Samsung SDI will invest several hundreds of billions of Korean won to build a production line for small-sized secondary batteries. It is analyzed that the decision was made while taking into consideration the fact that Japan's Panasonic, the world's largest battery maker, is extremely busy supplying batteries to Tesla for its electric vehicles so cannot meet other demand. The move has been seen as a gambit of Samsung SDI, which has the largest market share in the small-sized battery market, to further shore up its leadership in the market. In the global small-sized battery market, Samsung SDI outclasses Panasonic in the market share.
According to related industries on February 27, Samsung SDI recently started to work on the expansion of small battery production lines at Cheonan Plant in South Chungcheong Province in Korea. Although the amount of the investment has not been made public, the industry estimates that the amount will go from 200 to 300 billion won (US$180 million to US$270 millon).
Samsung SDI's expansion was backed by the company’s judgment that there was a supply shortage despite a growth forecast on the small-sized battery market. According to market researcher B3, the small-sized battery market is expected to reach 7.2 billion units this year, 13% up from last year. It was predicted that demand for batteries for non-IT devices such as power tools and electric cars in addition to smartphones will lead overall market growth.
In particular, the small-sized cylindrical battery market is enjoying rapid growth. Cylindrical battery shipments, which stood at 1.9 billion units in 2014, were estimated at 3.3 billion units last year, recording a sharp rise. Samsung SDI already boosted the utilization rates of its cylindrical battery production lines at its plants in Cheonan of Korea, Tianjin of China and Indonesia to the hilt. Samsung SDI's small-sized battery lines, which Samsung SDI is planning to expand this year, are centered on cylinder type batteries whose market is growing rapidly.
In addition, the profitability of Samsung SDI’s battery business has greatly improved since last year, lightening burdens of additional investment. In fact, Samsung SDI turned to generate operating profit last year thanks to a spike in profits in the battery business division since the second quarter of last year.
A sharp rise in demand for secondary batteries such as electric car batteries and energy storage systems (ESSs) in addition to small-sized batteries is accelerating Korean battery companies’ investments. In the industry, the global lithium rechargeable battery market is expected to more than double to US$67.7 billion in 2022 from US$31.2 billion two years ago. Under such circumstances, LG Chem is planning to increase its production capacity to 70GWh by 2020 by pouring 1.5 trillion won into battery facilities only. SK Innovation expanded lithium-ion battery separator (LiBS) production facilities at the end of last year and will invest 1 trillion won in its battery plant in Hungary. Samsung SDI will also invest more than 1 trillion won in facilities for mid-sized batteries for electric vehicles and energy storage systems (ESSs) as well as small-sized batteries.