Demand for Batteries to Continue to Rise
The authors are analysts of NH Investment & Securities. They can be reached at j.ko@nhqv.com. -- Ed.
Investment in low carbon-related industries is picking up, as countries around the globe hike their greenhouse gas reduction targets. We note that leading global auto player GM recently raised its EV investment target, while global IT firms remain focused on securing renewable energy. We view the shift in auto market demand to EVs and the expansion of renewable energy as evidence of a widespread change in industrial structure. Such developments should continue pushing up demand for batteries for some time to come.
Batteries are key components of climate-related technology
For July, NH I&S Tech Team’s top pick is Samsung SDI, and our recommended sector is the battery sector. Investment in low carbon-related industries has been accelerating, as a number of countries have recently hiked their greenhouse gas reduction targets. Amid a change in industrial structure to welcome in the low-carbon era, global automakers’ are strengthening their EV business strategies and global IT companies are striving to secure renewable energy. Against this backdrop, we expect the trend of rising demand for batteries to sustain for some time. In detail, demand for EV and ESS-related batteries should grow to 249GWh in 2021, 1,145GWh in 2025, and 3,309GWh in 2030.
Semicon inventories begin adjusting; smartphone shipments improving; BOE’s Apple business strengthening
Semicon: Affected by design changes at automotive and IT set firms, semiconductor application looks set to decline. At the same time, the release of inventories held by semicon distributors in anticipation of price increases is beginning. DRAM supply growth is accelerating relative to demand, which shows signs of slowing down. Investments from Samsung Electronics (SEC), SK Hynix, and Micron are on the rise. In contrast to memory supply-demand conditions, a healthy industry environment should continue to drive solid global semicon equipment earnings, with equipment input ratcheting up on the rising complexity of transistors (eg, GAA and FET). New foundry investment from UMC, Huawei, and others is also increasing.
Handset: Global smartphone demand and shipments have declined due to the lack of semiconductor supply and resurgence of Covid-19. However, conditions should improve from June. We note that: 1) smartphone sales were better than feared during China’s 618 shopping festival; 2) Covid-19 resurgence effects are gradually fading; and 3) the semicon shortage is easing. We expect the introduction of new form factors (eg, foldable handsets) and devices (eg, XR offerings) to lead future market growth.
Display: Thanks to BOE’s success in becoming a vendor to Apple, Apple’s OLED panel vendor portfolio has expanded to encompass three companies, including Samsung Display and LG Display. For the time being, BOE’s supply to Apple is to mainly focus on older iPhone models. Moving ahead, however, BOE’s drive to supply newer models is expected to continue as the firm works to boost its market share in the panel supply chain. We expect BOE’s overall OLED panel shipments to climb to 57.9mn units (+50% y-y) in 2021 and 134mn units (+131% y-y) in 2022, with its portion of overall OLED panel shipments for Apple rising from 19.7% in 2021 to 22.4% in 2022.