SAMSUNG SDI CO. LTD Earnings - Q4 2025 Analysis & Highlights
Samsung SDI reported mixed Q4 2025 results with strong ESS momentum offset by continued EV battery weakness, while management outlined a turnaround strategy focused on ESS capacity utilization, cost competitiveness, and future technology development amid challenging market conditions.
Key Financial Results
Q4 2025 revenue reached KRW 3.9 trillion, representing a 26.4% quarter-over-quarter increase and a 2.8% year-over-year increase.
Q4 operating profit recorded a loss of KRW 299 billion, with pre-tax income showing a loss of KRW 236 billion and net income a loss of KRW 208 billion.
Full-year 2025 revenue totaled KRW 13.3 trillion with an operating loss of KRW 1.7 trillion.
Total assets increased by KRW 1.7 trillion year-over-year to KRW 42.3 trillion, while liabilities decreased by KRW 345 billion to KRW 18.7 trillion.
Total equity increased by KRW 2 trillion year-over-year to KRW 23.6 trillion following a paid-in capital increase through new share issuance.
R&D expenses for 2025 reached approximately KRW 1.4 trillion, an increase from the previous year, while capital expenditures of KRW 3.3 trillion represented a significant year-over-year decrease.
Business Segment Results
Battery business Q4 revenue grew 28% quarter-over-quarter to KRW 3.6 trillion, driven by expanded US ESS sales and increased AMPC for local US production.
Battery business Q4 operating profit showed a loss of KRW 339 billion, significantly narrowing the loss compared to the previous quarter.
Full-year 2025 battery business revenue decreased 21% year-over-year to KRW 12.4 trillion, resulting in an operating loss of KRW 1.9 trillion due to environmental policy changes, EV sales decline from a strategic US customer, and delayed recovery in small battery demand.
Electronic materials business recorded Q4 revenue of KRW 237 billion and operating profit of KRW 39 billion, maintaining performance consistent with the previous quarter.
Full-year 2025 electronic materials business revenue decreased slightly year-over-year to KRW 883 billion despite improved semiconductor materials performance, with operating profit recorded at KRW 130 billion.
ESS marked an all-time high quarterly revenue in Q4 2025, driven by expanded US sales.
Samsung SDI reached a 50% global BBU market share based on battery cell sales.
Capital Allocation
Capital expenditures for 2025 totaled KRW 3.3 trillion, representing a significant year-over-year decrease.
Management expects overall capital spending to decline slightly year-over-year in 2026, focusing on essential investments including construction of 46-phi lines in Hungary, modifications to US LFP ESS lines, and application of cylindrical tab-less technology at the Malaysia site.
The company plans to review a range of funding options, including utilization of existing assets, to cover capital expenditures as it remains difficult to fully cover capital spending with operating cash flow alone.
Industry Trends and Dynamics
The global EV battery market is projected to grow approximately 16% year-over-year in 2026, though EV battery demand excluding China is expected to grow by only about 6% due to easing of green policies in North America and Europe and adjustments of electrification strategies by major global OEMs.
ESS market demand is expected to continue growing with expansion of AI data center investments, with demand for power storage UPS and BBU anticipated to exceed last quarter's projection.
Demand for cylindrical cells is rebounding, led by professional power tools amidst expansion of US data center construction, with additional demand from new markets like e2Wheeler and robotics expected to continue growing.
Demand for pouch cells is expected to increase for high-capacity batteries, centered on premium models like AI phones and foldable phones.
Semiconductor materials are expected to continue robust growth as AI server investments expand, with display materials projected to grow centered on IT and mobile OLED panels.
Rising power demand driven by AI data center growth, together with customer preferences for non-China battery supply, is creating expanding opportunities for locally based battery manufacturers in the US ESS market.
Recent ESS order patterns indicate a transition from one-time project awards to a growing share of multi-year contracts, typically spanning two to three years or more, as customers seek to lock in medium to long-term supply.
The BBU cell market is expected to sustain strong growth at a CAGR of approximately 14% from 2025 to 2030, supported by aggressive data center expansion by cloud service providers such as Amazon, Meta, and Google.
As server power per rack increases to support AI workloads, BBUs are required to deliver high-power, faster charge and discharge rates, driving stronger customer preference for high-power cells.
Competitive Landscape
Weakening EV demand and strengthened regulations against Chinese batteries in North America are expected to intensify competition within Europe as Chinese companies expand their entry into the European market.
Samsung SDI is leveraging its highly safe prismatic form factor products and SBB solutions to secure orders in the US ESS market.
The company is expanding its LFP product lineup to support increased order wins from new customers in addition to existing high-nickel products.
While local battery manufacturers including Samsung SDI are increasing ESS capacity by utilizing existing EV production lines, capacity expansion for LFP products in prismatic form factors requires advanced technical capabilities, constraining the pace of capacity additions.
Samsung SDI plans to leverage its Malaysia manufacturing base to drive more than 20% year-over-year BBU sales growth, given that end demand for BBU is concentrated in the US market where non-China sourcing requirements are strong.
Macroeconomic Environment
Heightened global geopolitical tensions and policy uncertainties continue to drive elevated demand volatility among customers.
Policy changes, including relaxed fuel economy standards and the elimination of subsidies, are leading OEMs to recalibrate their electrification strategy, with near-term recovery in EV demand unlikely.
Changes in the policy environment such as the IRA and tariffs are expected to expand supply opportunities for non-China firms through local production in the US.
Margins on products manufactured in Korea are expected to remain relatively lower due to significant exposure to US exports and associated tariff costs, while locally produced US products are expected to benefit from AMPC and reduced tariff exposure.
Tariff-exposed exports from Korea are expected to gradually phase out starting in the fourth quarter with the ramp-up of new US LFP production lines.
Due to relaxed European emissions regulation, a shift in consumer demand toward the mid to low segment, and increased penetration of Chinese EVs, demand for Samsung SDI's key products declined, leading to lower utilization at the Hungary plant last year.
The US housing market recovery remains sluggish despite recent interest rate cuts, though increased investment in AI-related infrastructure and data center construction is supporting growth in professional grade power tool sales.
Growth Opportunities and Strategies
Samsung SDI developed NCA-based SBB 1.7 and LFP-based SBB 2.0 to expand its ESS product portfolio and solidify its sales foundation based on its exclusive non-Chinese prismatic ESS solution.
The company expanded ESS capacity by repurposing the US local ex-EV line.
Samsung SDI signed a joint development agreement with BMW and an MOU with Hyundai Motor Company for robot batteries, successfully building its future technology foundation for all solid-state batteries.
Next generation G-host and high-thermal-conductivity EMC were first applied in customers' new products in the electronic materials business.
Samsung SDI completed a project award for NCA-based 46-phi cylindrical cells for an automotive OEM and signed large-scale supply agreements for LFP prismatic batteries for ESS applications.
The company won awards in the initial bid of the domestic ESS central contract market and commenced supply to global powertool customers by launching high-power tab-less cylindrical cell.
Management will mark 2026 as the inaugural year of turnaround by implementing selection and focus for management efficiency, speeding up response to customers and markets, and preparing future-ready technologies.
Samsung SDI will maximize ESS sales to achieve 100% production capacity utilization by executing seamless US mass production of the LFP-equipped SBB 2.0 to minimize the effect of US EV demand decline and maximize profitability by leveraging AMPC incentives.
The company will capture larger market share by scaling sales of high-performance BBU products powered by high-power cylindrical batteries featuring tab-less technologies.
In the EV battery sector, Samsung SDI will maintain a stable sales foundation with existing customers while seamlessly expanding reach to new customers to drive performance growth.
The company plans to secure mid to long-term growth drivers by expanding orders for products based on new materials such as LFP and mid-nickel.
Samsung SDI will initiate entry into new hybrid EV projects by leveraging high-power tab-less cylindrical batteries.
For the small battery business, the company will expand sales of high-power tab-less cylindrical batteries to meet recovering demand for professional power tools.
Samsung SDI will maximize sales by ensuring seamless mass production and supply aligned with customer schedules to secure first-in positions for key customers' new flagship smartphones.
The electronic materials business will accelerate development of materials focused on emerging markets such as packaging and patterning materials for HBM and films for foldable smartphones to strengthen mid to long-term growth foundation.
At the company-wide level, Samsung SDI plans to meet growing demand for ESS and LFP batteries while maintaining an efficient investment approach that prioritizes utilization of existing lines over new capacity expansions.
The company will drive productivity innovation by developing integrated solutions for process improvements and equipment retrofits.
Samsung SDI will focus on strengthening cost competitiveness through refined product designs, optimized workforce management at each site, and monitoring of costs and inefficiencies.
The company will continuously enhance mid to long-term technological competitiveness by differentiating products through development of ESS integrated systems, including real-time BMS control and cloud-based diagnostic solutions alongside advancements in material technologies such as binders, conductive agents, and electrolyte additives.
Samsung SDI plans to launch BBU dedicated cells incorporating tab-less technology to further enhance high-power performance within 2026, thereby expanding its product portfolio.
The company expects tab-less products to account for more than 10% of cylindrical battery revenue in 2026, contributing to overall performance improvement.
Samsung SDI is pursuing entry into high growth volume and entry-level segments and actively working to secure new customers, advancing discussions with multiple customers on mass production projects including high-nickel, mid-nickel, and LFP chemistries.
The company plans to construct new 46-phi production lines and convert certain lines to LFP with manufacturing modifications to enhance operational efficiency.
Financial Guidance and Outlook
Management expects sequential quarterly improvement in 2026 with performance weighted towards the second half, excluding seasonal softness in Q1, and expects to turn to quarterly profit in the second half of the year.
By business segment, profitability in ESS, where demand remains strong, is expected to improve significantly as US local production ramps up, driving higher AMPC benefits and reducing tariff burdens.
In small battery, following customers' tight inventory adjustments last year, management expects a gradual recovery in sales in 2026.
In electronic materials, the company expects to maintain solid growth momentum amid robust semiconductor demand.
For EV batteries, management is preparing to ensure timely supply, ramp up utilization rates without disruption, and optimize line operations across sites in order to narrow operating losses.
ESS revenue is expected to increase by close to 50% year-over-year in 2026.
For locally produced US ESS products, benefits from AMPC and reduced tariff exposure are expected to drive meaningful improvement in overall ESS business profitability.
As the initial fixed cost burden at new US lines alleviates, profitability is expected to show more visible improvement.
Samsung SDI plans to ramp up US ESS production lines as scheduled, increase utilization, and continue to enhance cost competitiveness with the objective of improving profitability over time.
The company plans to leverage its Malaysia manufacturing base to drive more than 20% year-over-year BBU sales growth.
Customer inventory levels for cylindrical batteries are now approaching normalized levels after large inventory reductions last year.
In the electronic materials business, the company expects solid growth to continue in 2026, supported by positive growth outlook in the semiconductor and OLED markets.
Wafer input in the semiconductor front-end market is projected to increase by more than 5%, driven by expanded production centered on high value-added products fueled by AI and data centers.
In the OLED panel market, panel shipments are expected to remain solid despite product price increases, supported by premium products such as foldable devices.
For semiconductor materials, Samsung SDI expects revenue growth driven by mass production ramp-ups with key customers for high-thermal-conductivity EMC and metal slurry products.
The company plans to expand its portfolio with packaging materials for next generation processes in semiconductor materials.
For OLED materials, the company expects sales to increase, supported by customer diversification for high-efficiency greenhouse materials and foldable display optical bonding films.
Management expects utilization at the Hungary plant to improve year-over-year in 2026 with several improvement drivers in place.
Samsung SDI is advancing the development of all solid-state batteries with the goal of starting mass production in 2027.
The company signed an MOU with BMW to develop test vehicles for all solid-state batteries, marking tangible progress in collaboration.
Samsung SDI is exploring collaboration opportunities with multiple robotics companies utilizing all solid-state batteries, given the rapidly growing robotics market with adoption of physical AI technologies.
The company is expanding business opportunities in new applications requiring highest levels of safety and energy density, including urban air mobility and high-altitude platform stations.
Samsung SDI plans to proceed with capacity expansion investments for all solid-state battery lines in 2026 and prepare for commercialization in accordance with its planned timeline.
Technology Development and Innovation
ESS safety and high-power cylindrical battery technologies gained external recognition.
Samsung SDI is developing integrated solutions for ESS, including real-time BMS control and cloud-based diagnostic solutions.
The company is advancing material technologies such as binders, conductive agents, and electrolyte additives to enhance product differentiation.
