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Future of Rechargeable Battery Industry: LG view
2000.03.30 프린트 하기
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1. LG Chemical

  •  Introduction

The history of the Korean chemical industry started with the establishment of LG Chemical fifty years ago. LG chemical has maintained its position as the leading chemical company for the past five decades. Our aggressive investment on R&D enabled us to enjoy remarkable growth over the years. Our business field encompasses chemicals & polymers, specialty chemicals, industrial & building materials, household & healthcare products, pharmaceuticals and electronic materials.

We announced a new corporate vision for the 21st century in conjunction with our 50th anniversary in 1997. According to our new corporate vision, the business area we should put our emphasis on is life science and advanced materials for information and electronic devices.  Battery business has been selected as one of the main business which would establish LG Chemical as a world-class company that delivers the highest customer satisfaction.

  • Background of battery business

In the 80s, the activity associated with battery was small mainly because of the market size in Korea.  Two companies, Rocket Electric and STC, produced zinc-carbon and alkaline battery to serve the Korean market.

In the 90s, battery business emerged as the promising business in Korea due to the popularity of portable electronics. Companies with the strength in R&D and manufacturing skill focused their efforts on the development of Li-ion battery. LG Chemical decided to enter into Li-ion battery market in 1996 based on our new corporate vision to shift from the conventional chemical products to the area of advanced materials for information and electronic devices. Several major Korean companies also directed their resources to the development of Li-ion battery.

Companies relating to the development of Li-ion battery, including LG Chemical , found it necessary to strengthen their capability to make their own equipment and develop the materials to have the competitive edge on a sustainable basis. Battery R&D Association was formed in 1997 for this purpose. This association provided the important venue for the collaboration between battery and equipment & material makers. Twenty-one companies were enrolled as the member of the Battery R&D Association, and Samsung SDI led this association during the first two years. LG Chemical is currently leading this association.

Financial crisis in 1998 made a strong impact on the activity of almost all the companies in Korea. LG Chemical was not the exception. Nevertheless, we decided to construct the Li-ion battery plant during this difficult period. Our decision paid off. LG Chemical became the first company to commercialize Li-ion battery in Korea. Construction of our first Li-ion battery production line was completed at the end of 1998. Our second and third Li-ion battery line had been constructed during 1999. As a result of our aggressive program, we were able to proclaim the official opening of our Li-ion battery plant in October, 1999. We currently have production capacity of 2 million cells per month. The construction of Li-ion polymer battery plant is underway . It will be completed before the end of this year.

  • Strength  

 The strength of LG Chemical comes from its strong chemical background and its pertinent R&D capability. Coating technology of LG Chemical is among the best in the industry due to its long experience in coating and strong chemical background. Strong mechatronics background of LG Electronics made it easier to enhance our capabilities in winding and assembly process.  

Cell performance, quality assurance and cost are three major factors to determine the competitiveness of battery makers. We are very comfortable with the cell performance of our product. We received many positive feedback from our customers. Our scientists in the area of Li-ion and Li-ion polymer battery are highly qualified. Moreover, our focus on recruiting top-notch scientists made it possible to achieve the very stringent goal in a short period of time. It will take some time to catch up the leadingcompanies in the quality assurance and the cost. However, our focus on Six Sigma activity makes a great contribution to reducing the learning curve.

We take nothing for granted when it comes to the quality of our batteries supplied to our customers. We succeeded in the development of battery components, including the aluminum can, in collaboration with specialty makers. Working in concert with the specialty makers, we will be able to develop our own anode, cathode, electrolyte and separator. Our policy is to form our ties with any specialty makers regardless of their nationality as long as this enhances our capability in the market we serve. All these activities would play an important role in cultivating commercial fruition in a short period of time.

Our aggressive expansion program and our focus on the high quality and the cost will further reinforce our capabilities in the markets we serve and we will serve.


2. Market

  • Korea

 Korea decided to adopt CDMA technology in our wireless communication system in spite of the technical barriers associated with commercialization. This decision worked out very well, and Korea became the first country to commercialize CDMA.

Samsung, LGIC (LG Information & Communication) and Hyundai are major players in Korean mobile phone industry. In the beginning, the market growth of CDMA was rather slow. However, introduction of PCS in late 1997 in Korea accelerated the growth of mobile phone market. 37 million units were produced by Korean makers in 1999. This accounts for approximately 13 % of the total production. Our conservative estimate shows that Korean mobile phone makers will be able to produce over 66 million units this year. This will increase the market share from 13 % to 18 %. Our favorable showing in terms of the sales of mobile phone this year will double the consumption of Li-ion batteries. It is expected that over 72 million Li-ion prismatic cells will be used in Korea. This trend will continue for times to come because of the introduction of IMT-2000.  With this trend, Korea will emerge as the major production site of mobile phone. Nokia's operation of their own plant in Korea and Motorola's aggressive strategic alignment activity with Korean makers reflect this.

In contrast, the production of notebook PC is not so active as that of mobile phone. However, the earthquake of Taichung, Chiayi and Nantou in Taiwan made major OEMs for notebook PC consider having the alternative production site. They seriously consider moving the production site from Taiwan to Korea. If that happens, Korea will emerge as one of the major production sites for notebook PC as well.

  • Taiwan and China

 Taiwan has the reputation for the center of notebook PC manufacturing. They produced 9.5 million units in 1999. Most importantly, this accounts for over 50% of the total production. They used 72 million Li-ion cylindrical cells for their notebook PC last year. This accounts for 30 % of the total production of Li-ion cylindrical cell. However, unlike notebook PC, the market for mobile phone is rather small. They have just begun to produce GSM phone. We all recognize the potential of Chinese market in mobile phone. The demand in mobile phone in Korea and Japan is beginning to saturate.

However, the situation is completely different in China. The registered users of mobile communication in Korea was 22 million in 1999. This will increase to 29 million this year, which covers 60 % of the total population. It will show the sign of slowing down. The situation is almost same in Japan as in Korea. In China, however, the registered users of mobile communication will jump to 75 million from 45 million this year. If this is the case, China will outnumber Japan this year in terms of the number of registered users by 25 percents.

This will be the starting point of the explosive growth of Chinese mobile phone market because 75 million registered users correspond to only 5 percents of the total population.   In this regard, the growth rate and the potential of Chinese market will play a major role in the telecommunication community. This will also have a strong impact on the battery industry.

By and large, there is a strong possibility that Korea, Taiwan and China will lead the market of mobile communication and notebook PC in the future. This explains why several major companies in Korea are so keen to enter into the battery business.

  • Other emerging market

Hybrid Electric Vehicle market is one of the most promising emerging markets we can see. We see the outlook for this market bright. We found that auto makers, including Korean, are very serious about HEVs. We also found that most of technical barriers had been removed. The remaining and most challenging issue is how to acquire reliable and cost-effective battery. Korean auto makers try to find the solution in Li-ion and Li-ion polymer battery. These batteries outperform the conventional batteries, and the incorporation of manganese oxide would further reduce the cost. Auto makers also emphasize the importance of the close link with battery makers. That's because it is essential to work in concert with battery maker and power management group for the successful development of HEV.

This is the view of Korean auto makers on the HEV. Battery makers have the intimate knowledge on how to improve the high rate capability without any sacrifice of the safety. Battery makers are keen to develop high power Li-ion or Li-ion polymer battery that is suitable for the application in HEV by controlling the cell chemistry and cell design. From the perspective of LG, the future competition dynamics would hinge on how to interface with the auto makers in this emerging market.   

 

3. Perspective of Future

The interest of Korean mobile phone makers on the next generation battery is very high because they believe that battery is the important component that can provide the competitive edge over their competitors. The trend of smaller and lighter mobile phone continues. In this respect, their interest in LiPB is understandable.

LiPB can provide some differentiation point. We can make it thinner, a little bit lighter than Li-ion prismatic battery. However, the difference between Li-ion prismatic and LiPB is small in terms of the cell performance because of the adoption of the same cell chemistry.

Therefore, it is not clear how long LiPB could maintain its position as the next generation battery. It is uncertain if LiPB could compete with Li-ion prismatic battery in terms of the cost despite the strong demand from mobile phone makers.

Battery makers have been seeking for new battery chemistry that can outperform Li-ion battery and that can make Li-ion battery obsolete. Li metal, Li alloy, Zn anode, Sn alloy, sulfur polymer cathode exhibit some possibility to substitute Li-ion battery in some respect. However, continuous improvement of the Li-ion battery makes it difficult for the next generation battery to compete with Li-ion battery. Li-ion and LiPB will remain as the major battery for 3~5 years.

It's a challenging task to identify the new chemistry that will be able to give us the competitive edge over Li-ion battery. There are some candidates for the new battery chemistry mentioned above, but technologically there are so many uncertainty. However, breakthrough could come any time. That's the characteristics of new technology. We believe that we can change the competition dynamics relating to secondary battery by taking advantage of the new battery chemistry.

Our strategy is to adopt the portfolio management in order to minimize the risk associated with the next generation battery. Our focus is primarily on the research activity in universities, institutes and venture companies all over the world. Our interest encompasses small battery, large battery and other power source like fuel cell. We carry out the extensive survey of the next generation battery through our channel. We'll make the continuous investment on the secondary battery until we have the competitive production volume for the stable supply to major OEMs. Our portfolio management of the next generation battery would aid us in determining where to invest. Preparation for the next generation battery has already begun for the new dimension of the competition.  

 

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