【SMM Analysis:】3C Peak Season Fails to Boost Volume, Structural Divergence Widens in Consumer Lithium Battery Market

The traditional Golden September & Silver October stocking season has arrived. The consumer lithium battery sector features an overall landscape of weak aggregate demand and prominent structural divergence. Shipments of flagship traditional 3C end-products including smartphones, tablets and PCs remain under pressure, with cutthroat stock-market competition and strong cost-reduction demands from end brands. Midstream material and cell manufacturers in the industrial chain have adjusted their order mix accordingly; many enterprises proactively tweak production line allocation by scaling back cobalt oxide capacity and raising production schedules for consumer ternary cells. Overall, the consumer lithium battery industry has no foundation for explosive growth and sees slow iteration. The market is largely characterized by a wait-and-see sentiment of stabilizing total volume and seeking growth via structural opportunities.

Traditional 3C: End Shipment Bottoms Out Under Pressure; Material Substitution Continues to Divert Cobalt Oxide Demand

Traditional 3C terminals constitute the core demand base of consumer lithium batteries and also represent the segment facing the most intense headwinds.

In terms of material substitution trends, mid-to-low-end tablets and PCs keep replacing lithium cobalt oxide (LCO) with ternary materials to cut costs, continuously diverting LCO demand. Application scenarios of LCO are further narrowed down to high-end smartphones and rigid-demand smart wearables. From a performance perspective, LCO delivers superior volumetric energy density, making it the preferred option for high-end ultra-thin models and fast-charging smartphones. By contrast, ternary materials benefit from cost advantages and are gaining rapid penetration in mid-to-low-end tablets and laptops with relatively loose energy density requirements. Driven by cost reduction, such substitution has become normalized with no sign of reversal in the short run.

Looking ahead, there is limited room for further sharp declines in shipments of traditional smartphones and tablets, which have bottomed out and stabilized. Nevertheless, "stabilization" does not equal a rebound, and overall volume growth remains sluggish. Material substitution within the 3C space will keep reshaping the demand map: ternary materials will continue eroding LCO’s market share in mid-to-low-end devices. High-end models retain LCO solutions for battery life and safety considerations. The industry also keeps advancing modification processes for high-voltage LCO, boosting voltage platforms and energy density via doping and coating technologies to reinforce technical barriers for high-end devices.

Segmented Tracks: Marked Divergence in Prosperity

Prosperity varies widely across segmented tracks. However, from the perspective of material consumption structure, most high-growth tracks consume little to no LCO — a key reality for market participants to recognize.

The smart home sector registers moderate growth supported by rising penetration rates. Power tools and consumer drones maintain steady growth amid headwinds from overseas macroeconomic conditions and real estate cycles; both tracks mainly adopt ternary cylindrical cells. Light-duty two-wheelers and service robots primarily use lead-acid batteries and lithium iron phosphate (LFP) batteries.

Battery chemistries for downstream tracks have become highly entrenched: smart home and power tool sectors mostly deploy ternary cylindrical cells; service robots use LFP batteries; the two-wheeler market relies mainly on lead-acid and LFP batteries. No drastic shifts in material routes are expected across these tracks in the near term.

Policy risks also warrant caution. Multiple regions in China have rolled out rectification campaigns for electric two-wheelers. Enforced national safety standards for lithium batteries under the new national standards impose stricter requirements on cell consistency and safety testing, slowing the pace of lithium batteries replacing lead-acid batteries. The e-cigarette track carries the highest policy risk amid tightening domestic and overseas regulations, which curb demand growth for supporting ternary and LCO materials. In general, consumer lithium battery-related policies focus on regulating market order, preventing battery safety hazards and governing grey-market segments. No large-scale stimulus policies have been introduced, delivering limited demand boost to the industry.

Market Outlook

On the whole, technology and policy variables can hardly drive total market volume upward in the short term. Market performance over the coming period will be jointly dictated by end-user demand, upstream raw material prices and the pace of material substitution, with structural opportunities outweighing aggregate-volume opportunities.

Key variables to monitor: whether shipments of traditional 3C terminals can achieve genuine stabilization and recovery; the pace and boundary of ternary materials substituting LCO in tablets/PCs; the industrialization progress of AI smart glasses in 2027 and their actual pull on ultra-thin pouch LCO cells; the demand stability of the smart wearable base market; and the impacts of policies covering lithium substitution in two-wheelers and e-cigarette regulation on relevant tracks.

In the short run, the consumer lithium battery sector stays in a weak-stable pattern, lacking fundamentals for sharp price rebounds. In the medium to long term, the LCO market will enter a regime of defending high-end stock market and tapping growth from wearables. Demand growth is highly dependent on the mass commercialization and penetration of new AI wearable products. Enterprises are shifting competition focus from simple cost competition to comprehensive capabilities including customized cell development for segmented scenarios, safety performance control and stable supply chain guarantee.