Secondary Batteries Need ESS to Be Market Leaders

Department Head Min Jae-ki explained that secondary batteries and semiconductors differ in market characteristics, pointing out that secondary batteries are not currently showing explosive profit growth. He stated that semiconductors have a structure where rising prices and improved margins lead to better performance, whereas secondary batteries' profit margins are not significantly increasing despite rising prices. Therefore, he emphasized that secondary batteries need to approach the market with a focus on Energy Storage System (ESS) momentum, which is complementary to the electric vehicle market, to become market leaders.

This eliminated concerns about capital increases and laid the groundwork for active investment in the rapidly growing North American market. He explained that these strategic moves contributed to making Samsung SDI a frontrunner among battery cell manufacturers and creating a positive trend.

Min mentioned that the expansion of AI data centers is exacerbating power shortages and grid strain, which inevitably leads to a surge in the installation of ESS to store electricity. He predicted that increased ESS installation will provide new order momentum for battery cell manufacturers like those in Korea, becoming an independent growth driver that moves separately from the electric vehicle market. In other words, his analysis suggests that the growth of the AI data center market will positively impact the battery industry.

Min emphasized that the primary beneficiaries of ESS market growth will be large battery cell manufacturers with secured orders and companies converting their production facilities to ESS use to improve utilization rates, rather than material companies. He analyzed that material companies like LNF (cathode materials) or Pino (precursors) can also benefit by entering the ESS supply chain, but cell manufacturers are at the forefront. Meanwhile, he added that a full recovery in EV demand will only materialize when interest rates fall further.

Min explained that a turnaround trend is being created as capital inflow into secondary battery ETFs restarted in August. Within this capital flow, he diagnosed that SK Innovation is relatively undervalued due to SK On's financial burden. He analyzed that once the merger event concludes and related costs are settled, SK Innovation has the potential to be reevaluated in connection with the refinery industry conditions, suggesting that the current undervaluation may be resolved.