Samsung SDI is considering an additional battery notching equipment provider, threatening the position of Phil Optics

Phil Optics' battery production equipment business is becoming unstable.

According to the industry on the 19th, Phil Optics is manufacturing and installing 6 units of notching equipment to supply to Samsung SDI. There are no additional orders through the first half of the year. Samsung SDI verbally noted that it could order an additional 24 units in the second half of the year. However, no formal agreement has been reached. It is unknown whether the contract will be finalized. This is because Samsung SDI is considering cooperation with other domestic and overseas battery equipment makers to cut costs and turn the battery business into a profit.

Notching equipment is used to cut both anode and cathode materials. It is used in the R2R (Roll to Roll) process, and an infrared (IR) wavelength fiber laser is utilized. Phil Optics is in charge of only the laser module. The remaining parts such as R2R are made by KOEM. The margin per piece of equipment is around 300 million won. Due to the fact that not all of the equipment is bundled together, the profitability is reduced.

This equipment was developed jointly with Samsung SDI. However, Samsung SDI is looking for additional battery equipment makers to speed up the mid-to-large-sized battery business turnaround. Among the candidates, reportedly, Chinese companies are included. The industry considers LEAD China to a likely selection. LEAD China has the capability to supply all of the core equipment needed for battery production from raw material mixing to notching, stacking, packaging, module, and pack assembly.

An industry official said, "Samsung SDI is aiming at applying Phil Optics’ notching equipment to the initial stage of installation while including other companies into the mass production line. It contacted  company D and company V, which are partners of LG Chem, and the measure has been selected because it is difficult to lower the cost by a large margin."

Phil Optics's battery equipment sales ratio target is over 50% this year. The company plans to overcome the sluggish display industry situation with the battery business experiencing active investments. However, experts say such a goal would be not easy to achieve if Samsung SDI diversifies its equipment supply sources. The company's sales last year turned out to be 62.9 billion won while operating profits suffered losses amounting to negative 23.7 billion won. In 2017, the sales were 285.4 billion won and operating profits were 22.9 billion won.