Korean makers of materials, parts, and equipment for energy storage systems (ESS) are establishing production bases in the United States and accelerating their push into the market. As shipments of North American ESS by Korean battery makers rise on the back of ESS market expansion and supply chain realignment, materials and parts suppliers are also moving to produce locally.
According to the industry on the 5th, parts maker Seojin System (178320) began operating a production facility built in the U.S. state of Indiana in July. The move is aimed at supplying battery enclosures (cases) for ESS to Samsung SDI America. Under the arrangement, enclosures manufactured in Vietnam are transported to the Indiana plant, where they undergo final assembly before delivery. "ESS is emerging as a solution to the volatility of renewable energy and the growing power demand from artificial intelligence data centers (AIDC)," a company official said. "The U.S. ESS market is a structurally growing market."
Secondary battery parts maker Shinsung ST (416180) plans to begin mass production at its plant in the U.S. state of Kentucky within the third quarter of this year. After establishing a corporation in January last year, the company has been building a production line for water-cooled thermal management components for ESS to supply to LG Energy Solution (373220). "LG Energy Solution currently accounts for a large share, but going forward we plan to diversify our customers to include U.S. companies and Korean companies that have entered the U.S.," a Shinsung ST official said.
Secondary battery parts maker Hanjung NCS (107640) broke ground on a production facility in the U.S. state of Indiana in April this year. It supplies water-cooled cooling systems for Samsung SDI's ESS product, the "Samsung Battery Box (SBB)." Sebang Global Battery (004490) is entering the North American market through its subsidiary Sebang Lithium Battery. The company has established a corporation in the U.S. state of Ohio and is building a production line at a cost of approximately 150 billion won, according to industry sources.
This is the result of the combination of growth in the U.S. ESS market and supply chain realignment. As the share of renewable energy generation increases, demand for ESS to ensure stable power supply is growing. Rising power demand driven by the spread of AIDC has also had an impact. In addition, the U.S. is realigning its supply chain to reduce dependence on Chinese-made batteries. It imposes high tariffs on Chinese-made lithium-ion batteries to weaken their price competitiveness, and applies differentiated tax credit benefits based on the ratio of U.S.-made procurement and supply chain eligibility.
Korean battery makers are also expanding their presence in the North American ESS market. According to market research firm SNE Research, the North American ESS market in the first half of this year totaled 75.9 gigawatt-hours (GWh), up 83% from the same period a year earlier. Over the same period, LG Energy Solution's shipments rose from 1.8 GWh to 10.3 GWh, while Samsung SDI's increased from 4 GWh to 4.7 GWh. As Korean battery makers broaden their foothold in the U.S. ESS market, materials and parts suppliers are seen accelerating the establishment of North American production bases to follow them.
