Samsung SDI Achieves Record High Q3 Performance Despite Auto Semiconductor Shortage (Comprehensive)

[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] Samsung SDI achieved its highest-ever performance in the third quarter of this year, driven by growth in its battery and electronic materials businesses.

On the 2nd, Samsung SDI announced its third-quarter results for this year, reporting sales of 3.4398 trillion KRW and operating profit of 373.5 billion KRW, representing increases of 11.4% and 39.7% respectively compared to the same period last year. Compared to the second quarter, sales grew by 3.2% and operating profit by 26.5%. Both sales and operating profit marked the highest quarterly results to date.

Sales in the energy and other segments, the company’s core businesses, reached 2.7409 trillion KRW, up 15.0% year-on-year and 1.1% quarter-on-quarter. Operating profit expanded by 46% compared to the third quarter of last year and by 19.6% compared to the second quarter.

Although demand for medium- and large-sized batteries decreased compared to the previous quarter, profitability was maintained. Automotive batteries were affected by reduced demand due to a shortage of vehicle semiconductors, but sales increased centered on high value-added products, maintaining profitability. This marks the second consecutive quarter of profitability for the automotive battery business. However, sales of energy storage systems (ESS) declined due to supply schedule impacts on major projects.

For small batteries, cylindrical batteries saw increased sales focused on mobility applications such as electric vehicles and electric bicycles, while pouch-type batteries improved profitability due to increased sales for new smartphones and wearables from key customers, Samsung SDI explained.

Sales in the electronic materials segment were 698.9 billion KRW, down 0.7% year-on-year but up 12.3% quarter-on-quarter. Operating profit rose 32.9% from the third quarter of last year to 171.7 billion KRW. Electronic materials saw improved profitability due to increased sales of high value-added products. Semiconductor materials grew with high value-added products such as spin-on hard masks (SOH), OLED (organic light-emitting diode) materials increased sales for flagship smartphones, and polarizing films expanded their sales share for large TVs.

Samsung SDI expects sales of medium- and large-sized batteries to increase in the fourth quarter, focusing on new models and high value-added products. Although semiconductor supply issues are expected to persist for automotive batteries, sales are projected to grow with expanded supply of Gen5 batteries. ESS sales are expected to increase centered on UPS (uninterruptible power supplies) and home ESS, improving profitability. Regarding Gen5, mass production began at the newly expanded Hungary line from the end of the third quarter this year, supplying new BMW models, and supply is expected to expand to other customers next year, Samsung SDI explained.

Small batteries are expected to see expanded sales centered on cylindrical batteries. Cylindrical batteries will see increased sales for key applications such as electric vehicles and power tools, while pouch-type batteries are expected to expand sales for new smartphones from overseas customers.

In particular, during the earnings conference call, Samsung SDI stated, "The market size for cylindrical batteries for electric vehicles (EV) is expected to grow at an average annual rate of over 20%, from 75 GWh this year to 170-180 GWh by 2026." They added, "Our EV cylindrical battery sales have significantly increased year-on-year, centered on the 21700 model, expanding the EV share within cylindrical batteries to about 10%. Next year, the share is expected to expand to over 20% due to increased volume and new projects."

The electronic materials segment is expected to continue expanding sales of semiconductor and OLED materials. Semiconductor materials sales are expected to increase slightly, and OLED materials sales are projected to grow as adoption expands for smartphones. However, Samsung SDI forecasts that sales of polarizing films will decline due to seasonal off-season effects.

Meanwhile, Samsung SDI views the impact of global semiconductor supply issues as limited. During the earnings conference call, they stated, "Semiconductor supply issues are expected to continue into next year, but automakers are prioritizing semiconductors for electric vehicles (EV) to meet carbon dioxide regulations," adding, "Compared to internal combustion engine vehicles, production disruptions are relatively less affected."

They further noted, "Many automakers are focusing more on EV production," and said, "While sales of PHEVs (plug-in hybrid electric vehicles) are somewhat affected, we will expand supply of batteries for new EVs starting in the fourth quarter and work closely with customers to achieve the originally planned sales and annual profit targets."

This content was produced with the assistance of AI translation services.