DEEP RESEARCH · DAEJOO ELECTRONIC MATERIALS/BATTERY ANODES
[Daejoo Electronic Materials] Anode Expansion and Secondary Batteries
An investment memo comparing silicon-anode growth, CAPEX burden, and the transition speed of key battery-material companies
0. Bottom line first
I slightly increased my secondary-battery exposure and added Daejoo Electronic Materials, which I view as the leader among silicon-anode names. I think the expansion stance for anode materials can continue, so I compared Daejoo, POSCO Future M, SKC, Lotte Energy Materials, and LG Chem under the same framework.
- Daejoo is Korea's only mass producer of silicon-based anode materials, and expects anode sales to exceed 25% of revenue in 2024.
- POSCO Future M's battery-materials revenue share had already reached about 70.6% in 2023, but commercial silicon-anode sales remain minimal.
- SKC and Lotte Energy Materials are expanding from copper foil into silicon anodes; in 2021~2023, commercial sales were absent or zero.
- LG Chem is centered on cathode materials, while silicon anodes remain a preparation-stage item targeting mass production around 2028.
1. Daejoo Electronic Materials: the most direct silicon-anode exposure
Official fact: Daejoo has conductive paste, LED phosphor, polymer materials, and secondary-battery silicon-anode businesses. Consolidated revenue was about KRW 184.0 billion in 2021, KRW 174.1 billion in 2022, and KRW 184.9 billion in 2023.
| Item | Numbers and trend | Meaning |
|---|---|---|
| 2023 conductive paste | About KRW 70.7 billion, around 44% of revenue | The traditional largest revenue source |
| 2023 LED phosphor | About KRW 27.8 billion, roughly 15% | One part of the legacy materials portfolio |
| 2023 polymer materials | About KRW 16.8 billion, roughly 9% | A supporting revenue base |
| Silicon anodes | KRW 3.8 billion in 2019 (4%) → KRW 13.0 billion in 2020 (11%) → about KRW 24.0 billion in 2021 (around 16%) | Silicon-anode revenue has been rising quickly from a small base |
Interpretation: I put Daejoo at the center because silicon-anode revenue is already real. The silicon-anode share was expected to reach 27% in 2022, but shipment timing to major downstream customers was delayed, so the actual 2022~2023 share was lower than expected.
In 2023, silicon-anode sales are estimated to have remained around 13% of revenue, and the annual report indicated that growth in this segment was pushed into 2024. Still, in 2024, quarterly anode sales are growing more than +125% year over year as EV model adoption expands, and the company expects anode revenue share to rise above 25% in 2024.
2. Daejoo cash flow and CAPEX
2023 profit slowdown
As depreciation and fixed costs rose for silicon-anode growth investment, 2023 operating profit fell 48% year over year to KRW 6.2 billion, and net income also dropped sharply.
Equipment-investment burden
Cumulative FCF outflow in 2020~2022 was KRW -59.2 billion. Operating cash flow alone could not cover large facility investment, so the company relied on external funding such as debt.
Still sound financial health
The debt ratio rose at end-2023, and debt increased by KRW 49.3 billion year over year, but the source still assessed financial health as sound.
Gunsan Saemangeum investment
CAPEX was only KRW 3.5 billion in 2017, exceeded KRW 10 billion in 2018, and rose to KRW 24.1 billion in 2021 and KRW 30.4 billion in 2022. Daejoo plans to invest KRW 204.5 billion by 2026 to build an advanced anode plant in the Gunsan Saemangeum industrial complex.
That investment expanded anode capacity from 20 tons per month in 2019 to more than 150 tons per month in 2022. In 2023, construction began on a large new plant in Gunsan, Jeonbuk, with further expansion planned after 2024. The company aims to become a trillion-won-revenue company, and its confidence appears based on high technology barriers and a limited number of competitors.
3. POSCO Future M: battery-materials share rising fast, silicon still in preparation
Official fact: POSCO Future M operates secondary-battery energy materials and basic materials such as refractories/lime chemicals. Energy-materials revenue was KRW 533.3 billion in 2020, or 34.1% of total; KRW 851.8 billion in 2021, or 42.8%; and about KRW 2 trillion in 2022, or 58.7%.
| Category | Detail |
|---|---|
| 2022 consolidated revenue | KRW 3.0413 trillion, +21.8% year over year, a record high |
| 2023 revenue estimate | About KRW 5.525 trillion |
| 2023 business mix | Battery materials about 70.6%, refractories about 11.4%, lime chemicals about 18.0% |
| End-2022 funding | Raised about KRW 1.3 trillion through a rights offering for battery-material investment |
| 2030 target | Annual revenue of KRW 43 trillion, 15 times 2022, with total battery-material investment of KRW 6 trillion+ |
Interpretation: POSCO Future M is moving quickly toward being a battery-materials company, but its anode business is still centered on natural and synthetic graphite. Silicon-anode revenue contribution is minimal, and the 2021~2023 silicon-anode revenue share is close to 0%.
The company is developing silicon and lithium-based anode materials to overcome graphite-anode limitations. Its direction includes pitch-based synthetic graphite internalization, next-generation silicon-anode R&D, and adding silicon-carbon composite (Si-C) anodes to the portfolio. In 2022 it partnered with OCI to localize coal-based pitch materials for anodes, and in 2024 it is strengthening development of low-expansion natural graphite and high-capacity Si-C composite anodes. The medium- to long-term commercialization target is after 2025.
Operating cash flow strengthened after 2021 as revenue and operating profit rose, and 2022 consolidated operating profit increased 27% year over year to about KRW 153.2 billion. However, in the second half of 2023, cathode selling-price declines, depreciation, and inventory valuation losses lowered profitability, and free cash flow in 2021~2023 was temporarily negative because of large-scale expansion.
4. SKC: from copper foil to a silicon-anode total solution
Official fact: SKC has operated battery copper foil, semiconductor materials, and legacy chemical/film businesses. 2021 consolidated revenue reached a record KRW 3.3961 trillion, and in 2022, strength in battery copper foil lifted revenue to KRW 3.0413 trillion and operating profit to KRW 153.2 billion.
- In 2023, revenue fell to about KRW 1.5708 trillion because of the end-2022 industrial film spin-off/sale and weakness in major business units.
- The secondary-battery copper-foil revenue share rose from about 19.5% in 2021 to 27.7% in 2022, and was assessed to have reached around half in 2023 after the film/chemical businesses were removed.
- The legacy chemical share was almost gone in 2023, while semiconductor materials and other new businesses were generally around 20% of revenue in 2021~2023.
Interpretation: SKC still has no silicon-anode revenue, but its entry strategy is aggressive. In 2022 it made a strategic investment in U.K. silicon-anode company Nexeon and secured a 51% stake, while establishing SKC Altimus to develop next-generation anodes.
Altimus targets composite anodes with silicon content of 15% or less, while Nexeon targets commercialization of high-silicon-content anodes. Both are still at the pilot stage, so commercial revenue in 2021~2023 was KRW 0. After 2024, SKC plans to begin mass production through the Nexeon Korea plant under construction in Gunsan, Jeonbuk, and is running product qualification tests with major battery customers.
Cash flow was sound in 2021~2022 thanks to chemical earnings and copper-foil growth, but in 2023 operating profit turned negative due to slowing copper-foil demand and one-off costs. SKC sold its industrial film business for about KRW 1.6 trillion at end-2022 to secure financial capacity, and cash and cash equivalents were above KRW 1 trillion as of 3Q 2023.
On CAPEX, large investment followed the 2019 acquisition of KCFT, now SK Nexilis, for about KRW 1 trillion. In 1Q 2023 alone, SKC made about KRW 270 billion of facility investment and planned to manage annual investment below KRW 800 billion. The direction is to reorganize the business around battery copper foil and silicon anodes as two axes.
5. Lotte Energy Materials: copper-foil cash flow plus next-generation anode option
Official fact: Lotte Energy Materials, formerly Iljin Materials, generates more than 90% of revenue from copper foil for EV batteries. Consolidated revenue grew at roughly 8% annually, from KRW 688.9 billion in 2021 to KRW 729.4 billion in 2022 and KRW 809.0 billion in 2023.
| Item | Detail |
|---|---|
| Growth | Revenue rose +5.9% in 2022 and +10.9% in 2023 |
| Silicon anode | No product revenue currently. No silicon-anode-related revenue occurred in 2021~2023 |
| Strategic investment | Invested in startup NWIRES in July 2023 to jointly develop silicon-carbon composite anodes and solid electrolytes |
| Profitability | Operating profit plunged from KRW 84.8 billion in 2022 to KRW 11.8 billion in 2023. Cumulative operating margin through 4Q 2023 was in the 1~2% range |
| Financials | Copper-foil EBITDA margin remained double digit, and the 2023 debt ratio was about 21% |
Interpretation: Lotte Energy Materials has the option to expand from copper foil into a broader battery-materials company. But R&D with NWIRES is still early, and revenue contribution requires a move from pilot production to mass production.
The company is also preparing adjacent areas such as LFP cathodes alongside next-generation anodes. In 2023, it completed LFP cathode technology development and produced pilot samples, and mentioned the possibility of investing up to KRW 1 trillion for anode and LFP commercialization. The main investment flow includes Iksan capacity additions after 2019, starting construction of a new Malaysia plant in 2022, and the plan after joining Lotte Group in 2023 to double copper-foil capacity within five years.
6. LG Chem: cathode-centered, preparing next-generation anodes
Official fact: LG Chem consists of petrochemicals/basic materials, the battery segment including consolidated LG Energy Solution, advanced materials, and life sciences. Although the battery business was spun off into LG Energy Solution at end-2020, LG Chem holds an 81% stake and includes it in consolidated results.
- 2021 consolidated revenue was about KRW 42.6547 trillion, with petrochemicals at 47%, batteries at 42%, advanced materials at 8%, and life sciences at 3%.
- 2022 revenue rose 21.8% to KRW 51.8649 trillion, exceeding KRW 50 trillion for the first time.
- For 2022, the segment mix was presented as batteries 41.7%, petrochemicals 47.3%, advanced materials 7.5%, and life sciences 7%.
- From 2021 to 2023, the battery-business share expanded from 40% to 60%, while petrochemical revenue fell in 2023 after rising from KRW 20.7 trillion in 2021 to KRW 21.7 trillion in 2022 and then KRW 17.8 trillion in 2023.
- 2023 advanced-materials revenue was estimated at about KRW 3~4 trillion.
Interpretation: LG Chem's battery-materials strategy is currently cathode-centered. Silicon anodes still have no commercial revenue, and the 2021~2023 revenue share is 0%. Still, LG Chem invested in U.S. silicon-anode startup Enevate and others in 2020, and its 2022 battery-materials investment plan included silicon-anode development.
LG Chem plans to invest KRW 6 trillion in battery materials by 2025, including expansion into silicon anodes, separators, and CNT. At present, it has only indirect revenue from anode binders or silicon additives, and no revenue from graphene or silicon-based anode active material itself. In the medium to long term, it is internally developing lithium-metal anodes for solid-state batteries and next-generation silicon anode materials, targeting mass production around 2028.
In 2021~2022, petrochemical strength and LG Energy Solution growth supported operating profit around KRW 3 trillion. In 2023, operating profit fell to around KRW 1.3 trillion because of petrochemical weakness. Annual CAPEX in 2019~2023 was roughly KRW 3~4 trillion, and 2022 CAPEX exceeded KRW 4.7 trillion. The end-2023 debt ratio in the mid-50% range is the base that allows continued large-scale investment.
7. Comparative summary
| Company | Current anode exposure | Investment point | Risk to verify |
|---|---|---|---|
| Daejoo Electronic Materials | Mass-producing silicon-based anodes, expects 2024 share above 25% | Korea's only mass producer, capacity expanded from 20 tons/month to more than 150 tons/month, KRW 204.5 billion investment through 2026 | KRW -59.2 billion FCF in 2020~2022, 48% operating-profit decline in 2023, possible customer shipment delays |
| POSCO Future M | Graphite-centered anodes; silicon sales close to 0% | Battery-materials share 70.6%, 2030 revenue target of KRW 43 trillion, KRW 6 trillion+ investment plan | Cathode-price declines, depreciation, inventory valuation losses, negative FCF |
| SKC | KRW 0 commercial silicon-anode revenue, preparing through Nexeon and Altimus | Global copper-foil expansion, KRW 1.6 trillion film sale as funding source, cash above KRW 1 trillion | 2023 operating loss, slowing copper-foil demand, need to move from pilot to mass production |
| Lotte Energy Materials | No silicon-anode revenue, option secured through NWIRES investment | Copper foil above 90% of revenue, 2023 revenue KRW 809.0 billion, low debt ratio around 21% | Operating profit plunged from KRW 84.8 billion to KRW 11.8 billion, R&D still early stage |
| LG Chem | Silicon-anode revenue 0%, mass-production target around 2028 | KRW 6 trillion battery-materials investment by 2025, large cash-generation base, mid-50% debt ratio | Petrochemical weakness, long path from cathode-centered strategy to anode commercialization |
The source basis cited in the original post is each company's business reports and earnings materials, securities analyst reports, and media coverage. I reorganized the numbers as figures based on public financial statements and company disclosures.
Sources
- Original Naver Blog post: https://m.blog.naver.com/PostView.naver?blogId=star_of_self&logNo=223763423259