SK Innovation on Wednesday announced a plan to spin off its material business unit while endorsing a 945.2 billion won ($844.6 million) investment for building a second manufacturing plant for electric vehicle batteries in Hungary.

The energy and chemical affiliate of SK Group said its board has approved the plan to spin off its information and electronic material division, with the timeline of splitting the unit into a subsidiary by April 1. 

The material division has made SK Innovation the world’s No. 2 in production of lithium-ion battery separators. The company operates 11 production facilities for LiBS in Jeungpyeong, North Chungcheong Province, and is building a new one in Changzhou, China.

The company’s reason for the spin-off was that the new material subsidiary would have authority on its own to make aggressive and timely decisions on new investments for additional production facilities for LiBS in an effort to ramp up production capacities in response to skyrocketing demand for the separators in line with the explosive growth of EV batteries.

Temporarily named “SK ie material,” the new material subsidiary will also focus on commercializing the Flexible Cover Window polyimide film, a core material that is hard-coated, easily bendable and anti-scratch for flexible display devices. The FWC was unveiled for the first time at the Consumer Electronics Show in January.

“The creation of the subsidiary is aimed at further expanding the LiBS and FWC businesses,” said an SK Innovation official. “Additional investments for LiBS and FWC plants will follow soon.”

The plan should be approved by shareholders at an annual meeting next month.

If approved, SK Innovation will have a total of six subsidiaries, including SK energy, SK global chemical, SK lubricants, SK Incheon petrochem and SK trading international.

The board also endorsed a 945.2 billion won investment for construction of a second manufacturing facility for EV batteries in Komarom, Hungary, which would be one of the biggest EV battery plants by the company.

With the new Hungary line, SK Innovation will run a total of four EV battery plants -- two in Europe, one in China and Korea each.

The new plant will break ground in March with a schedule to be completed by the first half of 2020.

By 2022, SK Innovation aims to secure production capacity of 60 gigawatts hour worldwide. 

By Song Su-hyun
(song@heraldcorp.com)