Apple Supplier TDK Bets New Battery Will Change Smartphone Game

(Bloomberg) -- TDK Corp. is fielding surging inquiries in Asia into a new lineup of smartphone batteries it hopes will become a game-changer in the quest to pack more power into ever-slimmer devices.

The Apple Inc. supplier is the first to apply to smartphones a technological breakthrough that its rivals have been exploring mainly as a means to stretch mileage for electric vehicles, according to TDK Chief Executive Officer Noboru Saito. In the first half of 2023, the company began shipping small-size lithium-ion batteries using silicon electrodes, manufactured by Hong Kong-based subsidiary Amperex Technology Ltd. (ATL).

TDK, the world’s largest maker of smartphone batteries, is one of several big-name players in a race to enhance energy storage — the industry’s holy grail. Its rivals are taking a different approach for consumer products. Samsung SDI Co. and LG Energy Solution are stacking materials for more compact batteries with higher energy density. Other options run the gamut from graphene-based cells and solid-state batteries to hydrogen fuel cells or sodium-ion batteries.

To keep its lead in the cutthroat smartphone field, where TDK controls more than a third of the battery market, the company will have to keep chasing knowhow, Saito said. 

“We need to assume that other companies will come into this space, and we need to develop the next, followed by the next, technology to differentiate ourselves and keep our lead from shrinking,” the 57-year-old said in an interview. “There’s room for the technology to evolve further.”

TDK now is the sole mass-producer of silicon-carbon batteries for smartphone use. Interest is especially strong from handset makers seeking to gain an edge in a saturated market through ultra-thin devices and different designs, which the high-capacity batteries allow.

One example is Shenzhen-based Honor Device Co.’s latest foldable smartphone, measuring less than 10mm thick, the Magic V2, according to analysts. TDK declined to comment, saying that it does not disclose the names of any of its customers. Honor, whose website said its phone has a silicon-carbon dual battery, vies with Huawei Technologies Co., Oppo Co. and Xiaomi Corp. in China and Asia more broadly. It declined to comment on its suppliers. 

TDK says its new battery has 10% more capacity than conventional graphite anode batteries, although industry studies show the technology has the potential to lift capacity by 40% or more. The product should be able to extend battery life in more devices, including mobile game gadgets, wearables and AI-related edge tools, while slimming down their size, Toyo Securities analyst Hideki Yasuda said.

For TDK, high-end batteries offer one path to achieve sustainable growth in an item seen as commoditized. The battery segment earns more than half of TDK’s annual revenue, with smartphone makers comprising the bulk of its biggest customers. But growth in smartphone batteries has been flat, TDK has said in recent earnings calls, triggering concerns of slowing growth due to clients’ paper-thin margins.

Saito said he expects the new products to make up a double-digit percentage of the company’s overall smartphone battery sales in terms of volume in the next few years, up from less than 5% now.

TDK acquired ATL, founded by Robin Zeng, in 2005 and expanded its production into the smartphone market, where it won big clients Apple and Samsung Electronics Co. ATL’s nascent EV battery business was spun out in 2011 into Hong Kong-based Contemporary Amperex Technology Co., with which ATL now has two joint ventures to make rechargeable batteries and battery cells for household energy storage, motorcycles and industrial machines. 

“Some may say that our battery sales are headed for a gradual decline, but I disagree. I guarantee that batteries will be a sustainable and big pillar of the group’s portfolio, even over the long term,” Saito said. “As we head into the age of AI where the world gets ever more connected, the demands placed on batteries will only grow, and it’s our mission to meet those needs through new and evolving technology.”

--With assistance from Gao Yuan.

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