AI infrastructure, mining hint at recovery for ‘K-equipment’ sector

(HD Hyundai)

South Korea’s construction equipment industry, which has struggled in recent years, is expected to show clearer signs of recovery starting this year, driven by rising demand linked to artificial intelligence infrastructure, expanded production facilities and increased mining investment amid higher gold prices.

According to the Korea Construction Equipment Manufacturers Association (KOCEMA) on Monday, overseas shipments of domestically produced construction machinery totaled 46,347 units last year, estimated to be down 17.7 percent from a year earlier. This marked the lowest level since the 2009 global financial crisis and followed a sharp decline in 2024, when shipments fell 36.8 percent year on year to 56,323 units, extending the downturn into a second consecutive year.

The prolonged slowdown stemmed from weaker global economic conditions, slumping construction and real estate markets, persistently high interest rates and additional pressure from U.S. tariff issues, which together dampened demand and weighed on exports to North America and Europe.

Signs of recovery, however, began to emerge in the second half of last year. In Europe, demand gradually improved on the back of a lower interest rate environment, while emerging markets in the Middle East and Africa saw increased infrastructure spending and mining development, partially offsetting weakness in North America.

Rising AI-related investment is also underpinning expectations for a rebound in equipment demand, as the construction of AI data centers and semiconductor manufacturing facilities drives broader infrastructure needs. According to Fortune Business Insights, the global construction equipment market is projected to grow from $171.98 billion in 2025 to $310.24 billion by 2034, representing a compound annual growth rate of 6.8 percent.

Amid improving industry conditions, HD Construction Equipment, which officially launched this month, presented a revenue target of 8.7 trillion to 9 trillion won ($6.12 billion) and an operating margin of 5 to 7 percent for this year at a recent investor briefing.

Operating profit is also projected at 435 billion to 630 billion won, potentially exceeding last year’s estimated results. The company said market conditions have improved compared with assumptions used in its management plan, adding that while tariff impacts were conservatively reflected in earnings forecasts, stronger-than-expected performance in the U.S. could lift actual results. Lee Dong-heon, an analyst at Shinhan Securities, said HD Construction Equipment has built a structural growth foundation across construction machinery, engines, parts and after-market services following its integration, with industry conditions in 2026 likely to improve in most regions except the U.S.

With a strong focus on mid- to large-sized equipment, HD Construction Equipment plans to target mining and resource development demand in emerging markets such as Ethiopia. The company said annual sales in Ethiopia, which previously stood at around 300 to 400 units, are expected to exceed 3,000 units this year, while shipments are also picking up in Libya and Algeria, alongside growing interest in the CIS region.

Doosan Bobcat, known for its strength in compact equipment, is expected to see a more pronounced recovery in advanced markets such as the U.S. Its compact machinery is used not only in housing but also in small-scale infrastructure, manufacturing and utility facilities, suggesting faster demand recovery during economic upturns. According to FnGuide, Doosan Bobcat’s consensus forecasts for this year point to revenue of 9.02 trillion won and operating profit of 772.8 billion won, up 3.9 percent and 12.6 percent, respectively, from estimated results for last year. Lee Han-gyeol, an analyst at Kiwoom Securities, said equipment demand recovery is likely to accelerate from this year as global companies expand production facilities in the U.S. and infrastructure investment remains resilient.