Samsung SDI Aims For Top Spot In Lithium Ion Batteries

Employees at SB LiMotive, a joint venture between Samsung SDI and Germany’s Bosch, examine the company’s lithium-ion battery products intended for use in cars. / Korea Times

By Kim Yoo-chul

Staff Reporter

Samsung SDI, a South Korea-based maker of batteries, plans to become the world's top producer of lithium-ion batteries, a market that appears to be ripe for an explosion.

Samsung SDI already has landed some major deals with global automakers, which are increasing their efforts toward the low-emission cars of the future, and another big deal is in the pipelines, company officials say, although declining to reveal the name of the carmaker.

Samsung SDI is supplying its lithium-ion batteries to Germany's BMW Group through a joint venture with Bosch dubbed as SB LiMotive.

The company is also looking to exploit the increasing demand in batteries for portable digital products such as smartphones, laptop computers and digital cameras.

Its wealth of experience in "green" technologies is continuing to open new opportunities in different sectors, company officials said.

According to Samsung SDI spokesman Seo Hae-su, it would be possible for the company to clinch the top spot in lithium-ion batteries by the end of the year, citing predictions from Japanese marketing firm, International Information Technology (IIT).

"The total revenue of our battery division in 2009 rose by 11 percent from the previous year. Growth will continue this year," he said.

The global market for lithium-ion batteries contracted by about 5 percent last year, according to Seo, although things are looking better for 2010.

Although Seo declined to reveal the companies target in market share, other company officials said the company is "very close" to beat Japan's Sanyo, currently the world's largest maker of rechargeable batteries by market share.

With the market growing for environment-friendly cars, such as electric and plug-in hybrid vehicles, industry watchers expect lithium-ion battery makers to land more supply contracts and also benefit from better prices.

According to the Japan Economic Center, the Panasonic Group, which includes Sanyo, held a 43.1 percent share of the world market for lithium-ion batteries in 2009.

Samsung SDI had a 15.1 percent share, while China's BYD followed with an 8.9 percent share.

Although Samsung SDI officials are declining to comment in detail about the company's negotiations with carmakers, it is expected that the deals will continue to come.

BMW recently confirmed its plans to produced electric vehicles, dubbed as "Megacity Vehicles," at its Leipzig plant, while also investing in its Bavaria facilities that are equipped to produce the same vehicles.

And there have been rumors that a South Korean lithium-ion battery maker is collaborating with Ford to provide batteries to the American company's vehicles.

Seo refused to confirm whether that company is Samsung SDI.

"We can't comment on that or any other specific deals, but the chances for another major deal for secondary batteries are always open."

Last December, SB LiMotive struck a 10-year exclusive lithium-ion battery deal with Delphi of the United States. The joint venture will supply the batteries to the U.S company from 2012 through 2021.

Delphi, which emerged from a four-year bankruptcy in last October, will use the batteries in its propulsion systems for hybrid trucks and buses, Seo said.

SB LiMotive will start production of hybrid and electric vehicle batteries in 2011 at a plant under construction in Ulsan.

The rising popularity for high-end consumer electronics that need more power is also helping SDI fuel the momentum of its ongoing corporate shift towards a battery-focused company.

Samsung SDI is also looking for a bigger slice of the market for lithium-polymer batteries, which are used in mobile products.

Samsung Electronics, which targets 18 million units in smartphone sales for this year, is currently asking Samsung SDI to supply more lithium-ion and lithium-polymer batteries.

To meet the rising demand, Samsung SDI is planning to spend $5 million to set up Samsung SDI Vietnam to produce lithium-ion battery packs in the country.

"Samsung SDI is in a great position to benefit from the current boom in smartphones, tablet computers and laptop computers," So Hyun-chul, an analyst from Shinhan Financial, said.

"Samsung SDI is the major supplier for lithium polymer batteries to leading smartphone makers such as Apple, and Samsung Electronics' aggressiveness to move up in this market will also boost the profit of Samsung SDI."

OLED, PDP in the Mix

Although the main focus is on batteries, Samsung SDI is also increasing its investment in organic light-emitting diode (OLEDs) and plasma panels.

Samsung SDI is already the world's biggest producer of OLED panels for mobile devices, and is supplying flat screens to Samsung Electronics to be used on the company's mobile phones.

Samsung SDI is also involved in plasma display panels (PDPs), a segment that is gaining momentum from the demand for affordable televisions in emerging markets.

There is PDP demand in the premium segment as well, as consumer electronics makers move toward three-dimensional (3D)-enabled televisions.

"In addition to lithium-ion batteries for cars and products for mobile products, Samsung SDI will also see a break-even point in PDPs, driven by the increasing demand from China, although panel prices will continue to fall," Kim Ji-san, an analyst at Kium Securities, said.

Source :

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