine cable production facilities, which are essential to expanding transmission networks and supporting the government's planned "energy expressway."

Separately, on July 1 the FSC held a joint public-private meeting with the Ministry of Trade, Industry and Energy under the banner of the "National Growth Fund–M.AX Frontier Project," discussing plans to identify and support promising leading companies and projects related to physical AI. Through this initiative, roughly KRW 16 trillion will be deployed this year across six sectors: AI, robotics, future mobility, defense, semiconductors, and secondary batteries.

The M.AX Frontier Project is an industry-finance collaboration aimed at fostering leading companies in M.AX-related fields — robotics, AI factories, future mobility, and the like — to pioneer the physical AI era. Leading companies are defined as those that drive the industrial ecosystem forward through large-scale investment and technological innovation, while also fueling the growth of partner firms.

KRW 80 Billion in Low-Interest Loans Through the National Growth Fund, Building on Years of Capital Investment

LS Cable & System became the beneficiary of the National Growth Fund's first M.AX investment project through its plan to expand its ultra-high-voltage submarine cable production plant.

The project involves expanding submarine cable mass-production infrastructure and a test bed in Donghae, Gangwon Province. Of the total KRW 160 billion required, KRW 80 billion will be secured through a long-term, low-interest loan from the National Growth Fund over a 10-year period.

LS Cable & System became the first company in Korea to successfully develop submarine cables in 2007, and went on to establish the country's first dedicated submarine cable plant in Donghae in 2009. Since then — even before this latest round of government support — the company is reported to have invested more than KRW 700 billion of its own capital in facility expansion over roughly 17 years.

That early investment has translated into recent earnings gains. On a consolidated basis, LS Cable & System's operating profit came to KRW 83.1 billion in the first quarter of last year, KRW 82.5 billion in the second quarter, and KRW 79.2 billion in the third quarter. Fourth-quarter profit dipped to KRW 35 billion amid seasonally lower operating rates and a temporary increase in the share of lower-margin products, before rebounding to KRW 97.1 billion in the first quarter of this year — the highest level in the past five quarters.

Revenue held relatively steady over the same period, at KRW 1.9437 trillion in the first quarter of last year, KRW 1.8894 trillion in the second quarter, KRW 1.8869 trillion in the third quarter, and KRW 1.8682 trillion in the fourth quarter. It then surpassed KRW 2 trillion in the first quarter of this year, driven by expanded sales of ultra-high-voltage underground and submarine cables for AI data centers and a growing share of higher-margin products.

HVDC Market Projected to Reach KRW 40 Trillion by 2030, Global Competitiveness a Key Factor

The market's own growth potential is also drawing attention. According to LS Cable & System, the global high-voltage direct current (HVDC) cable market is projected to grow to roughly KRW 40 trillion by 2030.

Only around six global cable manufacturers, including LS Cable & System, are reportedly capable of handling HVDC submarine cable production and installation on a full turnkey basis.

In 2021, the company invested KRW 190 billion to build Submarine Cable Plant No. 4, Korea's only — and Asia's largest — dedicated HVDC facility. In 2024, it committed a further KRW 100 billion to build Submarine Cable Plant No. 5, which was completed in July of last year and quadrupled the company's production capacity.

The project is also tied to national energy policy initiatives. LS Cable & System is supplying the world's first commercialized 90°C HVDC cable for KEPCO's "East Coast–Singaepyeong" 500kV transmission line project.

The company also plans to participate, together with LS Marine Solutions, in the "West Coast HVDC Energy Expressway" project, aligning with the government's broader policy direction. Long-distance HVDC installation requires dedicated cable-laying vessels of 10,000 tons or more, meaning only a handful of companies possess both the production and installation capabilities needed.

In addition, LS Cable & System is expanding globally, including construction of its largest overseas submarine cable plant in Chesapeake, Virginia, targeted for completion in 2027. The selection is also seen as symbolically aligned with the government's stated goal of making Korea the "world's No. 1 leader in physical AI."

An LS Cable & System official said the company operates as a global player, and that while the domestic HVDC submarine cable market is significant given heavy capital expenditure by data centers and semiconductor plants, the global market is considerably larger. The official added that this investment reflects recognition of the company's capacity to compete globally, not merely a boost to domestic demand.

Jung Jina (urzinnie@fntimes.com)