SoftBank has announced that it will begin manufacturing battery cells and energy storage systems at its facility in Sakai, Osaka, targeting gigawatt-hour-scale production by the fiscal year ending March 2028.

The Japanese company is partnering with two South Korean startups, Cosmos Lab and DeltaX, to produce zinc-halogen batteries that use water-based electrolytes instead of the flammable organic solvents found in lithium-ion cells. SoftBank expects the battery unit to generate more than ¥100 billion ($637 million) in annual revenue by fiscal 2030.

The Sakai site is the former Sharp LCD panel factory that SoftBank acquired for ¥100 billion ($676 million) in March last year. SoftBank is already converting the 440,000-square-meter complex into an AI data center with an initial capacity of around 150 megawatts, expandable to over 400 megawatts. Battery manufacturing will be co-located on the same campus alongside solar panel manufacturing and an AI hardware plant, creating what SoftBank calls its "GX Factory" for energy infrastructure and "AX Factory" for AI compute.

Zinc-halogen batteries have the potential to solve the thermal runaway risk associated with large lithium-ion installations, particularly when they’re sited inside or adjacent to server halls. SoftBank's zinc-halogen cells use pure water as their electrolyte, which the company said eliminates ignition risk, while the use of zinc and halogen compounds will reduce dependence on Chinese-controlled supply chains for lithium and cobalt.

While zinc-based batteries have shorter lifespans than Li-ion equivalents, Cosmos Lab, which developed the zinc-halogen cell technology, is working to address dendrite buildup on electrodes. DeltaX, meanwhile, will contribute containerized storage system design, with its Cell to Pack technology achieving 5.37 MWh in a standard 20-foot container.

The battery business extends a pattern of vertical integration that SoftBank has been building across AI infrastructure over the past 18 months. The company also controls Arm, the chip IP firm whose architecture underpins the majority of AI accelerators, and it spent $4 billion to acquire DigitalBridge for data center development capacity.

It’s also planning a 10-gigawatt data center complex in Ohio that would require its own $33 billion natural gas power plant, and, last month, SoftBank announced a new robotics unit designed to automate data center construction.

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Luke James is a freelance writer and journalist.  Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.