Expect prices to fall 5-10% for lithium rechargeables
Gina Roos -- Purchasing, 2/19/2004 2:00:00 AM
Battery buyers can expect a mixed bag of leadtimes and pricing trends for lithium batteries depending on type and size. Count on leadtimes of about three to nine months and a 20% price premium for latest generation lithium-ion cells. Tags for standard lithium-ion cylindrical cells and lithium polymer cells will fall about 5-10% this year. Leadtimes for standard lithium ion and lithium polymer batteries will remain at about two to three months.
While prices will decline, buyers can expect energy density of cells to increase by about 10% per year for the next several years. The market for both lithium ion and lithium polymer will grow from $3.8 billion in 2002 to about $4.2 billion in 2007, according to market researcher Darnell Group.
Buyers can expect continued downward price pressure for standard lithium cells. Driving the price declines are cell phone manufacturers who look for 5-10% price reductions per year. In addition, Chinese battery manufacturers have entered the market with lower prices for lithium cells.
Joe Carcone, vice president for Sanyo Energy Corp., says pricing for standard product has come down 10% to meet pricing from Chinese competitors. To offset lower pricing and shrinking margins, Japanese battery manufacturers are moving production of mature products to China to remain competitive.
While supply is plentiful for mainstream lithium batteries, buyers are challenged finding supply for newest generation lithium-ion batteries. Carcone says leading-edge products, including the highest capacity notebook batteries, are on allocation with leadtimes between three to six or nine months, depending on customer's volume and time to market.
Similarly, Toshiba reports an over demand situation for high energy density 3-mm and 4-mm lithium-ion cells, says Sean Collins, director of business development for display, device and components business unit of Toshiba America Electronic Components. He says the company is sold out for fourth quarter but expects supplies to loosen early in first quarter 2004.
Collins says there are no production capacity issues for lithium polymer. Toshiba is prepared to grow in that space particularly for 3.8-mm thickness advanced lithium cells with higher energy capacity.
Toshiba's production capacity is about 6 million units per month and it doesn't expect to increase capacity any time soon. Most of Toshiba's investment is moving into fuel cells, Collins says. The company is not abandoning the lithium battery market. It's technology roadmap calls for significant energy density improvements for both lithium ion and lithium polymer in 2004 and 2005.
Toshiba expects to commercialize its fuel cell technology for portable electronic applications in 2005. Toshiba's prototype of its direct methanol fuel cell (dmfc) as an alternative power source to recharge batteries offers an average output of 1 watt per hour for about 20 hours on a single 25-cc fuel cartridge, weighs 130 grams and measures 100 mm x 60 mm x 30 mm.
Buyers can expect more lithium battery capacity to come online next year. Shanthi Krishnamurthi, research analyst for Frost & Sullivan's Power Supplies and Batteries division, says Sanyo has announced plans to start production of lithium-ion batteries in May 2004 in a new factory in Tokushima, Japan. The factory should increase its Sanyo's current production capability by 1.5 times. Krishnamurthi also says that LG Chem has been steadily increasing its lithium-ion production capacity.
The extra capacity should keep pressure on prices. The average annual price decline for lithium-ion prismatic cells and lithium polymer cells is 9.7% and 11%, respectively, according to market researcher Darnell Group. Battery pack price drops are about the same, 9.5% for lithium-ion and 10.6% for lithium polymer. Collins says he's seen a continual price decline of about 10-20% depending on cell size for prismatic lithium-ion cells over the past two to three years.
Despite price drops for lithium-ion batteries, lithium polymer still comes with a price adder. Because lithium-ion polymer is one of the latest battery technologies, the cost of a lithium polymer cell is 10-15% higher than that of lithium-ion cells, says Krishnamurthi. "Demand for smaller and thinner cell phones has a direct impact on the adoption rate of lithium polymer batteries in these applications," she says. Battery revenue from lithium polymer designed in cell phones is expected to increase to 12.4% in 2009 from 4.5% in 2002, according to Frost & Sullivan.
Carcone says that lithium polymer batteries aren't being introduced in a variety of new sizes and there isn't a lot of pressure for energy density improvements. The cells are being designed in for their physical attributes including their low profile and lower energy density in comparison to lithium-ion. Lithium polymer cells are thinner than lithium-ion. If there is an application that requires maximum thinness then polymer is preferred, Carcone says.
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