South Korea's Samsung LED and Japan's Sumitomo Chemical said on March 28 that they would form a joint venture to produce sapphire wafers, a key material in the manufacture of flat-screen electronic displays.
The 50-50 joint venture will be capitalized at 80 billion won (US$$72 million) and start production of sapphire ingots and wafers from early next year, Samsung LED said.
The company, an affiliate of Samsung Electronics, said the deal is expected to help it secure supplies and meet the rising demand for light-emitting diodes (LEDs).
The deal comes amid market concerns about a global shortage of wafers after the March 11 earthquake and tsunami in Japan. Research firm IHS iSuppli said the disaster led to the suspension of a quarter of the global production of silicon wafers, which are used to make semiconductors.
But a Sumitomo Chemical spokesman quoted by Dow Jones Newswires said the planned tie-up was unrelated to the quake and tsunami.
"Sapphire ingot is a very important component for making wafers used in LEDs, but its price rose sharply last year so we did see only a limited supply of the material," a Samsung LED spokesman said.
Copyright Agence France-Presse, 2011