[Complete Battery Mastery](36) Market to Grow to 95 Trillion Won by 2035... What Battery Equipment Exists?

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With the recent slowdown in electric vehicle demand, domestic battery cell manufacturers received disappointing results in the first quarter and are now adjusting their investment pace for the year.

During its 2024 Q1 earnings conference call, LG Energy Solution stated, "We will continue to make only essential new and additional investments based on strict prioritization, and will adjust both the size and pace of our investments, reducing the scale of facility investment (CAPEX)." SK On also explained in its Q1 earnings call, "To respond to the unfavorable business environment, we will flexibly adjust the timing of facility expansions in Europe and China."

However, Samsung SDI commented, "Although the growth of the electric vehicle market is slowing temporarily in the short term due to high interest rates and delayed global economic recovery, its strong growth potential remains intact in the medium- to long-term." The company also stated, "We will proceed without delay with new plant investments already secured in Hungary and Malaysia and with construction of our joint venture plant in the United States." Samsung SDI expects its investment scale to increase significantly year-on-year.

Among the three major battery cell makers, two companies, excluding Samsung SDI, have officially announced plans to reduce their investment scale this year. As a result, their partner companies are also likely to be directly and indirectly affected. Changes are also expected in the order volume for battery equipment companies.

Battery equipment suppliers have benefited every time cell companies announced large-scale expansion plans at home and abroad. As of the end of last year, the three major battery cell firms' order backlogs are estimated to have exceeded 1,000 trillion won. Their combined CAPEX last year was around 20 trillion won, with roughly half of this capital flowing to related equipment businesses.

Unlike the semiconductor and display sectors, which still rely heavily on Japanese and other foreign-made equipment, battery equipment has achieved a high level of localization—around 90%. Thanks to technology verification through collaboration with domestic battery cell companies, domestic equipment firms have also been supplying products overseas. Moreover, the growing sentiment to keep China in check in the US and Europe has served as a favorable condition for Korean equipment suppliers.

However, it is now time for Korean equipment companies to brace for a lean period, at least for a while. Experts believe that because cell manufacturers are adjusting their investment pace, domestic equipment suppliers are inevitably affected as well. On the other hand, factors such as the move by automakers to internalize battery production, the commercialization of next-generation 46mm-diameter cylindrical batteries, and all-solid-state batteries could open up new opportunities.

Junseo Park, an analyst at Mirae Asset Securities, commented, "As the expansion pace of battery cell manufacturers slows, equipment makers are inevitably being affected. Overseas emerging battery cell firms and automakers could represent new opportunities going forward."

Half of Investment Spent on Equipment...A 95 Trillion Won Market by 2035

Like semiconductors and displays, batteries are a capital-intensive industry, making equipment a major component of facility investments. According to the battery industry, CAPEX per unit in Korea is typically around 70 billion won per gigawatt-hour (GWh). Overseas (North America), the figure is estimated at more than 100 billion won per GWh.

Recently, rising logistics and labor costs have driven up CAPEX to 120 billion to 150 billion won per GWh. In April, LG Energy Solution broke ground on a 53GWh plant in Arizona, USA, with an investment of 7.2 trillion won. A simple calculation shows that investment per GWh reached 135.8 billion won for this project.

Equipment typically accounts for 40% to 50% of overall CAPEX, although the exact ratio varies by site. The larger the factory, the greater the portion of CAPEX devoted to equipment. Market research firms and securities companies estimate the equipment market at 50 billion to 60 billion won per GWh.

By process type, equipment investment spending is focused mostly on the electrode process (30%), followed by assembly (17%), formation (29%), and others (24%).

Recently, battery companies have also been expanding investments in smart factories and plant automation. A smart factory integrates all stages—from planning and design to production and distribution—using information technology (IT) to reduce costs and boost productivity.

One essential tool for realizing this vision is plant automation utilizing robotics. Battery and materials companies are increasing efficiency by deploying technologies such as Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs) within manufacturing facilities.

Although battery makers are slowing their pace this year, facility investment continues. Unlike LG Energy Solution and SK On, Samsung SDI has announced aggressive investment plans for 2024. Although the timing of investments is being pushed back, the equipment market is projected to keep growing.

SNE Research, a leading energy market research firm, forecasts the battery equipment market will grow from $21.6 billion (about 2.9 trillion won) this year to $70 billion (roughly 9.5 trillion won) by 2035. By country/region in 2035, China is projected to account for 38% of the battery equipment market, followed by Europe at 31% and the US at 28%.

Localization Rates at 90%...Which Korean Equipment Companies Stand Out?

In the early days, Korean battery cell manufacturers relied heavily on Japanese equipment, but most of this has since been replaced with domestic equipment. Even when expanding or building new plants overseas, cell makers use proven domestic equipment. The localization rate for battery cell equipment is estimated at around 90%.

Foreign battery firms initially considered lower-priced Chinese equipment, but as yield issues surfaced, Korean equipment began to attract more interest abroad as well.

Among all manufacturing steps, the electrode process is the most technically demanding and capital intensive. It involves applying cathode and anode active materials to aluminum and copper current collectors, respectively. This process is subdivided into mixing, coating, drying, pressing (rolling), slitting, and notching. Equipment names reflect these subdivisions, with machines called mixers, coaters, slitters, and so forth.

Mixers must precisely and uniformly blend a variety of materials to create slurry, and high mixing capacity per unit time is key for enhanced productivity. There is a recent trend toward continuous mixers. Korean mixer manufacturers include TSI, Yoonsung F&C, and Jeil M&S, while notable foreign suppliers are INOUE and Primix (Japan), and LeadChina (China).

Secondary Battery Electrode Mixing Process and Equipment. Image Source=TSI

Coaters must be able to quickly and uniformly apply cathode and anode active materials to the current collector. Wide-width coaters capable of coating 70–80 meters per minute are being introduced to improve productivity. Generally, coating and drying processes are integrated into a single piece of equipment.

Key domestic coating & drying equipment manufacturers include CIS, PNT, Hanwha Momentum, and Hana Technology. In China, LeadChina and Yinghe Technology are well known, as are Toray and Hirano Tecseed in Japan.

Roll presses reduce the thickness of electrodes using roll-to-roll technology, applying uniform pressure down to or even below 1.3 micrometers. Leading Korean roll press suppliers are CIS and PNT; in Japan, Toray, Hitachi, and Canon; and in China, Yinghe Technology and LeadChina.

Secondary battery electrode roll press. Photo by CIS

Notching equipment is machinery that cuts out everything except the area of the electrode plate where the tab will be attached. Whereas press-based notching was once common, laser-based notching is now becoming standard. Leading Korean notching equipment providers include Philoptics (Phil Energy), DNT, and Youil Energy Tech.

Laser Notching Process and Equipment. Image Source=Phil Energy

The assembly process, following the electrode stage, forms the battery by assembling the cathode, anode, and separator into a cell. Equipment is differentiated based on the process—winding (for cylindrical/prismatic cells) or stacking (for pouch/prismatic cells). In recent years, stacking has become increasingly common even for prismatic batteries. Some companies classify notching as part of the assembly process rather than the electrode process.

Korean winding and stacking equipment makers include Hana Technology, Phil Energy, DA Technology, Mplus, and NineTech. Laminating equipment specialized for LG Energy Solution is supplied by NineTech, DSK, and Shinjin MTech.

NineTech's Z-folding type stacking equipment. Image source=NineTech

After completing the electrode plate, the next step involves tab welding and packaging the assembly into a can or pouch case. Domestic providers for this process include Mplus, Hana Technology, System R&D, and NS.

The formation process involves the aging step, during which assembled batteries are stored under specific conditions to ensure sufficient electrolyte penetration, and the activation step, in which repetition of charging and discharging imparts electrical properties and stabilizes the cell. Pouch cells add a degassing step after activation.

Secondary battery formation equipment. Image source=Wonik P&E

Leading activation equipment manufacturers are Wonik P&E, Apro, Gapjin, DH, and NS (for degassing). Hangke is a notable Chinese supplier. In battery inspection equipment, major Korean firms include NSys, V-ONE Tech, Inometry, Kowin Technology, and SFA.

4680 Cylindrical & All-Solid-State Batteries: Equipment Evolves with the Times

With the looming commercialization of 4680 and 4695 46mm-diameter cylindrical batteries—and all-solid-state batteries—new manufacturing processes are being adopted, requiring new types of equipment.

In 46mm-diameter batteries, dry electrodes—which are more environmentally friendly and energy-saving than traditional wet electrodes—are expected to be introduced. Although companies including Tesla, LG Energy Solution, and Samsung SDI are actively developing dry electrode technology, mass production is expected to take some more time.

All-solid-state battery mass production also demands new equipment compared to legacy lines. Samsung SDI, preparing to commercialize all-solid-state batteries domestically for the first time, is reportedly negotiating with a range of equipment suppliers to build production lines.

Unlike conventional cells that use liquid electrolytes, all-solid-state batteries do not require electrolyte injection in the assembly process. Furthermore, the formation step—designed to build the solid electrolyte interphase (SEI) and impart electrical characteristics—will also be simplified without liquid electrolytes.

Instead, the electrode process will require high-pressure pressing to enhance adhesion and interface characteristics between the active material, solid electrolyte, and current collector. In the case of sulfide-based solid electrolytes, strict process management is required, as moisture contact can generate toxic hydrogen sulfide (H2S) gas during manufacturing.

<References>

Newspim, "K-Battery Top 3 Firms Invest Five Times Annual Operating Profit in Facility Investment...Targeting Both Volume and Quality," 2024.1.8
Mirae Asset Securities, "Battery Equipment: Raising Earnings Forecasts. Focus on Process Innovation and OEM In-House Production," 2024.3.5
Kiwoom Securities, "Investment Cycle Begins in Earnest: Time to Focus on Equipment Stocks," 2023.9.13
SNE Research, "Status and Outlook for Lithium-Ion Secondary Battery Production Equipment Development," 2023.5.31
Mirae Asset Securities, "Battery Equipment: No Batteries Without Equipment," 2022.5.23

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