Wacker buys majority stake in NSC Electron to become No.2 wafer supplier

Wacker buys majority stake in NSC Electron to become No.2 wafer supplier
TOKYO -- Germany's Wacker-Chemie GmbH today announced that its Wacker Siltronic subsidiary has acquired a 55% equity share in Nippon Steel Corp.'s silicon wafer production company, NSC Electron Corp.

Wacker said the Japanese producer of starting wafer substrates for semiconductors will strengthen its presence in Japan and Asia. Wacker also said the acquisition will give it nearly 20% market share in silicon substrates for the chip industry, and it will solidify its position as the second largest wafer supplier in the world.

For several years, Wacker Siltronic, based in Burghausen (east of Munich), has been locked in a race for second place in wafer shipments with Sumitomo Electric Industries Ltd. of Japan and U.S.-based MEMC Electronic Materials Inc. Wacker Siltronic had nearly 15% of the industry's revenues for silicon wafers in 1998, based on the latest market data currently available. The world's largest wafer merchant, Shin-Etsu Handotai Co. Ltd. in Japan, had just over 27% of the world's $5.6 billion revenues for silicon substrates in 1998.

NSC Electron is ranked No. 8 in silicon wafer revenues at nearly 3%, according to industry estimates.

Wacker Siltronics said its combined wafer sales with NSC Electron will exceed DM 3 billion ($1.4 billion) during the first year of joint operations. NSC Electron is being renamed Wacker NSCE Corp.

Nippon Steel set up NSC Electron in 1985. The subsidiary operates three wafer production facilities. Two of the plants are in Hikari, Yamaguchi Prefecture, Japan, producing 5-, 6- and 8-inch wafers. About 660 workers are employed in those plants. The third facilities is in Kulim, Malaysia, and employs 360 workers to produce 8-inch silicon wafers.

Terms of the acquisition were not released.

Separately today, Wacker said sales by its semiconductor division exceeded DM 1.64 billion ($722.5 million) for the fiscal year, ended Sept. 30. Wacker estimated that shipments in silicon wafers--based on surface area--have grown 29% since the start of 2000, compared to last year. Wafer pricing has recovered slightly from the 1998/99 recession, which pushed prices down by 50% in some segments, according to the Germany materials supplier.

Wacker said the market has accepted "moderate" price increases of 5-to-10%.

"Our potential for long-term investment depends on pushing through the upward price adjustments that are still urgently needed," said the company.