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Chinese group to buy Honeywell sapphire arm

The Silian Group is basing billion-dollar LED manufacturing plans on an acquisition that will see it control a key part of the sapphire substrate supply.

Industrial giant China Silian Instruments Group is set to buy Honeywell s sapphire business, launching its bid to become a vertically integrated LED manufacturer.

The 45 workers at Honeywell s Victoria, Canada, site are due to transfer to the employment of Silian on July 26. The overall deal includes Honeywell's sapphire substrate, window, dome and custom sapphire fabrication business.

Silian clearly believes that this move is a big coup for its fledgling LED business. It says that the international sapphire wafer market is seriously short on supply, especially for large size and high quality substrates.

Xiaobo Xiang, Silian s chairman, pointed out that making sapphire wafers will allow the company to play a pivotal role in the global LED industry. He added confidently that the high-quality core technology his company is set to acquire will break through the supply bottleneck.

The Silian Group operates in a diverse range of industries, focusing largely on industrial automation control systems but extending to test equipment and car parts. It claims to be “one of the 55 most important groups contributing to national economic growth in China”.

Now, Silian will use the benefits of this status to supplement the Canadian business by building a larger scale sapphire manufacturing facility in Chongqing, to serve Asian markets.

Beyond that, the Chinese group will also set up a 0.66 km2 LED industrial park in the Caijia Industrial zone. It says it intends to include facilities for research, sapphire wafer, chip package and integrated product manufacturing.

Construction will begin in 2008 and production is slated to start in 2012, targeting annual output of RMB10 billion ($1.4 billion).

These plans underscore the importance Silian sees in “defeating many global competitors” to buy the sapphire business, contrasting starkly with Honeywell s reasons for selling.

“The sapphire business is simply no longer part of the long-term growth plans of the Honeywell Electronic Materials business,” a Honeywell spokesperson told compoundsemiconductor.net.

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