Investors can capture the grid capex super-cycle – without betting on any single wind farm or solar project – by owning the suppliers that make HVDC links and power inverters possible. These include HVDC subsea/land cable manufacturers, converter and inverter power-electronics providers, wide-bandgap semiconductor leaders (SiC/GaN), transformer/switchgear majors, passive component specialists (magnetics, capacitors), insulation & polymer providers, and marine EPC/installation partners. The category enjoys multi-year visibility thanks to long backlogs, qualification moats, and policy-driven demand.
Quick Summary
- The most resilient way to play grid electrification is via upstream enablers – cables, power semiconductors, magnetics/capacitors, insulation materials, transformer/switchgear, and installation EPC.
- HVDC growth favors cable makers and converter integrators; inverter proliferation (solar, storage, EV charging, data centers) favors SiC/GaN device leaders and passive component specialists.
- Prioritize firms with capacity moats, multi-year backlogs, and design-win visibility; mix hardware scale with rising software/service attach.
- A barbell of HVDC cable & converter names plus power-semi leaders and critical passives can smooth policy and cycle risk.
- Watch KPIs: order intake/book-to-bill, factory utilization, SiC/GaN revenue mix, gross margin trajectory, installation vessel availability.
What Counts as “Picks & Shovels” in HVDC and Inverters?
Investor angle: Backlog-rich cable & converter names monetize the grid build; device and passive leaders monetize the efficiency race inside every inverter.
Market Drivers & Trends (2025)
- Offshore wind & interconnectors: Multi-GW HVDC build-out across Europe/UK; selective long-haul links in North America and APAC.
- Data center & AI power: Step-change in UPS/PSU efficiency needs—favors GaN/SiC devices and premium magnetics/capacitors.
- Solar + storage scale-up: String/central inverters and bidirectional converters proliferate; grid-forming capabilities gain traction.
- Supply-chain tightness: Subsea HVDC manufacturing slots and installation vessels remain bottlenecks—supporting pricing power.
- Materials transition: Migration to 200 mm SiC and advanced polymer/XLPE systems reduces losses and expands TAM.
Top “Picks & Shovels” Companies by Segment (Selected, Global)
Market-cap ranges are indicative; verify current data before investing.
A) HVDC & High-Voltage Cables (Backlog-Rich, Capacity-Moat)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| Prysmian Group | BIT:PRY | Italy | €10–20B | Scale leader in 525 kV subsea/land HVDC; accessories & turnkey capability. |
| Nexans | EPA:NEX | France | €3–8B | Energy-focused cable portfolio; interconnectors and offshore wind export. |
| NKT A/S | CPH:NKT | Denmark | €4–9B | Europe-centric HVDC pure-play with UK/EU pipeline leverage. |
| Sumitomo Electric | TYO:5802 | Japan | ¥1.5–3.0T | Subsea/land HVDC cables and accessories; APAC and select EU exposure. |
KPIs: order intake vs. factory slots, 525 kV qualification, cable-lay capacity, mix of turnkey vs. supply-only.
B) Converter Stations & Grid System Integration (Engineering-Rich)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| Siemens Energy | XETRA:ENR | Germany | €10–30B | VSC converters, European reference base; service & digital attach. |
| Hitachi Ltd. (Hitachi Energy) | TYO:6501 | Japan | ¥7–12T | Global HVDC leadership; controls + converter transformers. |
| GE Vernova | NYSE:GEV | U.S. | $30–70B | Converter systems & grid software; UK/EU frameworks, NA corridors. |
| Mitsubishi Electric | TYO:6503 | Japan | ¥3–6T | HVDC valves/equipment; modules across industrial/rail. |
KPIs: book-to-bill, converter factory throughput, penalty-free delivery, lifecycle services mix.
C) Power Semiconductors (SiC/GaN) for Inverters & Converters
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| Infineon Technologies | XETRA:IFX | Germany | €40–70B | Broad SiC/GaN portfolio; auto/industrial depth; strong module ecosystem. |
| STMicroelectronics | NYSE:STM | Europe | $35–60B | Auto-heavy SiC wins; GaN for chargers/enterprise PSUs. |
| ON Semiconductor | NASDAQ:ON | U.S. | $30–55B | SiC capacity build; traction/OBC design-win visibility. |
| Wolfspeed | NASDAQ:WOLF | U.S. | $3–9B | SiC substrates/epi + devices; 200 mm ramp torque (higher execution risk). |
| ROHM | TSE:6963 | Japan | ¥0.8–1.4T | SiC diodes/MOSFETs/modules; Japanese OEM ties. |
| Renesas Electronics | TSE:6723 | Japan | ¥3–6T | WBG roadmap integrated with MCUs/SoCs; auto/industrial breadth. |
| Navitas | NASDAQ:NVTS | U.S./IE | $1–5B | GaN power ICs from consumer to enterprise/datacenter; fab-light model. |
| Power Integrations | NASDAQ:POWI | U.S. | $3–8B | GaN-based high-voltage ICs; sticky OEM sockets, strong GM profile. |
KPIs: SiC/GaN revenue mix, 200 mm SiC yields/capacity, enterprise PSU and inverter design-wins, gross-margin progression.
D) Transformers, Switchgear & Protection (AC Backbone + HVDC Interface)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| ABB Ltd | SIX:ABBN / NYSE:ABB | CH | $70–120B | Converter transformers, HV equipment, grid automation/DERMS. |
| Siemens AG | XETRA:SIE / SIEGY | DE | €90–160B | GIS/AIS switchgear, protection relays, digital substations. |
| Schneider Electric | EPA:SU | FR | €90–150B | MV/LV gear, protection, ADMS/DERMS software stack. |
| Toshiba | TSE:6502 | JP | ¥1.8–3.0T | Power transformers and HV gear for both AC and HVDC scopes. |
KPIs: large-transformer lead times, service/software attach, pricing power on constrained assets.
E) Magnetics, Capacitors & Thermal (Inside Every Inverter)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| TDK | TYO:6762 | JP | ¥3–6T | High-end magnetics/capacitors for PSU/inverter efficiency. |
| Murata | TYO:6981 | JP | ¥6–12T | Power passives; dense packaging for data-center/telecom. |
| Vishay Intertechnology | NYSE:VSH | U.S. | $3–7B | Film capacitors, resistive/inductive components for HV power. |
| Eaton (Power Quality) | NYSE:ETN | U.S. | $80–140B | UPS/power quality systems using premium passives and thermal. |
KPIs: mix shift to high-reliability parts, ASP resilience, delivery performance during tight cycles.
F) Insulation, Polymers & Cable Chemistry (Materials Moat)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| Arkema | EPA:AKE | FR | €7–15B | Advanced polymers/fluoromaterials for HV cables and insulation. |
| BASF | XETRA:BAS | DE | €40–70B | Specialty materials in cable compounds and accessories. |
| Celanese | NYSE:CE | U.S. | $12–25B | Engineering polymers for high-temp electrical applications. |
KPIs: premium compound approvals, cable-maker partnerships, margin mix in specialty grades.
G) Marine Installation & EPC (Cycle Torque, Higher Beta)
| Company | Ticker | Region | Market-Cap Range | Strategic Angle |
|---|---|---|---|---|
| Subsea 7 | OSE:SUBC | NO | NOK 40–80B | Cable lay & protection; North Sea and Atlantic campaigns. |
| DEME Group | EBR:DEME | BE | €3–7B | Vessels, trenching; levered to interconnector/export schedules. |
| TechnipFMC | NYSE:FTI | UK/U.S. | $8–18B | EPC/cable interfaces; optionality on offshore wind & interlinks. |
KPIs: vessel utilization/day-rates, weather-window execution, project penalties.
How to Build Exposure (Portfolio Blueprints)
1) HVDC Core Basket (Backlog-Heavy)
- Cables: PRY, NEX, NKT
- Converters: ENR, 6501, GEV, 6503
- Rationale: Rides multi-GW interconnectors/offshore export; accepts project-timing beta.
2) Inverter Efficiency Basket (Semis + Passives)
- SiC/GaN: IFX, STM, ON, WOLF, NVTS, POWI
- Passives/Thermal: TDK, Murata, VSH
- Rationale: Benefits from solar/storage/EV/data-center inverter proliferation and efficiency upgrades.
3) Balanced “Barbell”
- 50–60% HVDC core; 40–50% inverter efficiency basket.
- Add a small EPC sleeve (SUBC, DEME, FTI) for torque if risk tolerance allows.
What to Watch (KPIs & Catalysts)
- Order Intake & Book-to-Bill: Especially for cables/converters and transformer majors.
- Factory Slots & 525 kV Capability: Signals pricing power and delivery timing.
- SiC/GaN Mix & 200 mm Progress: Direct link to margin uplift and device cost/amp.
- Service/Software Attach: Recurring revenue improves resilience through cycles.
- Marine Campaign Windows: Schedule updates for interconnectors and export links.
Risks & Challenges
- Permitting/route delays for onshore works and converter sites.
- Supply constraints (copper/aluminum, specialized polymers, high-voltage valves).
- Ramp/yield risk in SiC and packaging for GaN as volumes rise.
- Execution penalties in turnkey EPC/cable-lay scopes.
- Policy timing and auction calendars shifting award cadences.
Long-Term Outlook (2025–2030)
- HVDC stays capacity-constrained, supporting healthy pricing and multi-year visibility for qualified suppliers.
- Inverters continue their efficiency march, embedding SiC/GaN and premium passives across solar, storage, EV fast charging, and data centers.
- Convergence of hardware with software (grid-forming controls, DERMS) increases switching costs and deepens customer lock-in.
- Expect consolidation and vertical integration as leaders secure materials, manufacturing, and installation capacity.
FAQ (Text Only)
Why “picks & shovels” instead of owning generators or utilities?
Suppliers monetize broad electrification regardless of which specific wind farm, solar plant, or interconnector wins—reducing single-asset risk.
Are cables or semiconductors the better bet for 2025?
Cables/converters offer backlog visibility and policy torque; semis/passives offer secular efficiency growth and faster product cycles. A barbell balances both.
Which KPIs matter most each quarter?
For cables/converters: book-to-bill, slot utilization, project milestones. For semis: SiC/GaN mix, 200 mm yield progress, enterprise/auto design-wins. For passives: premium mix and on-time delivery.
How can I reduce project-timing risk?
Blend HVDC names with inverter efficiency leaders and add software/service-heavy grid majors to smooth award cadence.
What could derail the thesis?
Permitting slippage, supply chain bottlenecks, SiC yield setbacks, or sharp pauses in utility procurement or data-center buildouts.