ABB Ltd (ABBN) Earnings Call Transcript

Greetings, everyone, and welcome to this presentation of the launch of the ABB Infinitus direct Current Portfolio for Data Centers. With me here today, I have Giampiero Frisio, our President of Electrification Business Area. I also have Adrian Guggisberg, Head of our division Distribution Solutions. And I also have Massimiliano Cifalitti, Head of the Smart Power Division in Electrification. I'm Ann-Sofie Nordh, Head of Investor Relations. Today, we will talk through how ABB is leading the technology transition in the Data Center segment. This is enabled by our portfolio that we're launching now, supporting customers across the spectrum of direct current architectures, facilitating data centers with scalability, higher power levels and improved efficiency. After the presentations, we will open up for questions as per usual. So with that said, I'll hand over to you, Giampiero, and just before we get into the details of the portfolio, let's start with some history and the development of AC and DC to get us all on the same page. Please, Giampiero.

Thank you so much, Ann-Sofie, and welcome to this key event for the Electrification business, where we are unveiling the portfolio Infinitus. As Ann-Sofie was saying, everything starts with the DC, and not many people know, it started 150 years ago because most of the people doesn't know that the very first grade started in direct current, in DC. It started in London, in New York, in Milan. And there, it was the first application. It was where the street lighting. It was done mainly by Thomas Edison. But of course, there was one key problem of the direct current. You need to generate power very close where you use it because there was a limitation. The limitation was that it was difficult at that time to step up the DC voltage and transmit the power for long distances. And so it was related to a lot of potential losses. And that's why at a certain moment, it pop up exactly in that period of time, just a couple of years later, it happened in Rome, in train, in the Niagara Falls there were popping up generation in alternative current. Why? Because it was easier to use. It was much easier to use. It was possible with the invention of the transformer to elevate, to step up and step down. So it was easier to have a power big power generation in one place and to have a transmission of this power at long distances with low losses. This, in a summary, in many books and there was also a very interesting movie that it was done a few years back. It happened that there was Thomas Edison and Tesla, they were the 2 inventor and the 2 scientists that they were fighting together in a big bottle that it was called as the war of the current. It happened in the -- at the end of the 19th centuries. The winner at the end, you know better than me, it was Tesla because it was used, and Tesla was capable to leverage the invention of the transformer and demonstrate that for the long-distance transmission, it was the right to use DC because as more simple it is easier to interrupt because the AC voltage is passed into the 0. So for the breakers is easy to interrupt when it's passing to the 0 or the voltage. And on top of that, it was easy to make long transmission line with very low losses. This was the battle that happened 150 years ago. And now it's looked at, we have a revenge. We are coming back or there is still for 100 years, everybody was using the alternative current. They were forgetting a little bit of the DC, but now the technology evolved. And with the evolution of the technology, there are now some advantages. I think that, as we were saying for the alternative current, we have a lot of advantage, the advantage that the current is passing through the 0, so it's easy to protect, is easy to with the reformer to utilize the step-up transformer to make a long transmission line and to transmit in long distances, is much simple and everybody are trained on the alternative current. On the other hand, today, with the advent of the electronics during the last 60 years, all of the devices that we are using today, that you are listening to us, with the mobile phone, the computer, the television set, the LED lighting everything thing that you're using, your cars, everything that we are using in our life are working in DC. So what is happening? It is happening that we have a super solidified transmission line that is super effective. But when we arrive, when the current and the voltage is running at our home, we need to make a lot of conversion from AC to DC with small devices that are converting AC to DC for our computer, for our mobile phone, with the EV charger for our cars and so on. And those conversions are inefficient. They create losses, and they create losses in a big way if you are using the power in a big way. Now, of course, as we said, we are utilizing all the devices already in direct current. But on top of that, we have a surge in the DC demand that is unbelievable. If you think about that all the solar panel that we are using in our house or in the big solar farm, they are working all in DC. And today, they are generating current in DC, and we are transforming as in order to the renewal edge, particularly the so they are growing 3x that what we have today in the next 10 years. On top of that, we have that battery energy storage. Battery, of course, working in DC. The battery storage, there we are foreseeing and everybody is foreseeing that the batteries will grow 8x what we have the installed base today because they will be needed in order to stabilize the network. On top of that, of course, as you know, the data center density, it will increase in an unbelievable way. We are talking about the single rack today and all the server infrastructure are working in DC. And so basically, they are arriving the AC to be converted to be utilized at 54 volts or 48 volts by the server rack, they are moving now from 30-kilowatt power, rack a few years ago or a few months ago, they need to move up to 1 megawatt. So huge amount of power density. So the conversial losses that you could have between the AC and DC could become very relevant. That's why NVIDIA, most of the hyperscaler, we are working with all of them during the last few years in order to try to guide and help this kind of transformation revolution. But we are starting from a big history. I think that you know that a few years back, 4 years ago, we were the first in the market that we launch a solid-state breaker certify IEC in the world since 2013. And the DC vessel is like to have a small, let me say, micro grid that is going to the C and need to be fully independent, need to be generating power and it need to be used power and with the propulsion season that is working in DC. And we are the leader in this market since already 13 years. On top of that, many, many people doesn't know, but we were investing in DC and in particular, in DC Data Center already in 2012. I was coming in Zurich and to work and leave you in Zurich in 2010. And just after 2 years, I was -- I have had the opportunity to work on the first project for having a data center in DC, that is still here, is done by green.ch This was 1 megawatt data center is still in function. And I don't know if it was the first data center in the world, but for sure, it was one of the first that it was installed. And it was installed with the technology that we used to have already at that time. You can imagine now because, of course, now the evolution of the technology is -- was very, very huge. But on top of that, today, we will talk about the portfolio of the Infinitus DC and with my colleague, they will go more in depth. And we talk about that we are doing now for the data center because we need speed. And there is immediate need for the data center because there will be AI factories is going to talk about gigawatts of power. But on top of that, this portfolio and this technology will be used in many other industries. -- it's going to be used, as I said, for example, in the marine investors is going to be using the renewal range is using the rail already since Dean we are leader and the traction for rate because some of the things that you will see today is the related version of technology that we're already in our portfolio in the Motion business. And there will be used for sure in the industrial sector, in industrial manufacturing in the EV industries because, again, most of the tanks are working already in DC, most of the motors, most of the drives, most of the tanks, they need to be supplied in direct current. Anyhow, let's back a step back and go in what's the benefit of the direct current. But let's imagine the benefit for the data center. And here, we have a few examples. For example, let's imagine a data center that alpha gigawatt, gigawatt, 500 megawatt, is becoming a standard, this kind of power. For 0.5 gigawatt data center, if you apply a DC technology instead of the AC technology and we demonstrated together with BCG, also now a white paper that we released a few days ago, that you can have a gain in less conversion losses of more than 5%. What does it mean this kind of game. It means that you could save almost 220 gigawatt hours, and to make a translation on 220 gigawatt hours, what does it mean? It means almost 60,000 ounces the electrical consumption of 60,000 ounces for 1 year in Europe. That's huge. It's big. We are talking about a midsized city in Europe. But -- and so if you think about the savings that the data center and the hyperscaler could have, it could be an immediate benefit because they could save in electricity consumption, and they could say some tens of million dollars. But on top of that, if you still think about the 500-megawatt data center, if you say 5%, it means that you could have also 25 megawatts available to generate more revenues, to generate more token. And so to generate more revenues that we can estimate that it could be up to or even more of the $100 million of revenues on a yearly basis. So these are the important advantage. That's why most of they are super interested to go in that direction. Now when I think about what's the saving from the CapEx standpoint. From the CapEx standpoint, as we said, for sure, the direct core current has some advantage. One of the key advantages that is using less cable than the alternative current that is using in 3 phases. With the direct calendar you can use less cable. And then you can have less losses because you don't have the induction losses typical by the alternative current. If you made estimation you made a calculation just in copper, again, for the same 500-megawatt data center, you could say up to 10,000 tons of copper. -- make a rough calculation. Today, the copper cost is around 14,000 per ton. So we talk about almost $150 million just in copper -- on top of that, you need to put the installation, the manpower to install, the hours that you need to install the footprint that you need to have, the additional footprint that you need to have, the anchors on the words and many, many other things. So at the end of the day, the data card, it could enable the hyperscaler to have a higher power level and so to have the optimization of the token per megawatt at the end of the day is the profit margin that the hyperscale it could realize. So it's super, super important is if you go in very, very high AI factory infrastructure, how many of them they will be built during the next few years. At the moment, the capacity still in the end of 2025 was roughly 80 gigawatts. If you look at the estimation that most everybody is doing, and you saw also the big investment that is going on, from all the hyperscale and all the colocate, we have talked about that 5 years staff to 2030, there will be an addition of almost 170 gigawatts. So that is a huge increase I was a few days ago, together with a big hyperscaler, where we are partnered with them, we're working. We're already looking on what it will happen in 28 and 29. So we were planning the capacity needed for 28 and 29 by the hyperscaler. And this Pascale was telling us, I can give you some number. During the last roughly 15 years, we sold almost 11 gigawatt capacity installed of data center. And that was telling us, you know how much is going to be the capacity that we will put in execution just in 27, 10 gigawatt. So they will install in 2027, the capacity that they were building up in the last 15 years. that race. When we talk about many times about the race of the data center, this is the race that is going on. It's a massive investment, but the massive investment is translating in maximum capacity. So if you make all the calculation that we were saying before with all the savings and all the saving in electrical consumption, but also on the generation from the revenue standpoint, -- you can imagine how much money, how much revenues and much profit the hyperscaler could really generate if we -- they move from AC and DC. And that's why they are so interested. And that's why also we are here to try to help the hyperscaler, the colocator and most of our partners to move from a simple server room that was the data center from a few years ago, and there are still some of the data center built up to the AI factory. Before the data center where rooms where they were server that were feeded in and they were and they were supplied with 48 to 54 watts. The first to understand it was working when there was 40-kilowatt rack, it was fine. Everything was working. It was the right setup. And this setup is right until 300, 400 kilowatts. After that, it will be 30, 400 kboe per single rack because otherwise, if we go up and we go increase this capacity, you need to go up with the power and with the voltage because otherwise, you will have a lot of losses, and you need to utilize tons of copper and so it's becoming almost impossible to grow the power of the data center. This is an important peak. This is an important part. That's why we are developing a new portfolio. Today, we are talking about that. and because we will move to 400 or 800 volts, whatever is going to be chosen by the hyperscaler and we will be super flexible. But in the meantime, remember, with the DC, we will reduce substantially the power commercial losses that will increase the potential revenue generated by the hyperscaler and will reduce the consumption of the lateral consumption for the data center. So how we work in order to ride to the portfolio that we're going to show you today. As we said, as I was saying before, we are in the DC technology since at least 15 years. We were already installing our technology in 1 of the first data center in the world that it was installed that it was 1 megawatt year. It was done and still here in Zurich. So we are in this business is a long, long time. And in fact, we have multiple divisions that are working already for the DC. We are division Electrification. We have division in Motion. We are, for example, as I was saying, many things that are happening in the power electronic conversion, and most of the knowledge is in our Motion business. We have a traction business where we have a lot of knowledge, and we are doing since decades. We are talking about that we have inverted that we are using for the marine investors define decade. And this is the beauty of the ABB Way. The fact that we are -- that we work in a decentralized matter and minor in order to have speed on the technology development and to be focused on some segments. For this particular team, we said, okay, we have many divisions that are working in parallel on different technology, on different topic, on different segments, on different type of power electronics. Now we need to build up the system architecture. And that's why we built up inside electrification and incubator that is pulling together all the technology that is built up by the various divisions and they build up a DC power solution offer that will enable our customers and will enable the colocator and in particular, the hyperscaler to deploy faster and in a reliable way and an efficient way the future of this architecture. This is how we work, and that's -- this is how we are, we are working, and this is what Adrian and Massimiliano, they will talk more in that. We talk about the DC now and the movement and the transformation from the AC to DC. And many times in the data center, we talk about white space and gray space. What's the change that we are foreseeing for the white space and gray space. We talked -- before we were saying, and it is happening, the DC data center will reduce the full capital investment for the hyperscale because there will be less copper, there will be less installation material. There will be, for sure, the possibility to have more footprint. So in general, it will be a reduction of the CapEx for the entire data center. But the big things that will happen is going to be the shift from the white space that today is around 45% of the total power infrastructure this part, it will be reduced from 45% to 25% and that would be the gray space area that will increase -- it will increase step by step because there will be an evolution of the this architecture. And my colleague, they will talk about that. It will not be a digital trigger with from 1 infrastructure to another 1 because there will be an evolution of that in at least 3, 4 steps. But due at the end of this 4 steps, for sure, the big part of the gray space is going to be 3/4 of the total power infrastructure. What does it mean for ABB? It means that today, our strength is -- it was and it is in the gray space. This gray space, it will grow during the next few years, and so we could benefit much, much more of this transformation from AC to DC. For sure, we will not forget this because not all markets will move in DC. It will move a portion of this market, mainly on the infrastructure and the big data center. And we are estimating making the analysis also with the ecosystem that is that is around the world and many studies, we could estimate that in 2030, between 25% and 40% of the data center installed in 2030 will be in DC and it will be mainly the AI part of the data center where we talk about that will remain for some type of segment and those ones for sure that we're working in. So we will continue to focus on the and make a transition on the DC power. So summarizing in a nutshell, what we are launching today is going to be a portfolio that will enable our customer to move in the journey from the AC to DC. But now I think that with Adrian and Massimiliano is trying to go more in depth. [Presentation]

We are super excited to speak about Infinitus, and now we will go a little bit more in deep. So Infinitus is our direct current portfolio. And today, we will be focusing more on data center for the DC under volt application. But as Giampiero said, this will be an enabler also for other industries for transportation, for renewable and so on. What we want to give today is 3 main messages. The first one, we are the first to give to the market a full portfolio from source to rack. The second message is that we will have all the building blocks that our customers can use, not only for the lending ending solution, but also for all the hybrid and transitory solution. And third message, thanks to this building block, we can capture all the opportunities around the world. So there will be -- this is a race. There will be customers that will be very fast, early adopters and some other that will be more traditional. We can partner with all of them so that we can optimize and maximize our opportunities around the world. So when we speak about the transitory solution is exactly what we want to show in this slide. So where we are now? Most of our customers are using traditional AC distribution network, okay? Now what will come in Phase 1, there will be already the need to have site car close to in the white space to support the high power in the rack. But this will be very last. We will immediately -- our customers will need to have the distribution of the 800 volt DC in the gray area because it's there where they will make money, saving in OpEx, CapEx and footprint. There will be a stage where they will experiment with different solution using, for example, DC, UPS or other alternatives like the ratified from Motion, and then the lending solution will be the solid state transformer. And this is where our start will take place and our customer can benefit for the full advantages that Giampiero just spoke. Now we have feared from Max a little bit on the evolution on how the power distribution will change now over time. And we heard from Giampiero earlier about the change from AC to DC. Now with DC comes a major challenge, DC is not standardized to the level of AC as it is today. As is super plug and play, everybody can build AC systems. And this is why we choose a system approach. So our building blocks, they enable to build a full system. And in order to get some modularity in that, we structured our offering into 5 building blocks, major building blocks. So we start with the powertrain. The powertrain is basically the element which connects the data center into the grid. -- or even into behind the meat, power generation or any hybrid solution. And it secures that there is reliable power and it also secures the power connection is stable. The second part, and that's probably a bit of the heart of the new solutions is the conversion from AC directly into the in the distribution. And then from there, actually, we have the distribution part of the DC, which replaces the traditional distribution and low voltage, and a core element in that is the protection. That's the big challenge when you change from AC to DC. And then not to forget, there is the whole cooling. Why we mentioned here cooling. If you look at the efficiency or the losses or kind of the energy use of a data center, there are 2 major consumers. One consumer is the data hall. That's what everybody is talking about. But there is another major consumer, that's the cooling systems. And also in the cooling systems today, there are multiple conversion stages which create losses. And what we do with the new solutions, we also reduced conversion stages in the whole cooling system, which again will increase the efficiency. Now in the next step, let us look a little bit deeper into the products within these building blocks. [Presentation]

Now you got a bit of an impression about kind of the scale of this portfolio. And we just look at this here and why is it so important to talk about the portfolio is a single component is not bringing the solution. We are working heavily in standardization. We're very active because we believe standardization will help to speed up. But before standardization will happen, we need to bring the portfolio together to help the customers to build the systems and the solutions. Now let's deep dive in 2, 3 components, which are super essential to make this successful. Max, maybe you start with the first one. So...

Yes, thanks, Adrian. And one of the main products that we want to deep dive is the hyper. Let's say that with this hypercar, we were the first in the world to have the medium-voltage UPS with solid-state technology. So now we rely on almost 10 years of experience. So imagine how we learn from the field, how much installation we did. We already installed more than 2 gigawatts of hyper guard over the last years. and this helps us to improve the product, to learn from the product, optimize the product and so on. So 1 of the most important characteristics of the hyper Guard is the scalability is design in a modular way so that you can put 20 medium-voltage UPS in hard parallel to arrive to 50-megawatt UPS system block. This is very useful when you want to be very fast in the implementation and installation using our Medium Voltage UPS, you can also improve the OpEx because the high level of efficiency is super important when they are using this 100 megawatts of installation, and this is another saving that you can have every year on the bill of electricity. And then on the footprint, the footprint of our medium-voltage UPS is 30% less compared to traditional architecture. So it's also a Class I performance product. So it means that is the poor quality sure. Now let's move to the Solid State transformer, another important building block.

Absolutely, Max. Now the SST probably is something you read a lot, you hear a lot, I think a lot of people talk about this. Now let me talk a little bit about what we are doing here and why we believe we're going to have a solution, which will help the industry to adapt fast. There are a few points. First of all, I think the technology has to be done in a way that it matches to the data centers. And that means you have to have the right power and the right reliability of the product in order really to have a building block, which becomes relevant. Many things charging, which comes in much lower power than what the data center needs. So that's the first step. The second step is we have invested in this technology for many years. I think Giampiero mentioned about this also in our research centers, for example, we are running this since almost 15 years on this technology. Now what we choose to do when we saw now comes the moment when this is going into industry and will scale to choose a solution which is based on proven technology building blocks because reliability is key. And the other part is it's key to be able to ramp up very fast the capacity to produce and to deliver. And that makes it unique. So it's not all invention in terms of every single piece or component is a new invention. It's the way we apply and bring things together. Also Giampiero mentioned our traction business some of the components and building blocks that are coming from a well-proven traction system. And as you can imagine, trains are not stopping. They need to run. They are very kind of critical in terms of reliability. So we are using very of. Now there is more than converting from AC -- the easiest protection, Max, maybe you add a few words on this.

So yes, Adrian, only a few years ago, the Capital Market Day in Frosinone we launched and we spoke about such Infinitus. The first solid-state breakers certified. Now we understood that at that time, it was super important for Marine application or other segments. Now we see a lot of interest in the data center. And now we see also opportunity with smaller size. And this is the reason why we will have at the end of next year, also 2 new frames. This will be at 250 amps and the 500 amps. So why the customer needs superfast breakers because a solid-state breaker can be 100x faster than a traditional breakers. Why? Because of selectivity because there is a lot of power electronic, as you add on the stripe upfront, and you need to have a product that can protect very fast. And when this is needed and is needed in microsecond then is where solid step breakers is used. So Giampiero, over to you for the final comments.

Thank you so much, Adrian and Max for going in depth in the portfolio. And I hope that you enjoy and you are excited as we are for this portfolio, a new portfolio that is the Infinitus DC. I think that summarizing the flexible portfolio that we are showing you today is going to support the deployment of -- to our customers going to facilitate their deployment to make a transition in the various evolution of the architecture that will happen in the next few years. The second important point is that the data center, the CapEx spend is going to -- of the data center, in the power infrastructure, they will move from the white space to the gray space, and this is our strength. This is where we are realizing most of our technology, and this is where we will deploy our strength. For sure, the portfolio that we are launching today is going to be supportive for the performances of the entire electrification, and it will have to reach the target of the operational EBITA for over the cycle. Ann-Sofie, now to you for the last words.

Indeed, we will open for questions. And as per usual, I want to remind you that for those of you who have dialed in on the phone, just press star 14, and you will be able to register a question. And also, as you do so, please remember to mute the webcast when your line is opened. Let's see how many questions we get. But just in case, please limit it to 1 question per person. And before we ask you to get back in the line. And we wanted to try and get through as many as possible. But as an alternative, you can also put your questions through the online tool on the webcast, and then I will voice it over from here. And with that said, we go ahead with the first question. And we have both through the online tool, but we'll start with the conference call, and we will open up the line for Will Mackie at Kepler Chevron. Are you with the .

Yes. Yes, can you hear me?

We can.

Perfect. I guess my one question would go to how you see the pace of the adoption of your technologies unfolding? And how do you see the limiting factors to that adoption? Does it relate to employee readiness and knowledge around D.C. manufacturing capacity in the industry or certification processes in the regions in which your technology will be utilized?

I could take it and I could answer. Thanks for the question because it's very, very relevant. As we were saying also during the presentation, we do believe that the adoption of the DC, it will happen and there will be the first execution of data center in the next 2, 3 years. And it's going to be the adoption also because there with the new chips and the new GBUs and DPUs that will be released is going to become in need. So it's going to become needed simple because the power of compute of the computing capacity and the power of the chips that needs is so high that it's becoming also physically impossible, not to use the adjusted alternative current. I think that as we were saying, within 2030, we do believe that for the installation that will happen in 2030, we are estimating that the DC Data Center is going to be around 25% to 40% in 2030 in terms of installation in that period of time. This is -- so it means that starting from '28, we can see the ramp-up of the DC data center. After that, in terms of capacity, I think that Massimiliano was mentioning also a little bit, we do believe that the capacity, for example, for what we are producing, it could be done already in the investments that you already defined that is already in our and we already announced in terms of footprint. So there will be -- today, we announced or better during the last couple of days, we announced this Infinitus portfolio that will be ready during 2027 and from the technology standpoint, we are ready to have it.

And I can actually -- we have another question here on the timing more exactly. When will the portfolio be commercially sort of available?

Yes, there are something that's already available. Something will happen during '27. In the next 12 months, it will be available, in particular, if the question is related to the solid state transform. It will -- that it most probably is going to be also -- this is the question related is going to be in the second half of 2026.

And I'll tie on a little bit more here, a question from Alex Virgo. Is it all your own IP, your own silicon and design, et cetera?

It is our IP for sure. We develop internally. It's all the things that you saw here is develop internal under our IP right. Of course, we are using a huge ecosystem of supplier partners that are working with us also from the semiconductor standpoint, but the intellectual property of what we are showing today of all the solutions and the portfolio is owned by us.

Okay. And then we open up the line for a question from Alasdair, Bernstein, please.

So my question is really on the power quality side of the portfolio. So the DC UPS, the SST, the TRU, you seem to be aligned here with some of your U.S. and European peers basically in terms of sort of pointing towards kind of more than one technology path to kind of centralize DC at least in the medium term. So really, I guess the question is to what extent do you think the sort of the TRU, the unit is really going to be seen as a genuine alternative to the SST during that period? How might that influence the kind of pace or timing of the solid state transformer adoption? And maybe the answer to that is sort of in the type of deployment or power requirements each can maybe best address, but maybe you could you -- could touch upon that as well. And then the final question, I suppose, on the SST, it's obviously maybe a more dynamic technology, but you also see a different system level efficiency benefit of the SST over the TRU as well?

Thanks for asking the question. I think some of them go a bit technical, some maybe a bit more on the more generic it. Let's talk quickly first out, you asked about the adoption in terms of DC and in terms of the TRU solution, why this versus an SST solution? I think this has to do with 2 factors. It's a little bit about scalability and the overall design but also a little bit of the pace to the previous question on the adoption, how fast somebody goes to the full native solution of 800-odd DC. Obviously, it's connected to the second question, that's a bit the rationale of moving from a TRU solution then to a full SST solution is the efficiency game. So basically, what happens in technology-wise,basically, if SST we are eliminating the transformers, the traditional transformer. There is to be also very clear, I mean, within the necessities also transformed with a high frequency transform with us. This size instead of filling the room here. And that's the huge saving also on the efficiency, which we gain with the new technology. So it's a little bit of both. It's kind of the pace of adoption and the other thing is really then to go to the higher efficiency.

Very good. Did you have anything else, Alisdair? No. Then we take a question here from the online tool. And we say what is a realistic market share -- it's from Max Yates. What is the realistic market share of ABB to receive in the 800 VDC market when they look at the competitive developments?

I mean, for sure, for the market share, as you know, we are not disclosing market share for a particular product line or solution is going to be the same for the Infinitus DC. We do believe that with the launch of today is going to be, as we said, the first industry source to rack portfolio in DC, we can put in the market all of our strengths. The 25-plus year of experience on there is the application on the application that we did already in the past on tractions, on the marine vessels and on all the power electronics. So we do believe that we could -- we could put all of the strengths on the market, and we can support all of our customers whatever architecture they will choose, whatever path they will choose during the transition from the AC to DC.

And then here, we move to a question from Aaron. Could you elaborate on why the sidecar architecture will be a fast transition and not a sticky one? Are customers not interested on moving to full DC?

I can take this one. So first of all, we think that site card will be mainly for retrofit and will be for transitory solution, as we said before. because when -- if you have only the last stage of conversion, very close to the rack, so in the white space, you have the full gray space that have the traditional AC solution. That means we will avoid all the savings that Giampiero explaining before on CapEx or OpEx and footprint. This is the reason why if the customer wants to take the full benefit of the 800 volt dc.

And then I continue. I have quite a few questions to -- yes, we'll get to that as well. And then here is from Mattias Holmberg. Compared with today's discipline here -- compared with today's AC architecture, how would 800 VDC change ABB's revenue opportunity per megawatt?

Yes. I think that we were always saying, if you recap that typically, we are -- in the AC, we are around a little bit more than EUR 2 million dollar per megawatt. That's an average, of course, because it's depending on countries, depending on many things, geography or whatever, but roughly around plus $2 million per megawatt. It is the fact, as we said, that there will be moving from AC to DC, there will be a significant transition from the white space to the gray space. The gray space will increase from the 55% of the total CapEx on the electrical power investment is going to move step by step to 75%. So for sure, it will be higher than the $2 million. We do not -- and we are confident that it's going to be significantly higher than the $2 million per megawatt.

And now we go to the conference call. We open up the line for Gael at Deutsche Bank.

Could you talk a bit more about the safety regulatory hurdles the more complex permitting that we are certainly going to see with DC systems, also the industrial time lines and the much higher price points for the DC technology versus AC. All that all these things that could potentially slow down the deployment of DC systems. And just a clarification on your statement that you expect 25% to 40% of the new capacity to be DC related in 2030 I mean, within that, how much exactly would be full complete grid to rack 800 VDC systems? And how much would be more related to hybrid architectures with some sort of legacy AC system with a bit of a DC portion?

Let me start and evenly after that, you jump in, Adrian. So let's say, from the electrical power system, -- we do believe that -- let's do this way. The total capital investment for a DC data center, it will be significantly lower because as we were making the example, before, just for the copper standpoint for a 500-megawatt data center, you could say 10,000 tons of copper with the apple cost of copper, just the cost of the copper per se, we are talking about $140 million plus you need to put all the people, the manpower that you need to anchor all the busway or all the cable. So there are many, many takes. But on top of that, the will be the conversion, as we were saying. And from the conversion standpoint and the saving on the conversion, if you -- again, you make the 500-megawatt example, you say 5%, it means saving, of course, in electrical consumption, and we talk about some tens of million dollars but the significant is going to be the additional revenue stream that you could generate with the save. So we talk about for a 500-megawatt data center that you could have additional 25 megawatts that you could use to sell, to sell in terms of revenues. And it's depending on the data center is going to be for a type of application or for selling for token, we are talking about from $100 million to $300 million of additional revenues that you could generate and you know better than me how much is the profit margin that you could have from that part. So I think that is significantly the advantages from the DC standpoint. -- not just from the technology standpoint, from the saving but also from the financial standpoint is from our powertrain. So for our electrical power, the capital investments, we do believe that there will be more a shift from white space to gray space, as I will say. So it means that the total capital investment for a data center in our market, let's say, in the electrical space, it's going to remain pretty similar, plus/minus 10%, depending on the architecture or stuff like that, but it's very, very similar to what we have today. So there will be additional costs for some components -- but if you look for the total -- for the total capital investment, it will be significantly. This will be significantly lower for the entire data set. For the regulation, for sure, there are new things that need to happen. And I think that Adrian, you could provide some feedback.

Sure. Before I go to the regulation, maybe also a few words about the kind of the adoption and the pace and the speed I mean several questions are related to this. And maybe it's really important to say in this is our approach with the full portfolio say we are comfortable with whatever speed this adoption will take. And here is the why. I think -- the first step of adoption is purely driven by the need of the higher power density of the drugs. There is no other way than going to DC. Now if that goes with sidecar in overstep or that goes very quick to native, we are okay either way. So I think that's what we try to do to go with the speeds of the customers and how they feel comfortable with it. The second phase of the adoption, what we expect to see is once the native thesis becoming established, the energy efficiency gains will also be taken advantage in data centers which don't need necessarily the full high-power rack density -- so that's kind of Phase 2 of this. Now if you ask me about what will be the share in 2030 or 2032 we are not able to answer. And we are also not speculating on it. For us, actually, it doesn't matter so much how this adoption will come. What we're trying to do is the partner, to be the partner in any situation or any architecture. When it comes to the standardization, I would say there are 2 things to be considered. One is performance and quality standards. These standards don't exist today. We are heavily involved in creating these standards because we believe in standardization. This will drive even faster adoption. The other part, which is existing is when it comes to safety. And that's the critical factor in order to bring things into operation and get the permission to deploy. So There, I think the path is open to deploy these solutions. We do not see there the problem on that one. But it certainly -- it reads the right knowledge and the right understanding of the safety requirements in order to really to have an industrialized solution.

And I'm going to follow up here with a question that came in and it relates to the white/gray space comment that you made. Can you elaborate, please, how large part of your revenues as of today go to white space versus gray space from Olof Larshammar?

Yes. We always said that our strength is the gray space and a significant portion of our revenues already today is coming from the gray space. We do not disclose how much is it, but it's significant -- is a significant portion of our revenues today in the data center are in the gray space.

And I continue here. It's quite a flow of questions coming. So that's really nice. Here's one from Daniela Costa. Do you think we C800 will also be used for inference? Is that in the 25% to 40% DC figure you see by 2030?

9 I can take this. I mean, I just mentioned before, I think the first start will be on the training side because this is where the super high power density is needed. But as I said, we expected this to move also into more traditional, which interference is included in order to get the energy savings, so the efficiency gains. I think this is kind of 2 phases. When we talk about the figure, obviously, that's a mix. That's not only AI training. I think it's probably more related to -- if you think about the long term, it's very much an adoption curve. And this is also why we give a quite big range on where this adoption could lie because we cannot tell where exactly this will lie or where exactly that mix will be. Again, what we know is the high-power density is coming, and the 800s need for the high-power density. That's going to happen.

And I continue here. There is one follow-up question from Alex Berger. Does H2 27 commercial availability of SST means that's when you anticipate fully certified and commercialized, or that's prototype launch and then you need testing certification, standardization, et cetera?

We -- when we talk about commercialization is H2 '27 available to be sold. It means that in that -- in this period of time, we will do already pilot installation. We've already done some pilot installation in some field. We are making all the certification piece, and we are making all the capacity built up and so on. So when we talk about commercialization, it means that it could be order or could be or the rest in the second half of 2027.

And maybe you, Adrian and Max is for you, you can split this between you. Question from Jonathan Mounsey. Where are you differentiated for certain product categories? Do you have any unique IP that would allow you to make more share than the customer usually allocate to one supplier.

I will start, and then Adrian, please build on what I say. So first of all, we were very often the first to have certain technology on the market. These allow us over the time to build a huge experiences. Let's give an example on the Medium Voltage UPS. We were the first -- and after we are learning, it's now 10 years that this platform is on the market. We have learned a lot from our application. And just a few months ago, we launched also the 34.5 kilowatts, hyper this will help us to directly connect the medium voltage UPS to the grid and so to eliminate another point of conversion in the system. So of course, being the first very often means understand the market, develop a new solution, learn from -- also from a small mistake and to evolve the platform. This is very key. We have done the same with the solid state breakers, where we were the first, we started even with other applications with the marine application, and now we discovered that is super important also for data center. And this is why we are learning, and now we will develop also to other frames.

Yes, maybe I'm adding a little bit of specifics to the solid state transformer on this one. You asked a bit the question about why ABB believes we have a strong position. So I would say there are kind of 3 factors or 3 things, which we do maybe a bit different than others, even though I not comment on the others what they exactly do. But the first thing is we are really focusing with our design on the data centers. When we look into the market, if I just look into the ratings of what we see being published, a lot of this products way more focusing on EV charging from a power rating point of view. So for the data center, it's not necessarily the way we understand data center designs. And the second 1 is very much related to that. Actually, we do a lot of core designs. So we are including some of our major customers into the design we are doing in order to make the trade-offs, which are the most practical ones to have a solution, which can be deployed fast and on the other hand, also meets the key requirements. And then the third step, I would say, that's probably 1 of the most important decisions we have done, we are reusing proven building blocks in order to have scalability of the product. What we have learned in the data center segment or business is it can change super fast the way a design would be deployed once it's proven. And in order to do that, I think we have the high focus on really being able to ramp up our supply chains and our capabilities to produce, to test, to deliver this new technology. So it's kind of the 3 things which we see a little bit different.