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Fujitsu, Sumitomo to Build Chip Devices

By Sean Michael Kerner

Two Japanese technology titans Thursday pledged to combine business units in a new joint venture to produce compound semiconductor devices to serve the broadband and home networking markets.

Japan-based Fujitsu will merge its Fujitsu Quantum Devices Limited subsidiary, which is focused on the development of compound semiconductors, with the electronic devices business of Sumitomo Electric's compound semiconductor operations.

Fujitsu and Japan's Sumitomo Electric will each have an equal equity ownership in the joint venture.

Known for their high processing speed, compound semiconductors are often made of materials such as gallium-arsenide instead of silicon and are used in a wide range of consumer and business products.

The two companies said in a statement that the compound semiconductor devices market has been expanding its product applications from the telecommunication infrastructure arena, such as equipment for fixed-line networks and wireless base stations, to such perceived growth markets as mobile terminals, digital home appliances and even enterprise applications, such as wireless local area networks (WLANs).

The venture is intended to capitalize on the anticipated growth in the global demand for products that employ compound semiconductor devices, which is fuelled by the expansion of fiber-to-the-home and other high-speed subscriber networks in the U.S., Europe, Japan and China.

Fujitsu Quantum Devices will contribute its microwave devices and optical communications devices products to the venture. Sumitomo Electric will chip in epitaxial technology, which adds a thin crystal layer on to a semiconductor's substrate to boost device performance.

Japan's Asahi Shimbun newspaper reports that the new venture will likely spur industry competitors to consider moves to realign the semiconductor sector.

The joint venture is slated to begin April 1, 2004.