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Business

Murata to pour $450m into Sony battery ops after purchase

Manufacturer using funds to upgrade factories in China, Singapore

Murata Manufacturing operates a battery production facility in Japan's Shiga Prefecture.

OSAKA -- Once Murata Manufacturing completes its acquisition of Sony's battery operations Friday, the new owner will lavish 50 billion yen ($453 million) on overseas production sites to supercharge the business against global rivals.

That money will bolster battery factories in Singapore and the Chinese city of Wuxi, with the investments running through the fiscal year ending in March 2020. The plants will receive electrode processing equipment as well as testing gear. Sony had delayed updating the facilities due to curbs on capital spending.

Murata will continue investing roughly 20 billion yen annually afterward. The Japanese producer of electronic components seeks to expand its supplies of smartphone batteries, as well as cylinder types used in power tools and vacuum cleaners.

The company, which specializes in smartphone components, controls a 15% global share in smartphone and tablet batteries, with plans to expand that slice to 20-30%. Murata aims to be the top battery supplier to the three largest smartphone makers, including Apple Inc.

Murata's automotive plans involve making the leap into engine anti-idle functions as well as batteries for on-board electrical components. The company also will commercialize all-solid-state batteries, which reduce the risk of fires, for use in smartwatches and other wearable devices.

The manufacturer looks to bundle storage batteries with voltage converters and sell them to factories and households. The company is eliminating low-margin products while aiming to raise sales 30% to 200 billion yen at a pace of 10% a year.

Sony's battery business has been mired in operating losses, but Murata aims to employ its electronic component production expertise to control costs and make those operations profitable.

Murata also plans to concentrate its development functions. The company will acquire roughly 9,000 Sony employees, many of whom will be relocated to a new site in Yokohama set for completion in 2020. New personnel will be hired as well.

Market intelligence firm Fuji Keizai projects that global demand for lithium-ion batteries will rise to about 3.23 trillion yen in 2020, up 35% from 2017. Murata manufactures smartphone batteries at its Shiga Prefecture plant in Japan, but the site lacks the size to capitalize on that scope.

With Sony's operations in hand, Murata expects to challenge competitors such as Panasonic at home as well as South Korea's Samsung SDI and LG Chem abroad. The Japanese company was supposed to finalize the 17.5 billion yen acquisition in April, but the deal was held up by Chinese regulators.

(Nikkei)

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