SDI aims to lead in energy solutions

Samsung SDI employees inspect a lithium battery manufactured by the firm’s plant in Ulsan in this file photo taken in 2013. / Courtesy of Samsung SDI

By Kim Yoo-chul

Samsung SDI aims to become a leading supplier in materials and energy solutions by realigning its structure according to its target segments.

The move comes less than a month after it agreed to merge with Cheil Industries, another Samsung unit, which produces electronic chemical materials.

The affiliate of Samsung Group has been approached by global carmakers about supplying patented battery solutions for electric vehicles (EVs), giving it an edge over its largest local rival LG Chem in the heated race for EV battery solutions.

EVs are becoming more popular around the world with increased subsidies from governments.

In a statement to The Korea Times, SDI said it will accelerate efforts to diversify and expand its portfolio and devote resources to its target segments.

“SDI actively changes its structure according to the markets. We are confident that our businesses will yield profits,” said SDI spokesman Seo Hae-su.

SDI was formerly known as a leading manufacturer of cathode ray tubes, which are used in television sets and computer monitors.

Although it was the first to mass produce OLEDs, or organic light-emitting diodes used in monitors for mobile devices, it handed over that promising business to fellow affiliate Samsung Display, worrying investors over SDI’s sustainability.

But Samsung Group’s top management believes SDI can become the conglomerate’s next cash generator because SDI has patented technologies and a highly skilled workforce that can keep up with the challenges.

Regarding SDI’s recent decision to absorb Cheil Industries through a stock swap, Seo said his company will utilize Cheil’s materials patents related to manufacturing batteries.

“By 2020, SDI aims to generate 29 trillion won in sales. We don’t want to be known only as a leading parts supplier. We will turn into a total solutions provider,” said the spokesman.

Since 2010, SDI has been the top global supplier for small batteries used in smartphones and tablets. Last year, it had a 25.8 percent share of the global market, according to the latest study by market research firm B3.

This achievement has helped the company expand into the profitable rechargeable EV batteries market. It agreed to supply EV batteries to BMW, Chrysler and Mahindra.

SDI is currently the exclusive battery supplier for BMW.

“EV sales for BMW’s i3 are looking healthy. BMW plans to sell some 30,000 i3 units this year, which will generate 230 billion won in revenue for SDI. As Chrysler is also using SDI-manufactured batteries, SDI is expected to report at least 300 billion won in revenue from batteries alone, up from 100 billion won last year,” said Kyobo Securities in a note to clients.

The company’s battery-manufacturing lines in Ulsan are now operating on full capacity, according to Seo. “U.S.-based EV maker Tesla may use SDI batteries as it is diversifying its battery sources,” said the local brokerage.

SDI considers China as its most critical market. It recently agreed to establish a joint venture in batteries with the Chinese authorities. The company’s statement said it will invest some $600 million in the project over the next five years.

As electric power becomes a more important energy source, the demand for energy storage solutions (ESS) also increases. This is why SDI is also entering the market.

“Power outages have emerged as a major headache to societies. A stable, efficiently managed electricity supply is really important. Because ESS is based on lithium-ion batteries, SDI will see significant returns,” said Seo.