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Sony pulls plug on pioneering battery business, eyes Murata deal

Murata Manufacturing is set to take charge of Sony's lithium-ion battery business by early next year.

TOKYO -- Sony has agreed to sell its battery business to Murata Manufacturing, as the electronics giant parts ways with a once-breakthrough lithium-ion operation that has failed to recover from a litany of setbacks.

Murata will take control of five production sites by the end of March 2017, including those in Japan's Fukushima Prefecture, Singapore and China. Sony will retain operations related to consumer sales of alkaline batteries and other consumer products, it was announced Thursday.

The deal is expected to be worth less than 40 billion yen ($379 million), and Sony may incur a loss on the sale. After hammering out the details, the two sides will shake hands on a formal agreement in October.

Sony's lithium-ion battery business showed much promise when it began. In 1991, the Japanese company became the first to commercialize the rechargeable cells that are now common in many consumer electronics. But Sony shied away from investing in mass production of those batteries after reports emerged of faulty laptop battery packs overheating and bursting into flames.

That left the business unprepared to deal with tough price competition from Samsung SDI and other South Korean rivals. Sony tried to restructure the segment, and even considered joining forces with Nissan Motor and another firm around 2012. But orders for smartphone batteries had picked up, and Sony decided at the end of 2013 to expand the operation independently.

However, the business environment remained prohibitively competitive. In 2015, Sony dropped one notch to fifth place in global lithium-ion battery share. The company had aimed to re-enter the electric vehicle battery business, but those plans have not panned out.

Sony's battery division generated roughly 160 billion yen in sales in fiscal 2015. Apart from fiscal 2014, the business has turned in operating losses since fiscal 2010. The Tokyo-based firm is positioning image sensors and games as core operations, and investing more funds into batteries "would be problematic," a Sony executive said.

Murata, a Kyoto-based electronic parts maker, is pouring resources into the automobile and energy segments. Though onboard auto components now make up 15% of group sales, the energy business remains a small-scale operation that the company has decided to expand through acquisitions.

Securing Sony's battery business will instantly give Murata production equipment and operational expertise in that area. Murata thinks its own manufacturing technology and client network will overcome the profitability challenges posed by lithium batteries for mobile devices. Moreover, Murata is betting on all-solid-state batteries, a next-generation innovation promising more safety and performance than lithium-ion batteries. Sony's technological research in that field "is advancing," said Yoshitaka Fujita, Murata's executive deputy president.


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