SEOUL -- Samsung SDI, the world's largest manufacturer of lithium-ion batteries, has prospered, mainly by supplying batteries for Samsung Electronics smartphones. But when it comes to batteries for electric cars, it lags behind its rivals.
Given the key role such cells are expected to play in the lithium-ion battery market, the ability of the South Korean company to respond to changes in this segment will be key to its future growth.
At a recent auto show in Detroit, Samsung SDI unveiled its prototype lithium-ion car battery, which the company says allows an electric vehicle to travel up to 600km on a single charge. Most batteries currently on the market offer only half that range -- a major drawback for electric cars.
At the auto show, on Jan. 11, Samsung SDI President and CEO Cho Nam-seong said the company's new products "will help accelerate its foray into the North American and global auto markets."
The company was originally a joint venture between Samsung group and Japanese electronics maker NEC. Founded in 1970, it got its start as a manufacturer of TV picture tubes. Since the joint venture was dissolved, Samsung SDI has increasingly focused on the battery business, which now accounts for nearly half of Samsung SDI's total sales.
In February, the company will sell off its chemical operations, its second-biggest source of revenue, after batteries. The buyer is Hanwha group of South Korea. Samsung SDI will continue to make chemicals for electronics applications, such as polarizing films used in liquid crystal display panels. The changes will give the company a greater focus on batteries.
Samsung SDI is a supplier of automotive batteries to German automaker BMW. Last November, the company announced it will begin supplying batteries to Chinese automaker Anhui Jianghuai Automobile. However, Samsung SDI lags competitors LG Chem of South Korea and Japan's Panasonic in terms of volume.
The automotive segment is generally profitable for lithium-ion battery makers because cars require more power cells than other types of machines, and because contracts can bring long-term profits. To prosper, Samsung SDI must therefore try to gain ground on its competitors.
Batteries for energy storage systems are another promising area.
Samsung SDI's operating profit for the July-September quarter stood at 17.9 billion won ($15.1 million), down 45% on the year. The weak results were blamed on sluggish sales of smartphone batteries. The company is now looking to get a jolt from its other business segments.