Good afternoon, everyone. Thank you for joining Samsung SDI 2025 Second Quarter earnings call. After today's presentation, we'll move on to the Q and A session with the analyst. Please press star one button on your phone if you have any questions. Now we'll begin 2025 second quarter earnings results. Good afternoon. I'm Yoontae Kim, Executive Vice President of the Business Management Office at Samsung SDI. First, thank you for joining today's earnings call. Joining me are CFO Jong-sung Kim, VP Soohan Kim for Automotive and ESS Battery, EVP Hanjae Cho for Small Battery, and VP Ik-soo Kim for Electronic Materials. We'll provide simultaneous interpretation for the earnings presentation and consecutive interpretation for the Q and A session. Now we'll begin Samsung SDI's 2025 second quarter earnings call.
First off, please note that starting with the 2024 Q3 results, the profit or loss from discontinued operations is separately stated due to the decision to discontinue the polarizer film business. Today's presentation will also be based on the same reporting standards. We'll start with our 2025 Q2 financial results. Q2 revenue was KRW 3.2 trillion, up 5.1% QOQ and down by 22% YOY. Operating income recorded a loss of KRW 398 billion. Pre-tax income recorded a loss of KRW 341 billion, and net income posted a loss of KRW 167 billion. Next is our financial status at the end of Q2. Assets increased to KRW 41.4 trillion, up by KRW 727 billion from the end of Q1 due to capital increase. Equity rose to KRW 22.7 trillion, up by KRW 1.1 trillion QOQ due to capital increase. Q2 CapEx was KRW 1.1 trillion, bringing the cumulative total for the first half to KRW 1.8 trillion.
For detailed financial status, please refer to the appendix. Now I will present the Q2 financial results of each business unit. First off, Q2 revenue for the battery business was KRW 2.96 trillion, down 1% QOQ and 24% YOY. Operating profit recorded a loss of KRW 431 billion. Inventory adjustments by major customers eased and sales of power tools and ESS BBUs grew on AI growth. However, revenue remained flattish QOQ due to sluggish demand of major EV customers. While fixed cost burden from delayed sales recovery persisted, profitability for North American ESS declined, and volume compensation from a major EV customer was delayed. However, operating deficit in the battery business slightly reduced QOQ as losses in the small battery business decreased quite significantly. For the electronic materials business, revenue and profitability improved as sales of OLED materials for major customers, new smartphones, as well as semiconductor wafer production increased.
Next, CFO Jong-sung Kim will share our first half business highlights and market outlook and core strategies for the second half.
Good afternoon. I am CFO Jong-sung Kim. First, we apologize for our earnings falling short of market expectations. We expected a meaningful recovery in Q2 earnings compared to Q1. However, due to increased uncertainty such as the IRA revision and tariffs, we were unable to reduce losses as much as originally planned. We expect gradual earnings improvement in the second half alongside sales growth, although macroeconomic uncertainties are likely to persist. To overcome these challenges and solidify our foundation for mid to long-term growth, we have continued our efforts and achieved the following results. First, we strengthened our battery order efforts to secure future growth in the battery business.
For EV batteries, we secured an order for 46-series cylindrical batteries for European global OEMs' premium EV lineup and are currently in discussions with a U.S. startup to supply 46-series batteries for commercial EVs. Discussions with another European global OEM are progressing well for prismatic LFP batteries for volume and entry-level EVs, as well as prismatic NCA batteries for commercial EVs. We expect to achieve tangible outcomes in the near future. For the ESS business, we won multiple projects by participating in domestic government-led ESS project bidding. We also signed a contract for a utility ESS project in the U.S. with local production scheduled to begin in Q4. Several products, including LFP, are also expected to be finalized in the second half. For small batteries, we'll begin supplying our newly developed tablets, ultra-high power battery, to major customers in Q3.
Alongside these efforts, we are continuing to diversify our applications and customer base. For batteries beyond existing applications, we're in discussions to expand applications not only to BBU, which accounts for a meaningful share of sales in the first half, but also to HEVs, humanoids, and UAM. For semiconductor materials, we're securing new customers in the U.S., Greater China, and Japan, and began sales to a new customer in Greater China during the first half. Next is a market outlook and our core business strategies in the second half. For the EV battery market, U.S. demand for EVs is slowing due to relaxed CO2 regulations, reduced subsidy, and tariffs. EU demand is concentrated in affordable volume and entry segments as subsidies resume. To cope with this, we're minimizing the impact of market changes by enhancing the operational efficiency of the StarPlus Energy line.
Leveraging no-thermal propagation technology of prismatic form factors and new chemistry such as LFP, we aim to expand orders in the fast-growing volume and entry segments. For the ESS market, demand for utility and UPS is steadily growing due to the rising share of renewables and increased power needs from AI data centers. In contrast, pressure on cost and profitability on ESS produced outside the U.S. due to tariffs is mounting. To address this, we'll boost sales in the second half by initiating local mass production in the U.S. and revitalizing domestic electric grid stabilization projects. Also, we'll secure more orders centering on LFP, cells for utility, and ultra-high power for UPS. Next is the small battery market. Demand is recovering for high-power products such as power tools and E2 wheeler. With the expansion of the AI and big data markets, BBU adoption for server is expected to grow.
We'll increase sales of power tools with new tablets, batteries, and E2 wheeler and BBU with high-power batteries. Additionally, for IT batteries, we plan to become the first in to supply batteries for flagship smartphones of major customers in 4Q. Last is the electronic materials. OLED panel market is expected to grow around new premium smartphones. With the expansion of AI, the semiconductor market is also expected to gain strong momentum based on rising demand for high-value-added DRAM products, including HBM. Accordingly, we'll ensure a timely supply of OLED materials to major customers' new platforms while increasing our market share in semiconductor materials by penetrating into customers' new products. With continued market challenges in the second half, significant short-term earnings improvement will be difficult. However, we'll execute the strategies outlined above to gradually recover our performance and achieve mid to long-term growth. Thank you.
[Foreign language]
Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant.
[Foreign language]
The first question will be provided by Hui Wen Chou from HSBC Securities. Please go ahead with your question.
[Foreign language] 네, 안녕하세요. HSBC 조우형입니다. 질문 기회 감사합니다. 저는 하반기 전망 관련해서 질문 하나만 드리도록 하겠습니다. 앞서 하반기 사업별 시장 전망과 주요 전략 공유해 주셨는데요. 좀 더 구체적인 하반기 실적 전망, 그리고 흑자 전환 예상 시점에 대해서도 말씀해 주시면 감사하겠습니다. 감사합니다.
Good afternoon. This is William Chou from HSBC. Thank you for giving me this opportunity to ask my question. I have one question. Samsung SDI recorded a significant loss in the first half of the year. Could you provide a more detailed outlook for the second half and indicate when a turnaround to profit is expected?
[Foreign language] 이 질문에 대해서는 제가 좀 보완 설명 드리겠습니다. 저는 경영위원 실장 김종성 부사장입니다. 앞서 말씀드렸지만 상반기에는 미국 IRA 개정 관세 부과 등 주요국 정책 변동이 굉장히 컸고, 이에 따른 수요 감소, 가동률 하락으로 고정비 부담이 증가되면서 부진한 실적을 겪었지만, 하반기에는 소형과 전자재료 사업 중심으로 판매가 호전되고 있고 4분기에는 흑자 전환이 가능할 것으로 전망하고 있습니다. 사업별로 조금 더 설명을 드리면, 중대형 배터리는 유럽 주요 OEM 양 판매 증가와 2분기에 지연되었던 전기차 배터리 물량 차지에 대한 보상 그리고 ESS 판매 호조 지속 등으로 적자 폭 축소가 예상됩니다. 다만 미국 관세의 영향 등의 변수는 수익성 둔화 요인으로 작용할 것으로 전망하고 있습니다. 소형 배터리는 BBU용 판매 호조가 지속되는 가운데 전동 공구, 전기차, 마이크로 모빌리티 등 타 어플리케이션용 매출도 상반기 대비 큰 폭으로 증가하는 등 유의미한 실적 개선을 예상하며 4분기 흑자 전환을 목표로 하고 있습니다.
[Foreign language] 전자재료는 전방 수요 호조 속에 OLED 및 반도체 공정 소재 모두 성장세를 이어가며 상반기 대비 매출과 이익이 모두 증가할 것으로 예상합니다. 다만 하반기에도 매크로 불확실성의 영향이 지속되면서 실적 변동성이 높은 상황인 바 시장을 면밀하게 센싱하고 고객과 긴밀하게 협의하여 영향을 최소화할 수 있도록 노력하겠습니다. 또한 중장기 성장을 위해 현재 추진 중인 주요 수주들을 조기에 확정하고 LFP 등 다양한 케미스트리를 적용한 각형 배터리와 템리스를 적용한 원형 배터리 등 지속적인 제품 차별화를 통해 수주를 확대해 나가도록 하겠습니다. 감사합니다.
This is CFO Jong-sung Kim, and I'll be providing you the answer to your question. In the first half of the year, significant policy changes in major countries, such as the revision of the U.S. IRA and the imposition of tariffs, led to reduced customer demand and lower utilization rates. This resulted in increased fixed cost pressure and weaker performance. However, in the second half, sales are expected to improve, particularly in the small battery and electronic materials businesses, leading to a gradual recovery in performance. We anticipate a turn to profit in Q4. Let me provide an additional update by business segment. In the mid to large-sized battery business, we expect the operating loss to narrow in the second half. This will be driven by increased shipments to major European OEMs, compensation for reduced EV battery orders that were delayed from Q2, and continued strong demand in ESS.
However, we do also expect some pressure on profitability from external factors such as the recently imposed U.S. tariffs. For small batteries, solid sales for BBU applications continue, while revenues from other applications such as power tools, EVs, and micro mobility are expected to grow significantly compared to the first half. As a result, we anticipate a meaningful improvement in performance with the goal of turning up profit in Q4. In the electronic materials business, strong end market demand is driving continued growth in both OLED and semiconductor process materials, and we expect both sales and profits to increase compared to the first half. However, macro-level uncertainties are expected to persist in the second half, contributing to continued earnings volatility. We will closely monitor market developments and work in close coordination with our customers to minimize any potential disruptions.
In addition, to support mid to long-term growth, we are working to secure several key orders currently under negotiation. We will continue to drive product differentiation through advanced technologies such as prismatic batteries utilizing multiple chemistries, including LFP, and cylindrical batteries featuring tablet technology to further expand our order pipelines.
[Foreign language] take the next question.
The following question will be presented by Sang Uk Kim from UBS Securities. Please go ahead with your question.
[Foreign language] 네, 질문 기회 주셔서 감사합니다. 두 가지 질문 드릴 텐데요. 첫 번째는 스타플러스에너지 라인 효율화와 ESS 배터리 미국 내 현지 생산 확보를 언급하셨는데, 이는 스타플러스에너지의 기존 전기차용 배터리 생산 라인을 ESS 배터리 라인으로 전환하는 것인지 말씀 부탁드립니다. 그렇다면 향후 스타플러스에너지 라인은 어떻게 운영하실지에 대해서 말씀도 부탁드리겠습니다. 두 번째 질문은 상반기 성과에서 전기차용 LFP 프로젝트 수주 협의가 잘 진행되고 있다고 하셨는데, 이제 SDI도 프리미엄 전략을 넘어 엔트리 시장에 본격적으로 진입한다고 볼 수 있을지 궁금합니다. 그리고 경쟁 업체 대비해서 상대적으로 진입 시점이 늦은 감이 있는데, 기존 업체 대비 SDI의 경쟁력은 무엇일지 설명 부탁드리겠습니다. 감사합니다.
Thank you for the opportunity to ask my questions. I actually have two questions. My first question is that you mentioned in your presentation about improving the operational efficiency of the StarPlus Energy lines and setting up a local ESS production system. Does this mean that the StarPlus Energy lines will be converted to ESS production? Please explain the future operational plan for the StarPlus Energy lines in more detail. My second question is this: you've also mentioned that discussions are underway for the first LFP project. Does this mean you're now more actively entering the volume entry market? Since the entry is relatively late, what is the catch-up strategy? Thank you.
안녕하십니까. 중대형 영업팀장 김수환입니다. 제가 답변 드리겠습니다. 첫 번째 질문하신 StarPlus Energy 운영 계획 과정에서 먼저 말씀드리면, 당초 예상 대비 고객 수요 감소로 StarPlus Energy 라인 가동 계획에 변화가 필요한 상황입니다. 현재로서는 전기차 배터리 생산만으로는 라인 운영이 어려워서 고객의 수요가 회복되기 전까지는 일부 라인을 ESS 배터리 생산에 활용할 계획입니다. 라인 셋업 작업을 통해서 10월까지는 양산 계획을 확보할 계획이고, 해당 라인에 대해서는 내년 물량까지 이미 오더를 충분히 확보한 상황입니다. 고객의 수요 둔화가 장기화되는 상황도 대비해서 ESS 라인 활용 외에도 유럽향 모델 등의 공급을 또 준비하고 있고, 라인 가동률 제고를 하기 위해서 여러 가지 다른 방법들을 고민하고 고안하여 고객들과 협의 중입니다. 이렇게 해서 ESS 셀 양산을 시작으로 해서 라인 계획 가동을 단계적으로 확대해 나가도록 할 계획입니다.
Thank you for your questions. Good afternoon. This is VP, Soohan Kim. I'll be providing you the answers to your questions. As for your question related to the operational plan for the StarPlus Energy line, due to lower than expected customer demand, it has become necessary to adjust the operation plan for the StarPlus Energy production line. At present, it is difficult to operate the lines solely with EV battery production, so until customer demand recovers, we plan to utilize part of the lines for ESS battery production. After completing the line setup, mass production is expected to begin around October. We have already secured a significant portion of orders for this line throughout next year.
To prepare for the possibility of prolonged weakness in customer demand, we are discussing various measures with customers to improve line utilization, such as supplying battery for European EV models in addition to using the lines for ESS production. Starting with mass production of ESS cells, we plan to gradually ramp up line operations.
[Foreign language] 중대형 영업팀장 김수환이 다시 두 번째 질문 답변 드리겠습니다. 두 번째 말씀하신 게 각형 LFP 신규 비즈니스 말씀하셨습니다. 맞습니다. 저희 볼륨 엔트리 시장으로 진입할 계획입니다. 전기차 시장의 성장 과정에서 볼륨 엔트리 시장이 보다 빠르게 성장하고 있고, 이러한 흐름에 맞춰서 LFP 등 다양한 케미스트리 신제품을 기반으로 볼륨 엔트리 시장에 적극적으로 대응해서 사업을 확대해 갈 계획입니다. 최근 OEM들의 요구 사항을 보시면 배터리의 에너지 밀도와 용량이 증가하고 있고, 배터리의 열 관리 등 안전성 기준이 더욱 높아지고 있는 상황입니다. 또한 배터리 볼륨 엔트리 모델의 경우는 주행 거리가 상대적으로 짧기 때문에 급속 충전 특성이 중요해지고 있습니다. 당사의 경우 그동안 고성능 프리미엄 시장에서 축적해 온 각형 폼팩터 기반의 독자적인 열전파 차단 기술이 최근 볼륨 엔트리 시장의 수주 과정에서 큰 소구점이 되고 있습니다. 이뿐만 아니라 저저한 기술 적용을 통해 급속 충전 성능을 더욱 향상시키고, 저원가 양극재 활용을 통해서 원가 경쟁력도 더욱 확보해서 저희가 볼륨 엔트리 시장을 확실하게 진입하도록 하겠습니다.
[Foreign language] 그리고 당사의 차별화 포인트인 각형 폼팩터 기반의 LFP 솔루션이라는 점에서 고객 니즈가 확대되고 있고, 다양한 케미스트리 제품으로 다수의 고객과 프로젝트 협력에 대해 상당한 진전을 이뤄내고 있습니다. 유럽과 미국 현지에서 본격적인 양산을 시작하는 2028년경에는 선두 업체들과의 동등한 수준의 경쟁력을 갖출 수 있도록 잘 준비해 나가겠습니다.
Once again, this is VP, Soo-han Kim, and I'll be answering your second question related to the LFP project with which we are going to be entering into the volume entry market. As the EV market grows, the volume and entry-level segments are expanding at a faster pace. To align with this trend, we plan to actively target these segments and expand our business by introducing new products based on multiple chemistries, including LFP. Recent OEM requirements show that as battery energy density and capacity increase, safety standards, including thermal management, are becoming significantly more stringent. Additionally, for volume and entry segments, which tend to have shorter driving ranges, fast charging performance is becoming increasingly important.
In our case, the proprietary thermal propagation prevention technology based on prismatic form factors developed through our experience in the high-performance premium market has become a major selling point in recent bidding processes for the volume and entry segment market. We also plan to enhance fast charging performance by applying low-resistance technology and strengthen cost competitiveness by utilizing low-cost cathode materials. In fact, customer needs are expanding due to the prismatic form factor-based LFP solution, and we are making significant progress in collaboration with multiple customers and projects using multiple chemistry products. By around 2028, when full-scale mass production begins in Europe and the U.S., we aim to be well-positioned to compete on equal footing with leading players in the industry.
[Foreign language] take the next question.
[Foreign language] 다음으로 질문해 주실 분은 하나증권의 김현수 님입니다.
The following question will be presented by Hyun-soo Kim from Hana Securities. Please go ahead with your question.
[Foreign language] 네, 안녕하십니까. 하나증권의 김현수입니다. 질문 기회 감사드립니다. 저는 소형 배터리 사업에 대해서 두 가지 질문 드리겠습니다. 먼저 지금 시장 상황이 그렇게 좋지는 않은데, 소형 배터리 부문이 이번 2분기에 실적이 좀 개선되었고, 아까 하반기에도 좀 더 개선될 거다라고 전망을 해주셨는데, 그러면 이거를 좀 어플리케이션별로 구분해서 설명을 부탁드리겠습니다. 두 번째는 원형 배터리고요. 앞서 46파이 원형 배터리 관련해서 자동차용으로 신규 수주 확보했다고 말씀을 주셔서 이거 좀 언급이 가능하신 범위 내에서 추가 설명을 좀 부탁드리겠습니다. 감사합니다.
Good afternoon. This is Hyun-soo Kim from Hana Securities. I have two questions related to small batteries. My first question is this: you've mentioned that small battery performance improved in Q2 and is expected to improve further in the second half. Could you please provide a bit more detail by application? My second question is this one: regarding the new automotive orders for 46-series cylindrical batteries, could you please provide additional details within the scope of what can be disclosed?
[Foreign language] plan to launch and expand sales of 18100 and 21700 TabLess products. The BBU is an application that requires high-speed charging and discharging due to the product characteristics. Therefore, we will strengthen our ultra-high-power characteristics and expand supply. For mountain E-motorcycles and E-2 wheelers, since the part with high consumer needs is also expanding mainly to high-power, high-capacity products, we expect our sales to expand. Depending on the market situation and characteristics by application, we are launching new products specialized for each market based on the product competitiveness of our cylindrical batteries and will actively respond to demand recovery to increase sales. For pouch batteries, in the fourth quarter, we will post to all flagship models of major domestic customers and also increase the share of mass models to improve sales and profitability.
[Foreign language] Through seamless response by application, we will strive to achieve a turnaround to profit in the small battery business as planned in the fourth quarter. That is all.
Good afternoon. This is EVP Hanjae Cho, and I'll be answering your question related to the performance of small battery in Q2. In the case of cylindrical batteries, the market conditions are expected to gradually improve, with demand showing signs of recovery, particularly for high-power products across key applications. For power tools, as major customers' inventory levels have generally decreased, demand has been gradually recovering since Q1, particularly for ultra-high-power battery packs. In the second half of the year, we plan to expand sales by launching 1865 and 2170 types of products. Given its product characteristics, BBU requires high-speed charging and discharging. We plan to expand supply by further enhancing our high-power performance. Sales of E-2 wheelers, including off-road E-motorcycles, are also expected to grow, driven by strong consumer demand for high-power and high-capacity products.
In line with the market conditions and characteristics of each application, we will actively respond to the recovery in demand by launching new application-specific products based on the competitiveness of our cylindrical batteries. For pouch batteries, we plan to achieve a first-in for all flagship models of major domestic customers in Q4, while also increasing our market share in mass-market models to improve both sales and profitability. Through such seamless responses tailored to each application, we will strive to ensure that the small battery business turns profitable as planned in Q4.
[Foreign language] 2028 through investment in a new line at our Hungary production base. Through this order, we expect to further strengthen our partnership with the customer and, in the mid to long term, expand our supply share with the customer again. Furthermore, it is significant in that we are expanding our electric vehicle battery business portfolio from prismatic to 46-series cylindrical batteries. As we are planning mass production of 46-series cylindrical batteries at our Hungary production base, we will prepare without any setbacks based on our localization experience and technological competitiveness to strengthen our position in Europe.
Again, this is VP, Soo-han Kim, and I'll be answering your second question regarding the new automotive orders for 46-series cylindrical batteries. We ask for your understanding as we are unable to disclose specific details due to contractual obligations. This project is being prepared with a target of mass production in 2028 through investment in a new production line at our manufacturing site in Hungary. Through this order, we expect to strengthen our partnership with the customer and gradually increase our supply share over the mid to long term. Moreover, this also marks a meaningful expansion of our EV battery product portfolio from prismatic cells to 46-series cylindrical cells. As the company is planning to locally produce 46-series cells in the Hungary plant, we will leverage our localization experience and technological competitiveness to ensure smooth execution and further strengthen our presence in the European market.
[Foreign language] take the next question.
The following question will be presented by Won-seok Jong from IM Securities. Please go ahead with your question.
[Foreign language] 네, 안녕하세요. IM증권 정원석입니다. 저도 두 가지 질문을 드리도록 하겠습니다. 최근에 미국 관세가 부과되면서 저희가 미국 외에서 ESS 생산을 하고 있는 것들이 실적에 부담이 되고 있는데, 실제로 수익성에 어느 정도 영향을 미치고 있는지 궁금하고요. 향후에 이런 부분에 대해서 어떻게 대응을 해 나가실 계획인지 말씀 부탁드리겠습니다. 그리고 두 번째 질문은 전자재료에서 평강필름 사업이 매각되면서 매출은 작아졌지만 전반적으로 전자재료 사업에서 실적이 견조하게 발생을 하고 있는데, 향후에 반도체 OLED 소재 사업 전망과 새로운 성장 동력 부분에서 어떻게 키워나가는 전략 방향을 가지고 계신지 말씀 부탁드리겠습니다.
Good afternoon. This is Won-seok Jong from IM Securities, and I have two questions. My first question is that the U.S. tariff policy is putting pressure on ESS performance. How significantly is it affecting profitability, and what measures are you planning to take in response? My second question is related to electronic materials. The electronic materials business has been delivering solid performance. What is the future outlook for the business, and what is the company's strategic direction?
[Foreign language] 첫 번째 질문하신 ESS 관세 영향 관련해서는 중대형 영업팀장 김수한이 다시 한번 말씀드리겠습니다. 현재 당사 ESS의 미국향 매출 비중은 70% 이상이며, 전량 국내에서 수출하고 있는 상황에서 8월 이후 관세율이 25% 상승할 경우, 하반기 영업 이익률에 하이싱글 % 수준의 영향이 있을 것으로 예상합니다. 관세 부담 다시 한번 좀 말씀을 드리겠습니다. 정정해서, 당사 ESS 매출 배정은 70% 이상이고요. 현재 전량 국내에서 수출하고 있는 상황인데, 8월부터는 15%의 관세율이 적용됨에 따라서, 예상됨에 따라서 하반기 영업 이익률에 미드싱글 % 수준의 영향이 있을 것으로 예상하고 있습니다. 관세 부담에 대응하기 위해 우선 연내 StarPlus Energy 라인을 활용해 현지 양산을 시작할 계획이며, 2026년에는 LFP ESS도 현지에서 양산할 계획입니다. 물론 현지 생산의 경우에도 일부 자재는 미국 외 지역으로부터 수입이 필요해 관세 영향을 받겠지만, AMPC 보조금을 받기 때문에 그 부담을 줄일 수 있을 것으로 전망합니다. 미국 ESS 시장이 가장 빠르게 성장하고 있는 만큼 매출 성장과 함께 점차 이익률 개선도 이루어질 전망입니다.
This is again VP, Soo-han Kim, and I'll be answering your question related to the impact of tariffs on ESS performance. Currently, more than 70% of our ESS sales are directed to the U.S., with all shipments exported from Korea, and as the tariff rate is expected to be set at 15% starting in August, it will have a mid-single-digit % impact on our operating margin in the second half of the year. To mitigate the impact of tariffs, we plan to begin local production within this year by utilizing the StarPlus Energy line. Additionally, we aim to start local mass production of LFP ESS by 2026. While some materials will still need to be imported from outside the U.S. and therefore remain subject to tariffs, we expect to offset part of the impact through AMPC subsidies. Given that the U.S.
ESS market is the fastest growing, we anticipate not only continued sales growth but also a gradual improvement in profit margins.
[Foreign language] 두 번째 질문하신 전자재료 사업 관련해서는 제가 말씀드리도록 하겠습니다. 전자재료 사업부 전략 마케팅 팀장 김익수입니다. 전자재료 사업의 주요 제품인 반도체 및 OLED 소재는 향후에도 꾸준한 성장세를 보일 것으로 전망하고 있습니다. 당사가 참여하고 있는 소재 기준으로 반도체 및 OLED 소재 시장은 2030년까지 연평균 각 7%, 5%의 성장이 전망되고 있습니다. 이러한 시장 성장세를 바탕으로 전자재료 사업부 매출은 지속 확대하면서 안정적인 수익성을 확보할 계획입니다. 이를 위해서 단기적으로는 기존 제품의 MS 확대와 신규 고객 추가 진입으로 고객 다변화를 추진하는 한편, 중기적으로는 신제품 개발도 적극 추진해 나가고 있습니다. 신제품 개발의 현황에 대해서 자세히 말씀드리면, 반도체 소재의 경우 향후 지속 성장이 전망되는 패키징 소재에 대해 당사가 보유한 핵심 기술을 기반으로 HBM 고방열 몰딩 소재와 카파 슬러리 소재에 중점을 두고 개발하고 있습니다. 또한, 팹 공정의 패터닝 소재는 EUV용 재료를 비롯해 반도체 신규 공법에 필요한 아이템을 개발하여 제품군 확대를 추진하고 있습니다.
[Foreign language] OLED 소재는 주요 고객사의 신규 제품에 적용할 고효율 그린호스트와 신규 어플리케이션에 필요한 RGB 소재 및 저굴절 소재 등 다양한 제품을 개발하고 있습니다. 반도체와 OLED 신규 아이템에 대해서는 적기에 출시하여 향후 전자재료 사업 확대에 기여토록 하겠습니다. 감사합니다.
I will be providing the answer to your second question related to electronic materials business and Ik-soo Kim. The key products of the electronic materials business, semiconductor and OLED materials, are expected to continue their steady growth going forward. The semiconductor and OLED material market, relevant to our portfolio, are expected to grow at average annual rates of 7% and 5% respectively through 2030. Aligned with this market growth, our business division aims to achieve sustained sales expansion while maintaining stable profitability. In the short term, we plan to diversify our customer base by increasing the market share of existing products and acquiring new clients. Over the midterm, we are also actively advancing the development of new products to support future growth. If I may elaborate on our new product development, in semiconductor materials, we are focusing on packaging materials, which are expected to demonstrate sustained growth.
Leveraging our core technologies, we are developing high thermal conductivity molding compounds for HBM applications, as well as copper slurry materials. Additionally, in that process, patterning materials, we're expanding our product portfolio by developing materials required for next-generation semiconductor processes, including EUV materials. For OLED materials, we are developing a range of new products, including G-host materials to be applied in major customers' new products, as well as RGB materials and low refractive index materials for new applications. We will ensure the timely launch of these new semiconductor and OLED materials to contribute to the future expansion of our electronic materials business.
[Foreign language] vehicle sales in the first half grew compared to last year, and while other battery companies' performance is also improving, Samsung SDI's performance recovery seems relatively slow. You asked about the reasons for this and our response measures. Soo-han Kim, Vice President, Head of Automotive and ESS Battery, will answer this question.
Lastly, we will close the call by answering one of the questions that we collected online in advance. The question is this. EV sales grew in the first half of the year compared to last year, and other battery companies are also seeing improved performance. However, SDI's recovery appears to be relatively slower. What are the reasons for this, and what measures are being taken in response? The answer will be provided by VP Jong-sung Kim.
[Foreign language] entry into the US, we have not been able to secure a variety of customers and projects, resulting in setbacks in sales growth and AMPC expansion. To overcome this situation, we are actively pursuing orders for volume and entry products based on our accumulated technological capabilities. Currently, we are advancing discussions with several customers using various battery chemistries, including LFP batteries, and expect multiple projects to be confirmed in the second half of the year. In the US, in the short term, we plan to minimize the impact on performance through efficient operation of StarPlus Energy, proceed with the JV with General Motors as planned, and expand discussions for US projects with other OEMs. Some of these measures may have a short-term effect on performance improvement, while many will show results in the mid to long term. We will faithfully implement these measures to improve performance and achieve sustainable growth.
Our company has focused on the premium market based on high nickel batteries, achieving both strong profitability and top-line growth. However, over the past 1 to 2 years, due to economic slowdowns in major countries and reductions in EV subsidies, consumer demand has shifted faster than expected toward the volume and entry segments, creating challenges. Additionally, our relatively late entry into the U.S. market limited our ability to secure a diverse range of customers and products, which impacted our sales growth and the expansion of AMPC. To address these challenges, we are actively pursuing orders for volume and entry-level products by leveraging our accumulated expertise in prismatic battery technology. Utilizing a range of battery chemistries, including LFP, we are advancing discussions with multiple customers and expect several projects to be finalized in the second half of the year.
In the U.S., we plan to minimize the impact on our performance in the short term through the efficient operation of StarPlus Energy while proceeding as planned with our joint venture with General Motors. We also intend to expand discussions on project collaborations with other OEMs in the U.S. market. While some of the initiatives that we have outlined are expected to deliver short-term performance improvements, many are geared toward generating results over the mid to long term. We remain committed to executing these measures diligently to enhance our performance and drive sustainable growth.
[Foreign language] and will take them into consideration for major management decisions. This concludes the 2025 second quarter earnings presentation. If you have any further inquiries, please contact our IR team. Thank you.
Thank you for the answer. We appreciate your valuable questions and opinions, and we'll refer to them in our management decision-making. Now, we will end the earnings conference call for Q2 2025. Should you have further inquiries, please contact the IR team. Thank you.