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Last updated: October 24, 2006 6:25 pm

Sony faces loss of battery market share

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Sony admitted on Tuesday it could lose ground in the laptop battery market in the wake of a global recall of its lithium ion batteries, but insisted it had no intention of scaling down or quitting the business.

“There is a possibility that some of the orders from PC makers may not come back to us,” Yutaka Nakagawa, executive deputy president, conceded on Tuesday.

Mr Nakagawa said Sony did not have the manufacturing capacity to deal with both replacement batteries for those covered by the recall and batteries for new PCs. He said manufacturers including Dell and Apple Computer had turned to other suppliers to meet their replacement plans, following a global recall programme that will affect 9.6m lithium ion battery packs used in notebook PCs.

Sanyo and Matsushita, rival Japanese battery makers Sanyo and Matsushita, that both outsell Sony – the pioneer of the lithium ion battery – are best positioned to gain from its the troubles.of Sony which pioneered the lithium ion battery.

Sony’s battery recall came after several incidents in which notebooks using certain Sony-made lithium ion batteries were found to have overheated and, in some cases, caught fire.

The situation has led to recalls by notebook PC makers including Lenovo, Gateway, Toshiba and Fujitsu,, and dented Sony’s reputation for manufacturing excellence.

However, Mr Nakagawa emphasised on Tuesday that the battery business was an important one for Sony, which the group hoped to expand.

Sony, which estimates the recall will cost it Y51bn ($428m), could also face protracted negotiations with PC manufacturers that use its problematic batteries over how the cost of replacing the batteries should be shared.

The group plans to shoulder a large part of the costs but is not proposing to cover the entire amount, Sony said.

Mr Nakagawa said Toshiba and other PC manufacturers, which are participating in its voluntary battery replacement programme, had contacted Sony outlining their thinking on the sharing of costs.

“We believe the battery packs that are being used now are perfectly safe,” Mr Nakagawa said. “We are carrying out the replacement programme in order to allay concerns about the safety of our batteries. But whether or not to participate in the replacement is up to the PC manufacturer,” he added.

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