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SDK Further Expands Production Capacity of InP Epitaxial & Mirror Wafers for Optical Communication

February 8, 2001

Showa Denko K.K. (SDK) has decided to make additional investment in indium-phosphide (InP) epitaxial and mirror wafer production facilities to meet growing demand for these wafers used in photodiodes for optical communication. This 2 billion yen investment is in addition to the ongoing expansion work at SDK's Chichibu Plant in Saitama Prefecture.

Demand for InP wafers started to increase remarkably in the spring of 2000 with the spread of the dense wavelength division multiplexing (DWDM) system that can dramatically increase the amount of information transmitted over the Internet through optical glass fibers.

The world market for the optical communication devices, including InP wafers, is expanding at an annual rate of over 50%, centering on North America. The markets in Europe and Japan are expected to increase at the yearly rate of 40-50% as well with the introduction of DWDM. Furthermore, there is increasing demand for semi-insulating InP mirror wafers for use as substrate of very high speed electronic devices necessary for high-speed optical communication.

SDK produces InP polycrystal and monocrystal mirror wafers as well as InP epitaxial wafers. Especially in the area of InP epitaxial wafers by the metal-organic chemical vapor deposition (MOCVD) process, SDK is the leading manufacturer in the world in terms of both product quality and sales volume.

1. Outline of the additional investment

  • a)Construction of a new factory building
    A new factory building exclusively for production of InP epitaxial wafers will be constructed at the Chichibu Plant for completion in November 2001. The building, with a total floor area of around 3,000 m2, will have a 1,500 m2 clean room. When the building space is fully utilized in the future, SDK's MOCVD epitaxial wafer production capacity will be increased about 10 times the capacity at the beginning of 2000. In this case, the overall investment will amount to approx.9 billion yen.
  • b) Expansion of InP epitaxial wafer production capacity
    In the first phase, production capacity will be increased five times the level at the beginning of 2000 by the beginning of 2002. Expansion will be materialized step by step.
  • c)Expansion of InP mirror wafer production capacity
    Production capacity will be increased six times the level at the beginning of 2000 by October 2001. During that process, production capacity will have been doubled by March 2001.

(Note: As announced in August 2000, SDK already started expanding InP wafer production capacity at the Chichibu Plant. The current expansion work, representing an investment of 3 billion yen, will triple the InP epitaxial wafer and InP mirror wafer production capacities by the summer of 2001 compared with the level at the beginning of 2000.)

2. Effect of the additional investment

As a result of the additional investment, we expect our InP wafer sales to increase to 4 billion yen in 2001, 8 billion yen in 2002, and 10 billion yen in 2003, respectively, from approx. 2 billion yen in 2000.

Sales of our compound semiconductors as a whole, that were around 15 billion yen in 2000, are expected to increase to 30 billion yen in 2003 owing to the sharp rise in InP wafer sales as well as the sales growth of gallium arsenide (GaAs) optical and electronic devices.

In its medium-term consolidated business plan, SDK puts a strong emphasis on electronics, allocating a lot of resources to this high-growth sector. We will continue to aggressively expand our compound semiconductor business to further strengthen our position as a world-class manufacturer with considerable technological advantage.


1. SDK's compound semiconductor business

  • a)LED materials (Mirror wafers; Epitaxial wafers; Chips) Gallium phosphide (GaP: yellow-green light) Gallium aluminum arsenide (GaAlAs: red light and infrared)
    Aluminum indium gallium phosphide (AlInGaP: red to yellow-green light)
  • b)Indium phosphide (InP) for optical communication (Mirror wafers; Epitaxial wafers)
  • c)Gallium arsenide (GaAs) for use in semiconductors for mobile communication (Mirror wafers)

2. InP wafers for use in optical communication devices

In optical communication, photodiodes are used to convert electricity into light, and vice versa. InP is the best material for handling light in the wavelengths of 1.3 micron m and 1.55 micron m, where transmission loss through the quartz fiber is quite small.