Samsung Electronics’ battery arm, Samsung SDI, has broken ground on a $1.3 billion factory in Malaysia to take advantage of the Southeast Asian country’s solid yet inexpensive tech climate and vie for a place in the growing global market for electric vehicle batteries.
Samsung SDI said in a statement last week that the plant in Seremban, a city south of the Malaysian capital Kuala Lumpur, will open in 2025, a year after its launch of a line of batteries that will be 21 millimeters by 70 millimeters and designed for EVs.
Demand for cylindrical batteries is forecast to grow from 10.17 billion cells this year to 15.11 billion cells in 2027, the statement said. Samsung SDI expects demand from builders of electrical tools and energy storage systems as well as electric vehicles.
The EV industry will reach $957 billion worldwide by 2030 at a compound annual growth rate of 24.5% from this year, Market Research Future forecasts. Governments in much of the world are pushing EV purchases to reduce carbon emissions.
Plant operator Samsung SDI Energy Malaysia will become a “center of the global battery industry,” Yoonho Choi, president and CEO of Samsung SDI, said in the statement.
Choi added that Malaysia was key to that ambition. “With the support from the Malaysian state government and partner companies…we will be able to realize the vision much faster,” he said.
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Exports from Malaysia can reach China, the United States and Southeast Asia free of political constraints, says Darson Chiu, deputy macroeconomic forecasting director with the Taiwan Institute of Economic Research think tank in Taipei. The four-year-old Sino-U.S. trade dispute has raised import tariffs between the two powers.
“More countries [are] diversifying from North Asia, especially China, to Southeast Asia since politicians in Western countries are not letting up on hammering China,” says Seng Wun Song, Singapore-based economist in the private banking unit of Malaysian bank CIMB.
Malaysia attracts foreign tech investors partly because it lacks the Covid-19 restrictions of China and other parts of North Asia, says Calvin Cheng, senior analyst with the Institute of Strategic and International Studies Malaysia.
The Southeast Asian nation already contributes 7% of the world’s semiconductors, has ample factory infrastructure, offers “reasonably skilled” English-fluent tech workers and labor costs are lower than in other developed Asian economies, Cheng says. “There is a sense of high integration with the global economy,” he says.
Southeast Asia represents a growing market for EVs and their components as well, Song adds. “There is growing demand for these batteries, whether it is for e-bikes in Indonesia or EVs in tiny Singapore,” he says.