Cell Makers to Raise Prices by 6-8% in Q3, 2008

Taipei, June 26, 2008 (CENS)--Japan and Korea's cell suppliers have recently decided to raise quotations of battery cells by between 6% and 8% in July, and nearly all notebook PC brands have already agreed to the price adjustment, according to industry sources.

In fact, in light of price hikes on cobalt and nickel, raw materials for making battery cells, cell makers decided to raise prices of the material by 5-8% last May, 8-10% two months later in the year and 10% in the first quarter of this year. In other words, cell prices have been adjusted upward for three times within one year.

The price spirals in battery cells are expected to boost sales performance of Taiwan's notebook PC power supply makers, including Simplo Technology Co., DynaPack International Technology Corp. and Celxpert Energy Corp., this year, according to industry sources.

On the other hand, severe shortage of battery cells has lasted for some time, prompting notebook PC brands to move to secure enough supply to embrace a seasonal boom in the third quarter. Consequently, supply for the material is still short of demand, though cell makers have already moved to expand their production capacity.

At the moment, Japan's Matsushita Electric is planning to resume its production capacity of batter cells in the second quarter of this year after suffering a fire at its plant, while Korea's LGC is scheduled to boost monthly capacity to 13.5 million units in October. Also, Sanyo is going to increase capacity by between 8 million and 10 million this year.

To counter tight supply of lithium-ion cells, some notebook PC brands have tried to use lithium-ion polymer batteries in their products. For instance, Dell has worked with Simplo and DynaPack to develop lithium-ion polymer batteries, which are scheduled to be shipped between this July and August.

Simplo has kicked off trial production of lithium-ion polymer battery this month and will mass produce the battery in July, with half of its single-month capacity of 700,000 units to go to Dell. At present, Apple has totally adopted the battery for its notebook PCs, and Dell is actively following the trend.

Market observers indicated that global shipment of notebook PCs for the third quarter of this year is estimated to grow by between 15% and 20% from a quarter earlier, which may drive up shipment of power supplies by at least 15% in the same quarter. Moreover, the upcoming price adjustment for battery cells in the quarter will probably help power supply makers to either maintain or push up their gross profits this year.