Data Center Power Revolution! With Major Manufacturers Doubling Production, BBU Ignites Trillion-Yen HVDC Business Opportunity!

As AI computing power surges, data center power architecture is undergoing a structural upgrade. With leading manufacturers doubling production capacity as strong backing, Backup Battery Units (BBUs) are rising powerfully, becoming a core component for maintaining computing stability and driving the HVDC (High-Voltage Direct Current) transformation. The BBU industry is entering a period of high-speed growth, creating a massive market capable of accommodating multiple winners, and offering excellent long-term growth opportunities for the Taiwan-Japan supply chain.

Leading Manufacturers Expand Production, Establishing a High-Growth Trajectory for BBU

The strong outlook from industry leader Panasonic provides powerful validation for the BBU market's explosive growth. Panasonic expects its data center BBU business to grow 82% in FY3/27 to 585 billion yen, and further increase by 45% in FY3/28 to 850 billion yen, contributing 10% of the group's revenue. To meet strong demand, its battery cell production capacity in Japan is expected to double by CY27 to approximately 6GWh, and further expand to 9-10GWh by CY28. The leader's astonishing growth guidance fully confirms that BBU has become a structural key component in AI data center power architecture.

High Power and HVDC Build Moats, Maintaining High Profit Margins

On the profitability front, mature 3kW and 5kW BBU products are already facing intense price competition, limiting pricing power. However, high-power products such as 8kW, 12kW, and even 25kW continue to enjoy healthy profit margins due to higher certification barriers, engineering complexity, and a limited number of qualified suppliers. Future profitability will depend on system integration and engineering capabilities, rather than just battery cell costs. Additionally, HVDC-compatible BBU is expected to complete certification by the Taiwan-Japan supply chain in the first half of 2027, begin shipments in the second half, and deliver significant revenue contributions in 2028, becoming the next strong driver for advancing industry specifications and gross margins.

CSPs Expand Second-Supplier Strategy, Taiwan-Based Module Makers Gain Market Share

Although Panasonic maintains its market leadership with proprietary NCA battery technology (high energy density and safety), early-mover advantage, and highly integrated solutions, cloud service providers (CSPs) are actively expanding their second-supplier strategy to reduce supply chain risk. This creates an excellent breakthrough opportunity for Taiwanese BBU manufacturers such as AES-KY (6781-TW) and Sunlord (3211-TW). Taiwan's competitive advantages lie in excellent battery module integration, safety certification, and close collaboration with power supply manufacturers. As CSP orders spill over, Taiwan-based manufacturers are expected to continuously expand market share at the module level, with tremendous long-term earnings growth potential. Investors are invited to download Mr. Chen's app and lock in live streams to grasp the front-line industry dynamics together!

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Source: Analyst Chen Zhilin / Kaixu Investment Consulting

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