Key words: Lithium-ion, battery, li-ion, shortages
The impact of the catastrophic earthquake and subsequent events in Japan are not yet (and may never be) fully understood, EXCEPT that those events have had and will continue to have a real effect on all manufacturers and consumers of lithium-ion power cells. The question for the next few months or so may turn out to be—Got batteries?
The expected 42% annual increase in demand for tablets, eReaders and Smartphones in 2011 has battery vendors looking ahead to substantially increased demand; all other mobile products are forecast to have double-digit demand growth as well. Convergent Semiconductors forecasts that the first impact to lithium-ion battery supply will be felt this May and June.
The Eastern Japan earthquake, tsunami and nuclear power plant news about wafers, semiconductor supply and the impact on automakers has been in the news. What has not been in the news is the effect on the five Japanese chemical companies that supply nearly all materials to the world’s battery manufacturers. Even as the chemical companies recover and repair the direct damage to their plants, the question of the infrastructure problems needs to be resolved. The evacuation zone around the Fukushima Nuclear Power Plant and rolling blackouts are issues that must be taken into account.
All of the top battery companies, Panasonic-Sanyo, Sony, Samsung SDI, and LGC, depend upon chemical suppliers with manufacturing located in the Eastern Japan region. There are seven chemical companies that were damaged by the earthquake/tsunami/power plant disaster. These companies are not all the major suppliers of specific chemicals, but are part of a supply chain that works with an ever-increasing battery demand.
While the Korean battery manufacturers have taken over market share leadership for lithium-ion batteries consumed by PCs and other mobile products, the Japanese material suppliers have remained dominant in the key chemical components for batteries no matter where those batteries are manufactured. May and June will start to exhibit supply interruptions for mobile products ranging from notebooks and tablets to power tools. Expect to see push-outs of new product announcements until a secure battery supply has been established. Meanwhile, tough competitors are using creative cooperation to ensure the user is not forced into some other technology.
For example, Sony committed to produce certain lithium batteries in March and April but could not deliver due to the quake. Panasonic, at Sony’s request, took over production and adjusted the number and types of batteries in order to deliver a workable solution.
Makita purchased lithium-ion batteries for power tools from Sony but now appears to have gone to Samsung SDI for its supply of lithium-ion batteries. According to an insider, Makita placed an exceptionally large battery order in expectation of strong reconstruction demand in the wake of the earthquake.
Lithium-ion batteries are usually available everywhere. They are the ubiquitous item on the bill of materials that OEMs take for granted will always be available…whenever. Then there is a catastrophic earthquake/tsunami/nuclear power plant failure in Japan—home of single source chemicals for the global battery industry. Hence the essential drama of our battery report—which of your high volume, high dollar consumer electronics products depends on a one-dollar li-ion battery formerly manufactured in the Evacuation Zone?
Convergent Semiconductors covers this market to provide a strategic view of the mobile products phenomenon. Expect delays in product introductions and push-outs in delivery because of the broken supply chain of deliveries from chemical companies in Japan to its global customers. The industry will solve this problem. New sources in a variety of locations will be established. The companies in Japan will recover. However, in the near future, batteries will be a limiting component on the BOM. Contact us for more details of report.
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