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Appendix 5. Li-ion Batteries: Market Participants

According to Yoshino, Asahi Chemicals in Japan started R&D work on Li-ion batteries in the early 1980s and acquired the first patents on its technology in 1987. Sony published details of its system in 1991. Device manufacturers quickly saw the advantages of longer lasting, lighter weight batteries for their cellular phones and notebook computers. The Li-ion system provided up to four times the run time with one-third the weight of the Ni-Cd system, which was the standard of performance at the time.

These initial Li-ion manufacturers were large electronics companies with active battery R&D and manufacturing. Sony, Matsushita, and Sanyo all had significant R&D programs in the area, and each invested about $150 million in production facilities in quick succession. Starting in 1991, they invested heavily in production capability; this investment continued throughout the decade and, in some cases, amounted to as much as $1 to $2 billion or more. Motorola had a significant R&D effort to develop its own Li-ion polymer technology. After completing the development, rather than pilot and pro-duce the cells themselves, Motorola decided to license the technology as did Telcordia (now SAIC).

Today the principal manufacturers of Li-ion batteries are, with the exception of BYD in China, large, vertically integrated Japanese and Korean producers of consumer electronics. These account for all of the Li-ion batteries produced in Japan, where about 80 percent of the world's production of Li-ion batteries is located (the rest is in China, Taiwan, and South Korea ).

Japanese Li-ion battery production goes first to captive in-house uses for a company's own portable electronic devices. The remaining production (a sizable percentage of the total production) is sold to other original equipment manufacturers (OEMs) of portable devices. These manufacturers have established very high standards for quality, performance, and safety for their products. Device designers will share future product development and designs within their own company but are reluctant to share the same data with outside suppliers.

Figure A5.1 summarizes current market shares for Li-ion batteries, as assessed by the Institute of Information Technology, Ltd. Its data show that volume exceeded 800 million cells by 2002, when value reached nearly $3 billion.

Figure A5.1. Li-ion Market Share for 2002
Source: Institute of Information Technology, Ltd. Japan. 2002.

Although Ni-MH and Li-ion had been forecast to replace Ni-Cd batteries, it should be noted that Ni-MH and Li-ion systems took the market expansion, while the Ni-Cd systems maintained the low-end electronics and power-tool markets.

In 2003, BYD of China became a significant supplier, as did South Korean companies Samsung and LG Chemical (former-ly Lucky-Goldstar). The manufacture of Li-ion batteries has begun to shift from Japan to China as some major producers take advantage of the Chinese government's willingness to provide low-cost loans and production facilities or support for companies that bring strategic new technologies to China . South Korea also provides government incentives and has essentially the same cost structure as China . In the past three years, Samsung and LG Chemicals entered the market. Samsung penetrated the market and captured the fifth spot in production capability, with LG not far behind.

Major Japanese and Korean manufacturers of portable electronic devices have their own integrated Li-ion battery production facilities. They have pursued aggressive research and development efforts, leading the way in making engineering improvements as well as developing new materials to enhance Li-ion performance. The governments of South Korea and China have made Li-ion systems a strategic technology. Both governments have encouraged investment in the development of new technology, and support new production facilities with loans or grants.

In preparation for the 2008 Olympics, the Chinese government has designated both Li-ion and fuel cell systems as strategic technologies. This has attracted new production from Japan to China, given the potential size of Chinese markets for portable electronics devices. New production facilities are being constructed in China, some as joint ventures between Chinese companies and major Japanese companies. As a quid pro quo, Chinese participants get government funding to assist in building facilities, and the Japanese partner supplies the technology.

Battery pack assembly operations have been shifting from Mexico to China to take advantage of lower labor costs. This is the most labor-intensive part of battery manufacturing.

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Date created: July 21, 2005
Last updated: August 4, 2005


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