New 112Ah Electrode Plate Factory Established in Xi'an, Construction Started Last Year and Scheduled for Completion Within the Year
Samsung SDI Xi'an Corporation's Samsung Hwanxin Power Battery (SAPB) building located in Xi'an, China. (Photo by Samsung SDI website)
[Asia Economy Reporter Jeong Hyunjin] Samsung SDI is reportedly investing about 300 billion KRW to revamp the production line at its electric vehicle battery plant in Xi'an, China. This is interpreted as a preemptive investment to respond to the expanding battery demand driven by the global electric vehicle market boom. Samsung SDI is strengthening the production capacity of its Chinese plant while also seeking large-scale overseas production facility investments in the United States, Hungary, and other locations.
According to industry sources and foreign media on the 5th, Samsung Huanxin Power Battery (SAPB), which operates Samsung SDI's Xi'an plant, is investing 1.6 billion yuan (approximately 280 billion KRW) to replace the production line with the goal of mass production by the end of this year. The 34Ah lithium-ion battery production line is being remodeled to establish a new 112Ah electrode production factory, which began construction last year and is scheduled for completion within this year. The Xi'an city government expects the plant's annual production value to exceed 6 billion yuan and to create employment for about 3,000 people.
Samsung SDI is known to plan to localize 100% of electrode production through this investment. Battery production processes are broadly divided into electrode, assembly, and formation stages. The electrode process is the procedure for manufacturing the cathode and anode, which are two of the four main components of a battery, and is the fundamental step in battery manufacturing.
SAPB is Samsung SDI's Xi'an subsidiary and operates the electric vehicle battery production line in China. It is a joint venture established in 2014 by Samsung SDI, China's largest automotive parts manufacturer Anjing Huanxin Group, and Shaanxi Province state-owned enterprise Xi'an High-Tech Group specializing in real estate and investment. Currently, Samsung SDI holds a 65% stake, maintaining control over operations. Until 2016, sales were around 60 billion KRW but rapidly grew afterward, surpassing 1 trillion KRW in 2019.
Samsung SDI's investment in China is interpreted as a response to the expanding global electric vehicle battery market. According to market research firm SNE Research, the electric vehicle battery market size is expected to increase more than tenfold from 30.4 billion USD last year to 304.7 billion USD by 2030. In June this year alone, global electric vehicle battery usage reached 25.4 GWh, more than doubling compared to the same month last year. However, Samsung SDI declined to confirm details regarding the factory expansion.
Samsung SDI is accelerating investments in overseas production facilities to keep pace with the growing battery demand driven by the recent expansion of electric vehicle adoption. It has recently formalized plans to establish a new battery plant in the United States and is expected to invest about 1 trillion KRW to expand its Hungarian subsidiary. This is aimed at strengthening competitiveness by upgrading key production bases amid surging battery demand.
Samsung SDI posted a profit in its electric vehicle battery business in the second quarter of this year. This turnaround to profitability in the sector came after a year and a half since the fourth quarter of 2019. Based on this, the company's total sales reached 3.3343 trillion KRW, marking the highest quarterly performance ever. Industry experts predict that Samsung SDI's annual operating profit will exceed 1 trillion KRW for the first time this year.
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