Overseas suppliers fill the gap as AI data centers strain US transformer supply

Overseas manufacturers now account for about three-fourths of the bids received by California’s Roseville Electric Utility, with suppliers from countries including China and South Korea becoming more prominent as domestic manufacturers struggle to keep pace with rising demand for transformers, according to CEO Dan Beans.

Beans said domestic manufacturers generally quote longer lead times and higher prices than overseas suppliers, a gap driven by the rapid expansion of AI data centres, which is putting significant pressure on US power companies, according to a Reuters report. Developers are securing critical electrical equipment years in advance, and Roseville Electric Utility itself now operates on a three-year procurement timeline, up from about a year previously, with some equipment ordered up to five years ahead.

Transformers, used to raise or lower electricity voltage, have faced supply shortages since demand recovered faster than manufacturing capacity after the Covid-19 pandemic, with AI data center construction adding further strain. Wood Mackenzie estimates lead times for generator step-up transformers exceeded 160 weeks in the first quarter of 2026, up from an average of 143 weeks in 2024.

“Equipment availability is becoming the biggest concern for developers as they value time to market so highly,” senior analyst Ben Boucher told Reuters. Wood Mackenzie estimates US data center capacity will grow from around 24 gigawatts today to 110 gigawatts by 2030, with data centers’ share of the electrical equipment market potentially reaching about 40% under accelerated growth scenarios, up from just under 2% in 2020.

The industry is also looking at longer-term fixes, including expanding domestic manufacturing capacity for electrical equipment and delaying some power plant retirements while new infrastructure is developed, as the US power sector works to meet growing electricity demand from AI data centers.