Samsung SDI Forges Ahead with Chip Independence as Losses Narrow

Samsung SDI narrows Q1 loss to 155.6B won, beating forecasts, as ESS orders from AI data centers surge and it tests local chips to reduce foreign reliance.

The South Korean battery maker is charting a dual-pronged strategy to weather the global battery downturn: slashing its reliance on foreign semiconductor suppliers while narrowing its quarterly losses faster than the market anticipated. Samsung SDI reported an operating loss of 155.6 billion won for the first quarter of 2026, a figure that handily beat the consensus analyst estimate of 281 billion won. Revenue climbed 12.6% year-on-year to 3.5764 trillion won.

The improvement was driven by a rebound in the small battery segment, particularly demand from power tool manufacturers, and a surge in orders for energy storage systems (ESS). The latter is being fuelled by the relentless expansion of AI data centres, which require uninterrupted, round-the-clock backup power. This boom in the ESS business has helped offset persistent weakness in the electric vehicle market, while compensation payments from North American customers—tied to agreed purchase volumes—also bolstered the bottom line.

Samsung SDI’s relative resilience stands in stark contrast to its domestic peers. The combined first-quarter loss for South Korea’s three major battery makers hit roughly 700 billion won, with LG Energy Solution and SK On both suffering heavy setbacks. Kyobo Securities has maintained its buy rating on Samsung SDI shares, setting a target price of 880,000 won, citing the company’s strong positioning in high-margin products for data centres.

On the supply-chain front, Samsung SDI is pushing to reduce its dependence on foreign chipmakers by testing locally developed semiconductors for battery management systems. The company is evaluating chips from startup Anabatic Semi, which can monitor voltage and temperature across up to 20 battery cells simultaneously. A high-voltage variant rated at 150 volts is also in development. Mass production of these components is slated to begin in November through foundry partner SK keyfoundry.

The move is part of a broader industry trend toward vertical integration. Rival LG Energy Solution is also investing heavily in proprietary control technology. For Samsung SDI, the goal is to secure a more stable and resilient supply chain for its industrial energy storage business, which is becoming increasingly critical as AI data centres drive demand for reliable power infrastructure.

The company’s shares are currently trading at 101.00 euros, just shy of a recent all-time high, having surged roughly 157% since the start of the year. Looking ahead, Samsung SDI plans to scale up production in North America in the second half of 2026, with new high-performance battery lines expected to come online. The strategy remains focused on specialised industrial batteries and advanced cell chemistry, betting that the current testing phase will validate the safety and reliability of its new homegrown chips for large-scale storage systems.