Samsung SDI rose nearly 12% in a single day. Is Chinese battery makers pulling out of the US really an opportunity for Korean batteries? I'm wondering whether all battery stocks benefit equally.
2026-10-20
The size of the opportunity differs by company
It is true that Chinese products are being pushed out of the North American ESS (energy storage system) market. US battery production tax credits restrict prohibited foreign entities such as Chinese firms from participating in the supply chain (Metro Seoul, 2026-10-11), and higher tariffs are effectively forcing Chinese ESS out of North America (Smart Today). But only companies already making LFP batteries for ESS inside the US can fill the gap. That battery stocks rose across the board on October 19 shows the market has not yet priced in this difference.
| Company | US ESS base | Q3 earnings | Assessment |
|---|---|---|---|
| LG Energy Solution | LFP ESS production in Holland, Michigan; No. 1 in US ESS orders | Operating profit KRW 756 billion, KRW 339.1 billion excluding subsidies | Top beneficiary, though more than half of profit comes from subsidies |
| Samsung SDI | Began LFP production for US ESS in late 2025, contracts worth over KRW 2 trillion | Operating profit expected to swing to a KRW 165.4 billion surplus | Confirming the swing to profit is key |
| SK On | Pursuing conversion of joint venture plants to ESS | Operating loss of KRW 275 billion expected | Needs time before the benefit shows up in the numbers |
Earnings figures are based on Metro Seoul (2026-10-11) and FnGuide consensus, and production bases on reports by New Daily and Smart Today. Estimates for Samsung SDI's operating profit range widely from KRW 165.4 billion to KRW 260 billion (Shinhan Investment Corp.), so results around October 29 will set expectations.
Demand itself is strong. Global ESS battery shipments in the first half of this year rose 71% to 461.3GWh, with North America growing 83%. LG Energy Solution's and Samsung SDI's combined share of North America rose from 13.9% to 19.7% (SNE Research, cited by Metro Seoul). AI data center power demand is driving ESS.
Which of the stocks that rose together could lose out
- Cathode materials stocks. EcoPro also rose 11.19% on October 19, but ESS mostly uses LFP batteries. ESS expansion does not translate directly into revenue for materials makers focused on high-nickel cathodes. In fact, the LFP materials supply chain is heavily dependent on China, so cost pressure could rise for cell makers that must exclude Chinese inputs
- Dependence on subsidies. Excluding KRW 416.9 billion in production subsidies, LG Energy Solution's Q3 operating profit is KRW 339.1 billion. If subsidy policy wavers depending on the November 3 midterm results, half of its profit is at stake
- Chinese entry through workarounds. Chinese companies remain ahead in LFP technology, and CATL and EVE are expanding overseas production bases (Jiemian). If products made in third countries enter while avoiding tariffs, Korean companies' pricing power will shrink
Interpretations of market share also differ. Some experts saw the surge as sentiment-driven, noting that Korean companies' North American share is only about 4% (10/19 report, YouTube insights). That means it is close to 20% in ESS alone, but still small across all batteries.
What investors should do
- Don't buy batteries as one basket. Look separately at cell makers with US ESS capacity (LG Energy Solution, Samsung SDI) and materials stocks
- Avoid chasing the day after a surge. After a rise of more than 10% in a day, two hurdles remain: Samsung SDI's earnings around October 29 and the November 3 election results. If you want to buy in stages, split your purchases between these two events
- If you hold a battery ETF, check the weight of materials stocks among its holdings. If materials make up a large share, you benefit less from the ESS tailwind than you might think
- Switching entirely from chips to batteries is risky. This rebound came from institutional buying and flow rotation without foreign buying, and if memory, where 80% of foreign selling was concentrated, turns around, rotation could head back to chips