Samsung SDI Slashes Q1 Operating Loss Amid Surging AI Data Center and ESS Demand
Samsung SDI announced a significant reduction in its operating loss for the first quarter of this year, a positive trend driven by the burgeoning demand for energy storage systems (ESS) fueled by the artificial intelligence (AI) data center boom.
According to the company’s recent earnings call on Tuesday, its operating loss narrowed by an impressive 64.2 percent year-on-year, reaching 155.6 billion won ($105.6 million). Concurrently, total revenue saw a robust increase of 12.6 percent, climbing to 3.58 trillion won.
While battery sales revenue experienced a minor dip of 7 percent from the preceding quarter, it marked a strong 13 percent increase year-on-year. This growth reflects a significant recovery in demand across crucial sectors, including utility-scale ESS, AI data centers, and high-performance power tools.
The notable narrowing of operating losses, both quarterly and annually, was primarily supported by higher Advanced Manufacturing Production Credit benefits, stemming from expanding sales of US-made ESS products. Additionally, strategic shipments of high-margin cylindrical batteries played a crucial role. These batteries are vital components for battery backup units (BBUs) in data centers and for professional-grade power tools, which are essential equipment in the construction and operation of advanced AI data centers.
These innovative, high-performance batteries feature a pioneering tabless design. This advanced design eliminates traditional metal tabs that connect electrodes to terminals, thereby significantly enhancing energy density, power output, and overall charging performance. Samsung SDI is set to commence supplying these advanced tabless cells for BBUs in the second quarter, with plans to extend supply to hybrid electric vehicles (HEVs) in the latter half of the year.
Despite persistent global economic uncertainties, including geopolitical tensions in the Middle East, Chief Financial Officer Oh Jae-kyun confirmed that the impact on Samsung SDI has remained limited. He highlighted that the company’s performance has shown a strong rebound since bottoming out in the third quarter of last year. Projections indicate a further narrowing of losses in the second quarter, with Samsung SDI targeting a return to quarterly profit within the second half of the year.
As global demand for electric vehicles (EVs) steadily recovers, particularly in key European markets such as Germany and France, Samsung SDI is strategically preparing to initiate battery production for new mass-market EV models. This proactive move is expected to boost utilization at its Hungary plant to over 70 percent by the second half of this year.
Further solidifying its market position, Samsung SDI recently secured its inaugural prismatic battery supply agreement with Mercedes-Benz, expanding its prestigious customer base which already includes industry leaders like BMW and Audi.
In its flourishing ESS business segment, Samsung SDI forecasts the demand from US data centers to surge by more than 30 percent annually, growing from 9 gigawatt-hours (GWh) in 2025 to exceeding 40 GWh by 2030. The company also confirmed that a substantial portion of its US ESS production capacity is already pre-booked for the next two to three years, driven by expanding strategic partnerships with major data center operators, utilities, and system integrators.
To underpin this impressive growth and align with evolving regulatory frameworks, Samsung SDI is actively developing a robust non-China supply chain for critical lithium iron phosphate (LFP) battery cathode materials. This initiative adheres to the US “One Big Beautiful Bill Act” rules, which cap the share of materials from prohibited foreign entities at 40 percent this year, with a planned reduction to 15 percent by 2030.
Regarding its strategic financial maneuvers, Samsung SDI announced its intention to sell its entire 15.2 percent stake in Samsung Display, a holding valued at approximately 10 trillion won. The company aims to finalize this significant transaction within the current year.
