Posted by: Kenji Hall on August 4, 2008
What is it about Japanese companies and batteries? Today, Sony announced that it would spend $370 million to boost its output of lithium-ion batteries used in laptop computers, cameras, cellphones and other gizmos. Over the next three years, the money will go toward building new plants (Sony didn’t say how many) and expanding two facilities in Fukushima and Tochigi prefectures, northeast of Tokyo. Sony will also be jacking up production in Singapore and China.
The result: an 80% increase from its current monthly output of just under 500 million units to nearly 900 million.
This is no surprise. Batteries for laptop computers are driving the market these days, despite the rash of bad publicity two years ago when several laptops with Sony-made batteries burst into flames.
Just last week, Panasonic said it would earmark $1.1 billion for a new factory (it will initially crank out 300 million lithium-ion batteries a year when it’s completed in April 2010, and double that amount 18 months later) and another $212 million to refurbish three existing plants. Early in July, the Nikkei reported that Sanyo, the world’s No. 1 lithium-ion batter producer, would drop $500 million on new factories that are expected to be up and running next spring.
I’m betting that the three are gearing up for a bigger prize: next-generation batteries that will power gas-electric hybrid and electric-only cars.
In fact, last month, the Nikkei reported that the government is leading a consortium of Japanese tech companies and utility Tokyo Electric Power in coming up with standards for the next generation of lithium-ion batteries for cars.
For now, Sony’s investment is a drop in the bucket. Last fiscal year, Sony’s capital expenditures amounted to just over $3.1 billion (calculated at current exchange rates). Since the company will be spreading $370 million over the next three years, its battery investment will amount to just 4% of the annual figure. That’s not a whole lot given that Sony’s components business accounts for 14% of its electronics sales and 9.5% of the company’s overall sales. But you can bet you'll be seeing more announcements of this kind in the not-so-distant future.