Samsung SDI has signed a 1.6 trillion won ($1.2 billion) supply agreement with L&F for lithium iron phosphate (LFP) cathode materials, a strategic move to strengthen its presence in the North American energy storage system (ESS) market and diversify its supply chain away from China.
The company announced Tuesday that the mid- to long-term deal with L&F, a leading Korean battery materials manufacturer, will span three years starting in 2027. The materials will be used to produce LFP batteries specifically for ESS applications, with the contract including an option to extend the supply for an additional three years.
Samsung SDI plans to use the L&F-supplied materials to manufacture ESS batteries at StarPlus Energy (SPE), its joint venture with Stellantis located in the U.S. state of Indiana. Since the fourth quarter of last year, SPE has been gradually converting a portion of its production lines from electric vehicle batteries to ESS batteries. The facility is expected to begin mass-producing LFP batteries alongside its existing high-nickel nickel-cobalt-aluminum batteries starting in the fourth quarter of this year.
As Korea’s sole manufacturer of prismatic batteries, Samsung SDI expects the partnership to help establish a stable domestic materials supply chain while sharpening its competitive edge in North America. L&F became the first company outside of China to announce a major investment in LFP cathode materials in August last year and is currently building a production capacity of 60,000 tons per year.
While the global battery industry has traditionally relied heavily on Chinese suppliers for LFP materials, tightening U.S. regulations — including rules related to Prohibited Foreign Entities — have made supply chain diversification a top priority for Korean firms. Samsung SDI’s move to secure a domestic supply is seen by industry analysts as a strategic maneuver to bypass these escalating geopolitical risks.
The agreement comes as the company continues to expand its footprint in the North American ESS sector. Late last year, Samsung SDI signed a deal worth some 2 trillion won to supply LFP batteries to a major U.S. energy developer. On March 16, it announced another supply deal worth 1.5 trillion won with a U.S. energy firm.
"In response to growing demand for supply chains that are less dependent on China, we proactively signed a supply agreement with a domestic materials partner," a Samsung SDI official said.
"Through this partnership, we expect to further strengthen our competitiveness in the North American market and create additional business opportunities."
Source: Korea Times News
