Big Idea:

South Korea’s leading battery materials producer, EcoPro BM, has signed a $44 trillion won ($34 billion) contract with Samsung SDI to supply lithium nickel-cobalt-aluminum oxide (NCA) cathodes for electric vehicle (EV) batteries over a five-year period from 2024 to 2028. EcoPro BM's stock rose by 2.2% following the announcement.

Why It Matters:

With EV battery demand expected to surge by 30% by 2030,  the long-term nature of this cathode supply contract reflects both companies' confidence in the sustained growth of the EV market.

Zoom In:

Samsung SDI, although controlling the smallest market share among South Korea's top three battery providers (including LG Energy Solution Ltd. and SK On Co.), supplies EV batteries to major carmakers such as BMW, General Motors, and Hyundai Motor Co. 

Zoom Out:

EcoPro BM and Samsung SDI have a history of collaboration, with EcoPro BM supplying cathodes to Samsung SDI since 2011. In 2020, they established a joint venture, EcoPro EM Co., to supply NCA cathodes to Samsung SDI's offshore battery plants. This long-standing partnership is viewed as a foundation for EcoPro group's future growth.

Key Details:

• The first batch will be produced at EcoPro BM’s plant in Pohang, South Korea, with production expanding to a new facility in Hungary from 2025.
• The facility's expected annual output is 108,000 tons, enough for about 1.35 million EVs.
• NCA cathodes are known for their high energy density and efficiency but require careful cycling to minimize efficiency loss due to microcracking.

“EcoPro and Samsung SDI’s trust-based partnership is playing a crucial role in strengthening Korea’s battery industry,” said EcoPro BM CEO Joo Jae-hwan in a statement. “This long-term supply deal provides another opportunity to consolidate our relations.”

Big Idea:

Toyota and its affiliated suppliers plan to reduce their shareholdings in electric parts maker Denso Corp., with Toyota intending to lower its stake from 24% to 20%. This move is aimed at generating approximately USD$1.9 billion to fund the companies' shift to electric vehicles. Denso will conduct a share buyback of up to $1.3 billion worth of its own shares.

Why It Matters:

Toyota is freeing up funds to support their transition to electric vehicles, as the company aims to roll out 10 new battery-powered EVs and sell 1.5 million units annually by 2026. This move is part of Toyota's broader strategy to compete in the ever-increasing EV market.

Key Details:

• Introduction of next-generation batteries and sonic technology, aiming for a 1,000 km range, and adopting modular car body structures.
• Collaborations with companies like FAW Group, GAC, and BYD indicate Toyota's global approach to the EV market.

What's Next:

Toyota’s revised strategy and technological advancements makes them a formidable contender against EV competitors like Tesla, Volkswagen, and General Motors. This aligns with their $13.9 billion EV Battery factory investment in North Carolina.

By the Numbers:

• Expected production of 1.7 million EV batteries from Toyota’s BEV Factory by 2030.
• Target of a 37% cost reduction in next-generation hydrogen fuel cell systems.

Zoom Out:

Japanese companies, including Toyota, have been facing pressure to reduce or eliminate cross shareholdings. Toyota previously announced the sale of some of its stake in telecommunications company KDDI Corp. for $2.3 billion.

Big Idea:

Extropic, a hardware startup founded by former Alphabet quantum research team members, has secured $14.1 million in seed funding. Extropic is reportedly developing a chip optimized for running LLMs. The technology is described as a "novel full-stack paradigm of physics-based computing" that incorporates concepts from non-equilibrium thermodynamics, hinting at a unique approach to chip design.

Why It Matters:

Traditional computing models are constrained by physical and complexity limitations. Extropic's breakthrough aims to build a system where computing errors or noise, which has been a significant challenge in quantum computing, are considered an asset rather than a liability. The company has not disclosed detailed technical information but indicated a goal to reduce the electricity required for running AI models and automate certain coding tasks, potentially allowing the computer to self-program for learning representations of the world.

Key Details:

• Founded in 2022 by CEO Guillaume Verdon and CTO Trevor McCourt, both of whom had previously led a quantum computing team at Alphabet's X research unit. They were involved in developing a TensorFlow library for running AI models on quantum computing chips.
• Funding round led by Kindred Ventures, with participation from HOF Capital, Julian Capital, Marque VC, OSS Capital, Valor Equity Partners, Weekend Fund, and executives from Adobe Inc., Shopify Inc., and other AI startups.

What's Next:

Extropic is advancing the development of their physics-based computing model, which could automate coding tasks and enhance processing of LLMs, potentially leading to major improvements in AI applications.

Dive Deeper:

Contrary to its founders' background in quantum computing, Extropic's product is not a quantum computing chip. The decision is attributed to the scalability challenges of quantum physics-based computers and the company's pursuit of a different path to practical physics-based computing.

Zoom Out:

This development challenges Nvidia's dominance in AI hardware, especially with its H200 data center processor. Extropic's approach, utilizing physics-based computing, offers a compelling alternative in the competitive AI chip industry.