Sony Corp. said five computer makers are recalling 100,000 lithium-ion battery packs made by the company, the latest bad news to hit the Japanese electronics giant, which is already reeling from the global economic downturn.

The recall also shows the challenges involved in mass-producing a powerful yet safe battery technology that could drive next-generation consumer electronics and eco-friendly cars.

Sony said Friday it was cooperating in a recall of 2.15Ah lithium-ion cell batteries made in Japan and sold around the world in laptops made by Hewlett-Packard Co., Dell Inc., Toshiba Corp., Lenovo Group Ltd. and Acer Inc. There have been 40 reports of overheating, in some cases involving smoke or flames, according to a company statement.

Sony, the second-largest maker of lithium-ion batteries in the world after Sanyo Electric Co., was involved in a recall two years ago of more than nine million units of a higher-capacity battery. That recall affected almost all of the world's major PC manufacturers and cost Sony more than $400 million.

Still, Tokyo-based Sony has since boosted its production of the rechargeable batteries, spending more than 40 billion yen ($406 million) to increase production in Japan. It said in August that the investment, together with expanded lithium-ion battery operations in Singapore and China, should increase its monthly output capacity to 74 million cells in the year ending March 2011 from the current 21 million cells.

Sony said the faulty batteries were from the same subsidiary that made the batteries recalled two years ago, Sony Energy Devices in Tochigi, Japan. Sony said efforts to make manufacturing lines there more efficient appeared to have backfired, leading to substandard cells. A possible flaw in the metal foil for electrodes could also have led to overheating, the company said.

Lithium-ion batteries have become a booming business on the back of growing demand for consumer electronics, pitting makers Sony, Sanyo, Panasonic Co., and South Korea's Samsung SDI Co. against each other in a race to increase production. The batteries are lighter and more powerful than many other battery technologies, and they can be made in a variety of shapes and sizes. But lithium-ion technology runs the risk of overheating if damaged.

Solving the overheating problem has become key for battery makers. A stumble by Sony could open up the field for smaller manufacturers, part of the reason why the company overhauled its production technology in 2006. Sony says the batteries in the recent recall were manufactured before then, in 2004 and 2005.

An H-P spokesman said the faulty batteries were found in 32,000 laptops in the U.S., and in 74,000 H-P machines world-wide. H-P has a Web site for owners to figure out if their machines are affected.

Dell has a similar site and said it will replace recalled batteries free of charge. A Lenovo spokesman said the company found the affected battery model in fewer than 450 laptops in China but was offering free replacements as a precaution. Toshiba and Acer could not be reached for comment.

The recall comes days after Sony reported dismal earnings for the September quarter and slashed its profit forecast for the year ending March 2009.

Write to Hiroko Tabuchi at hiroko.tabuchi@wsj.com