Korea — Issue 11 | The Hysteresis

Q2 Earnings Dashboard

All three Korean battery makers reported Q2 2026 results, and all three improved versus Q1. In each case, the reported number includes production credits, tariff refunds, or one-time items that cannot be fully separated from the manufacturing result in public disclosures. Underlying profitability remains ambiguous at best.

Outside the quarterly cycle: LGES started LFP production at Lansing, Samsung SDI took full ownership of New Carlisle and is now liquidating a display stake to fund it, and SK On booked a one-time customer compensation whose size remains undisclosed. SNE Research's H1 data showed all three losing non-China xEV market share while the market itself grew 26% YoY. Korea's proposed domestic production credit advanced without a direct-pay mechanism, limiting its near-term value to makers currently running losses.

Q2 Earnings Dashboard

All three Korean battery makers reported Q2 2026 results, and all three improved versus Q1. In each case, the reported number includes production credits, tariff refunds, or one-time items that cannot be fully separated from the manufacturing result in public disclosures. Underlying profitability remains ambiguous at best.

Outside the quarterly cycle: LGES started LFP production at Lansing, Samsung SDI took full ownership of New Carlisle and is now liquidating a display stake to fund it, and SK On booked a one-time customer compensation whose size remains undisclosed. SNE Research's H1 data showed all three losing non-China xEV market share while the market itself grew 26% YoY. Korea's proposed domestic production credit advanced without a direct-pay mechanism, limiting its near-term value to makers currently running losses.

LGES Q2

LGES Still Loss-Making Before Production Credits

Revenue KRW 7.56T, reported operating profit KRW 113.3B. Strip KRW 241.0B in North American production incentives and the underlying result was KRW -127.7B. That's better than Q1's roughly KRW -397.6B ex-incentive loss, but the manufacturing business remains unprofitable on its own.

LGES Lansing

Lansing SOP August 18 LFP Split Unknown

Production started August 18 at Lansing, Michigan: LFP cells for ESS and NMC for Toyota, with target capacity above 35 GWh across both chemistries. LGES has not disclosed the LFP-NMC line allocation, yield data, or customer-accepted volumes. Argus confirmed no split was provided.

Samsung SDI Q2

Samsung SDI Battery Segment Profits, Support Unclear

Battery segment operating profit KRW 159.3B, the first positive quarter in seven. Consolidated result includes KRW 107.7B AMPC plus an undisclosed tariff refund. Earnings call: "excluding the impact of tariffs, a small profit was recorded." The manufacturing-only result cannot be isolated from public disclosure. Scope and utilization context in the sidebar.

Samsung SDI Funding

Samsung Display Stake Sale Funds New Carlisle

Announced today: Samsung SDI will sell 13.09M Samsung Display shares for KRW 4.45T (~$3.2B), closing August 27. Proceeds tagged for "future growth engine investments." The likely destination is the 27 GWh New Carlisle plant, now wholly owned after Samsung SDI completed its GM buyout on August 11.

SK On Q2

SK On Posts KRW 821.8B Profit, Drivers Unquantified

Battery revenue KRW 2.95T, operating profit KRW 821.8B versus Q1's KRW -349.2B loss. SK Innovation cited higher Asian sales, one-time customer compensation, and increased AMPC. None quantified separately in public materials. Full Q2 decomposition in this week's feature.

Market Share

Korean Makers Lose Share in Growing Market

SNE Research H1 2026: non-China xEV battery usage up 26.3% YoY to 269 GWh. Korean combined share dropped from 37.2% to 27.6%. LGES 16.7% (from 20.7%), SK On 7.0% (from 9.5%), Samsung SDI 3.9% (from 7.0%). All three declined YoY in a market that grew by a quarter.

Policy Signal

Korean Production Credit Proposed, Cash Access Missing

Korea's August 3 tax reform plan proposes a 10-year domestic production credit for secondary batteries. The structural gap: no direct pay or credit transfer provision. Loss-making companies cannot monetize it as cash. Requires National Assembly approval, not enacted as of August 21.

ESS Execution

Three ESS Sites Running, No Acceptance Data Yet

LGES has started production at Lansing, Jeffersonville (Ohio), and Spring Hill. Samsung SDI runs NCA ESS at StarPlus with LFP targeted for Q4. SK On targets H2 2026 LFP at Commerce, Georgia. No facility has disclosed customer-accepted ESS run-rate or sustained commercial output volumes.

The Earnings Decomposition

SK On Q2 2026 — More Solvent, Not Demonstrably Healthier

By Ronan Adike— August 21, 2026

Feature image for article: SK On Q2 2026 — More Solvent, Not Demonstrably Healthier

SK On reported KRW 821.8 billion in Q2 operating profit at 36.4% utilization. Those numbers cannot coexist unless non-manufacturing income dominated the quarter. The company names three contributors — increased AMPC, a one-time customer compensation, higher Asian volume — and quantifies none of them. Ford's Q2 10-Q separately records a $0.5 billion dissolution-related settlement that is temporally coincident and roughly the right magnitude, though neither filing connects the two. The recurring manufacturing result, calculable through Q4 2025 and worsening, is no longer isolable. This decode works the four profit layers, maps the 94.3 GWh capacity stock against 45X and FEOC eligibility, and tests which ESS gates SK On has actually crossed.

The Earnings Decomposition

SK On Q2 2026 — More Solvent, Not Demonstrably Healthier

By Ronan Adike— August 21, 2026

SK On reported KRW 821.8 billion in Q2 operating profit at 36.4% utilization. Those numbers cannot coexist unless non-manufacturing income dominated the quarter. The company names three contributors — increased AMPC, a one-time customer compensation, higher Asian volume — and quantifies none of them. Ford's Q2 10-Q separately records a $0.5 billion dissolution-related settlement that is temporally coincident and roughly the right magnitude, though neither filing connects the two. The recurring manufacturing result, calculable through Q4 2025 and worsening, is no longer isolable. This decode works the four profit layers, maps the 94.3 GWh capacity stock against 45X and FEOC eligibility, and tests which ESS gates SK On has actually crossed.

Utilization Scope Trap

Samsung SDI's 73% Utilization Applies to Small Batteries Only

Samsung SDI's H1 2026 DART filing (August 14) discloses 73% capacity utilization — 860 million units produced against 1.178 billion unit capacity. The scope is small-battery facilities only: Cheonan and Tianjin consumer cell plants (Edaily, August 14, reporting directly from the filing). The full-year 2025 figure of 50.4% covered the same small-battery scope. The filing provides no utilization figure for medium- and large-format EV or ESS operations.

Samsung SDI's prismatic ESS cells — the product BESS integrators are qualifying — sit in the medium/large category the filing leaves unaddressed. FEOC-compliant supply estimates that incorporate 73% are applying a consumer-cell figure to a format category it does not represent. The small-battery recovery is directionally useful as a consumer electronics demand signal. It carries no information about available capacity at StarPlus or elsewhere in the medium/large footprint.

Utilization Scope Trap

Samsung SDI's 73% Utilization Applies to Small Batteries Only

Samsung SDI's H1 2026 DART filing (August 14) discloses 73% capacity utilization — 860 million units produced against 1.178 billion unit capacity. The scope is small-battery facilities only: Cheonan and Tianjin consumer cell plants (Edaily, August 14, reporting directly from the filing). The full-year 2025 figure of 50.4% covered the same small-battery scope. The filing provides no utilization figure for medium- and large-format EV or ESS operations.

Samsung SDI's prismatic ESS cells — the product BESS integrators are qualifying — sit in the medium/large category the filing leaves unaddressed. FEOC-compliant supply estimates that incorporate 73% are applying a consumer-cell figure to a format category it does not represent. The small-battery recovery is directionally useful as a consumer electronics demand signal. It carries no information about available capacity at StarPlus or elsewhere in the medium/large footprint.

TAKE NOTE

Disclosed scope: Small batteries only — Cheonan (Korea) and Tianjin (China) consumer cell plants
H1 2026 output: 860M units / 1.178B capacity = 73% (DART filing)
FY 2025 comparator: 1.269B / 2.52B = 50.4%, same small-battery scope
Medium/large utilization: Not disclosed in the H1 filing
ESS shipment proxy (Tier 3): 6.4 GWh global ESS in H1 2026 per Battery-Tech Network citing SMM — not company-disclosed, methodology unspecified
NA ESS share: Fell to 6.1% from 9.7% YoY (CnEVPost, Aug 4)
Denominator caution: The 84%→50% (2022–2025) series from Seoul Economic Daily may use a broader scope; comparison to 73% requires confirming a common denominator