Rising union demands at HD Hyundai Heavy Industries is emerging as a fresh test for one of South Korea’s hottest artificial intelligence-related trades, but investors and analysts increasingly believe booming demand tied to AI infrastructure, liquefied natural gas shipping and U.S. naval cooperation will outweigh near-term union risks.

The shipbuilder’s shares recently pulled back as wage negotiations with its labor union intensified, with the union demanding a profit-sharing scheme tied to 30 percent of operating profit. Yet some investors view the decline as a buying opportunity rather than a warning sign.

“Union strikes at Korean listed companies are buying opportunities,” analysts at JPMorgan Chase said in a recent report, reflecting growing optimism on Wall Street that the earnings momentum behind South Korea’s major shipbuilders remains intact despite labor tensions.

HD Hyundai Heavy has become one of the biggest beneficiaries of the global AI infrastructure race, as surging electricity demand from AI data centers boosts long-term demand for LNG carriers, gas-related offshore facilities and large marine engines.

Around 60 percent of global AI data-center electricity currently comes from natural gas, according to industry estimates. As AI expansion accelerates, demand for LNG transportation is expected to rise alongside orders for LNG vessels built by South Korean shipbuilders including HD Hyundai Heavy, Samsung Heavy Industries and Hanwha Ocean.

Samsung Heavy recently secured design approval for a floating data center structure (FDC), a new type of offshore platform that functions as a floating AI data center.

Securities firms have also been increasing exposure to shipbuilding shares. Since early May, financial investment firms in South Korea have poured more than 100 billion won ($66.7 million) into the SOL Shipbuilding TOP Plus exchange-traded fund, which heavily weights the country’s three major shipbuilders.

Analysts say shipbuilders are increasingly attracting investors seeking alternatives to semiconductor-heavy AI trades.

HD Hyundai Heavy’s engine business has drawn particular attention because marine engines can provide faster solutions to the AI-driven power shortage than nuclear plants or gas turbines. While nuclear facilities can take a decade to become operational and gas turbines require three to four years, ship engines can be deployed within roughly two years.

The company’s engine division, one of the world’s largest by revenue, is believed to generate operating margins above 21 percent, well above HD Hyundai Heavy’s overall first-quarter operating margin of 15.3 percent.

According to Bloomberg estimates, the company’s second-quarter revenue is expected to reach 6.3 trillion won, up 52.4 percent from a year earlier.

Some investors have even argued that HD Hyundai Heavy may offer a more attractive long-term investment case than Nvidia because South Korean shipbuilders already hold multi-year backlogs and maintain technological advantages in high-value vessels that Chinese competitors still struggle to replicate.

The LNG boom has further strengthened earnings visibility. HD Hyundai Heavy disclosed supply contracts worth 10.7 trillion won through May 8 this year, roughly double its estimated annual revenue for 2025.

Industry analysts say geopolitical risks surrounding the Strait of Hormuz and Qatar’s LNG infrastructure could force global energy companies to secure more LNG carriers for longer shipping routes, creating another major tailwind for South Korea’s shipbuilders, which dominate the high-value LNG vessel market.

HD Hyundai Heavy has also expanded its U.S. naval maintenance, repair and overhaul business, tripling last year’s annual performance within just three months.
Meanwhile, Samsung Heavy is positioning itself as a dominant player in floating LNG facilities, or FLNGs, offshore plants that extract and liquefy natural gas at sea. Analysts expect the company to secure the contract for Delfin LNG, the first FLNG project planned for the Gulf of Mexico.

Hanwha Ocean is also drawing investor attention because of its dual exposure to shipbuilding and defense businesses, including submarines and very large crude carriers.

Despite lower profit margins compared with rivals, Samsung Heavy is viewed as relatively undervalued. Based on projected price-to-earnings ratios for the end of 2026, Samsung Heavy trades at 23.62 times earnings, compared with 24.53 for Hanwha Ocean and 25.01 for HD Hyundai Heavy.

Dividend investors, however, continue to favor HD Hyundai Heavy after the company resumed dividends in 2024 for the first time in 11 years. The shipbuilder paid 5,661 won per share in 2025, including interim dividends, marking a 171 percent increase from a year earlier. However, investors should note that the dividend yield remains below 1 percent at the current share price.
Source: Pulse