TOKYO -- Mitsubishi Chemical and Ube Industries will merge Chinese electrolyte operations next April, with an eye toward broader integration in the future, amid increasingly heated competition in the material used for lithium-ion batteries.

A 50-50 joint venture will be established for this purpose. Patents will be shared to develop new products, and production bases consolidated. The duo will also consider similar mergers in the U.S. and Europe later.

The companies each control 10% of the global market and ring up sales of 7 billion yen to 10 billion yen ($67.5 million to $96.4 million). Mitsubishi Chemical, a unit of Mitsubishi Chemical Holdings, specializes in electrolyte for automotive batteries, while Ube focuses on electrolyte for smartphone batteries. Ube has well-regarded technology that improves battery performance through additives mixed into the electrolyte. Yet Chinese companies remain atop the global market. Hit by intense price competition, Mitsubishi Chemical and Ube have logged losses in China.

The electrolyte market amounted to less than 100 billion yen in 2015. While the rise of electric vehicles will boost demand, automakers are asking battery and material manufacturers to cut prices around 30%. More companies may decide to restructure businesses in such Chinese-dominated areas as electrolytes and anode materials.

(Nikkei)