Samsung SDI steps up U.S. LFP production line investments; domestic equipment makers secure 96.2 billion won in contracts
Expanding North American ESS supply capacity through EV facility conversions and domestic materials sourcing
Samsung SDI (006400) is accelerating its penetration into the North American market by converting its electric vehicle (EV) battery production lines in the United States for energy storage systems (ESS). Related facility investments are gaining traction, highlighted by recent supply contracts for battery production equipment totaling 96.2 billion won ($69.6 million) awarded to two domestic equipment manufacturers.
The production pivot centers on the StarPlus Energy (SPE) plant in Kokomo, Indiana. Samsung SDI is converting a portion of the existing nickel-cobalt-aluminum (NCA) battery production lines at its joint venture with Stellantis to accommodate lithium iron phosphate (LFP) batteries. The reorganization of the North American ESS supply chain is gathering pace, driven by tighter U.S. regulatory scrutiny on Chinese batteries and surging power demand fueled by the proliferation of artificial intelligence (AI) data centers.
Equipment Makers Secure 96.2 Billion Won Contracts Amid U.S. LFP Line Expansion
Battery equipment suppliers MOT and PhilEnergy disclosed on the 21st that they had secured battery assembly equipment supply contracts valued at 10.1 billion won and 861 billion won, respectively. The contract execution periods run through April 20, 2027, for MOT and April 1 of the same year for PhilEnergy. Both companies withheld the identity of the counterparty, citing trade secrets.
Industry sources indicate that both firms are key equipment partners for Samsung SDI, and the newly ordered machinery is designated for the ESS-use LFP battery production line at StarPlus Energy (SPE) in Indiana. The wave of assembly equipment orders follows Samsung SDI's strategic pivot of its EV battery production facilities toward ESS applications.
Samsung SDI is converting a segment of SPE's established manufacturing footprint to LFP production. Unlike conventional NCA batteries, LFP batteries feature distinct cell dimensions and assembly procedures, necessitating dedicated capital expenditures. Rather than building a greenfield plant, the company is repurposing existing facilities while reconfiguring production apparatuses to match specific product characteristics.
While LFP batteries offer lower energy density than ternary batteries, they boast superior cost efficiency and a longer life cycle, making them ideal for large-scale power storage facilities. Samsung SDI, which has traditionally focused on high-margin ternary batteries, aims to bolster its product competitiveness in an ESS market long dominated by Chinese manufacturers by scaling up local LFP production in the U.S.
Surging Orders Amid U.S. Supply Chain Realignment; Profitability Post-Mass Production in Focus
The U.S. ESS market is expanding rapidly on the back of soaring investments in AI data centers and renewable energy infrastructure. As grid stability and demand for massive power storage escalate—compounded by stricter tariffs and supply chain restrictions on Chinese batteries—business opportunities are broadening for companies equipped with localized production capabilities.
Alongside facility conversions, Samsung SDI has embarked on building a supply chain for core materials independent of China. In March, the company signed an LFP cathode supply contract with L&F valued at approximately 1.6 trillion won, followed on the 6th of this month by a long-term supply agreement with POSCO Future M worth roughly 6 trillion won. The deal with POSCO Future M encompasses LFP cathode materials as well as existing ternary materials and prospective collaborative items.
The company has also locked in major battery supply contracts in the North American ESS market. Following a contract exceeding 2 trillion won with a U.S. energy infrastructure firm late last year, Samsung SDI secured an additional agreement worth approximately 1.5 trillion won with an American energy specialist this March. Deliveries under the March contract are scheduled sequentially from this year through 2029.
Financial performance is also showing a rebound. In the second quarter of this year, Samsung SDI posted revenue of 3.7688 trillion won and an operating profit of 203.8 billion won, returning to the black after seven quarters. The turnaround was propelled by rising sales of utility-scale ESS and high-output data center batteries, alongside 107.7 billion won in tax credits under the U.S. Advanced Manufacturing Production Credit (AMPC) and tariff rebate effects.
As mass production of U.S.-made LFP batteries scales up, the fulfillment of existing order backlogs is expected to drive plant utilization rates and revenue growth. Nevertheless, initial facility conversion costs and fierce pricing competition with Chinese rivals could weigh on profitability. Whether Samsung SDI can translate its massive order book into stable production and operating profit will ultimately depend on the operational performance of its U.S. plants going forward.
