28 March 2011

Sumitomo Chemical and Samsung LED to form $72m sapphire substrate JV

Sumitomo Chemical Co Ltd of Tokyo, Japan and Samsung LED Co Ltd of Suwon, South Korea have agreed to form a 50:50 joint venture in South Korea for R&D, manufacturing and sale of sapphire substrates for LEDs. Samsung LED says in a regulatory filing that it will invest 40bn won ($36m), so total investment amounts to $72m.

Sumitomo Chemical provides materials such as high-purity alumina, which is used as a raw material in sapphire substrates and liquid-crystal polymer used in materials for LED packages. Last year, its subsidiary Dongwoo Fine-Chem of Seoul, South Korea started developing sapphire substrates, and is currently upgrading its production facilities to start commercial production as soon as possible. Samsung LED is a joint venture formed in mid-2009 between Samsung Electronics Co and its affiliate Samsung Electro-Mechanics Co. The firm plans to invest in strategic expansion of its core business of LED manufacturing.

Establishment of the joint venture is in response to the demand for sapphire substrates and related materials, which is driven by growth in the market for LEDs in LCD TV backlights, interior lighting, and automobiles. The plan is to set up a production plant this year and to start mass production of substrates from early 2012.

The joint venture partners reckon that, as both firms aim to expand business in the LED sector, they can strengthen their competitiveness by generating synergies in technology development, marketing and other areas. Specifically, Samsung LED wants to benefit from vertical integration of the supply chain of such key components, and to avoid importing the material. Currently, about five firms control 90% of the global supply of sapphire ingots, and Samsung LED wants to secure its supply as global demand rises.

See related items:

Doubling of monthly sapphire wafer demand in 2010 sends 2” price over $30s

Sapphire to exceed 50% of compound semiconductor substrate processed surface area from 2011

Sapphire faces shortage in second-half 2010, to be resolved in early 2011

Tags: Sumitomo Chemical Samsung LED Sapphire substrates

Visit: www.sumitomo-chem.co.jp/english

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