China’s energy hardware stocks keep ripping higher this year as AI data centers chase anything that can stop their grids from collapsing. Battery makers, transformer suppliers, and storage-system builders are seeing heavy demand from inside and outside China, and the money flow is insane. CATL, the world’s biggest battery maker, has seen its shares jump 45% this year. Sungrow, the second-largest energy-storage system supplier after Tesla, has climbed 130%. Both sit at the top of Shenzhen’s CSI New Energy index, which is up 38% in 2025. Brian Ho of Bernstein summed up the mood with one line: “Suddenly there’s a scramble for this power equipment.” No kidding. Even with neither CATL nor Sungrow revealing their US sales, official data shows that China supplies most US battery and energy-storage imports. Matty Zhao at BofA Global Research put it like this: “China is not only powering China. It’s actually powering the US, Europe and the rest of the world.” And in this market, that tracks. Despite President Donald Trump’s tariffs, export demand is what’s driving profits, because domestic competition inside China keeps margins thin. Zhao said companies make three to five times more on exported storage systems than on domestic sales. Tracking profit surges across China’s power suppliers Transformers, the backbone gear that keeps each data-center component fed the right amount of electricity, show the same pattern. Zhao said Chinese companies earn 10–20% gross margins at home but pull 40–50% when selling into the US and Europe. “They would rather continue to export and eat up the tariff,” she said. AI power needs are exploding. The International Energy Agency expects data centers to consume 945 terawatt hours by 2030, up from about 415 terawatt hours last year. That’s more than a fifth of all electricity the US currently produces in a year. Legacy grids aren’t built for this, and everyone knows it. So companies in the US are now turning to giant battery banks and micro grids, which run independently from traditional power networks. The US Department of Energy says micro grids are expanding fast and will soon make up a majority of America’s distributed energy resources. US reliance on China is not slowing. Across the first nine months of this year, 60% of lithium-ion battery imports came from China, up from 43% in 2020. Those imports hit $15 billion through September, triple the full-year total from 2020. This is happening even while Washington insists it wants to rely less on China. The Council on Foreign Relations warned in October that the biggest threat in the US-China AI race “stem[s] from supply chains.” Raymond Yeung of ANZ doesn’t think there’s real separation happening. “China and the US have basically not decoupled. They’re a single economy of two different jurisdictions,” he said. Yeung pointed to a “structural advantage” for Chinese groups in the AI supply chain, especially in lithium iron phosphate batteries. CATL leads that space, and Ho said demand remains strong because “there are just no other suppliers outside China.” China’s speed and prices dominate global supply chains Chinese firms win on price and speed. Zhao gave a blunt example on transformers: “If you buy from Korea you have to wait two to three years. If you have to urgently build out your grid for a data centre, you cannot wait for two years.” That speed advantage, mixed with cheap production, explains why both CATL and Sungrow have seen foreign revenue surge since 2018, the year Trump first raised tariffs on Chinese goods. And it’s not just batteries and transformers. US data-center operators buy optical transceivers from China’s Zhongji Innolight and circuit boards manufactured inside China. Despite loud talk of breaking supply chains, America still relies heavily on Chinese inputs for its AI build-out. Still, this may shift. Next year, the Trump administration plans to raise tariffs on Chinese batteries from 30.9% to 48.4% and tighten rules so equipment with high Chinese content struggles to qualify for federal tax credits. HSBC noted that many US buyers rushed installations this year ahead of those new rules, calling it “frontloaded installation in the US ahead of the implementation of the foreign entity of concern requirements.” Join a premium crypto trading community free for 30 days - normally $100/mo.
