LONDON Japanese quartz device suppliers Seiko Epson Corp. and Toyo Communications Equipment are planning to merge their activities in the sector, with the companies setting a start date of October 2005 for the joint venture.
As a first step, Epson is buying convertible bonds worth Yen 2.7 billion (about $26.3 million) out of Yen 5.4 billion of such bonds being issued by Toyo Communications.
The companies say the joint venture would strengthen their specialist fields, and in turn create synergies that would lead to the new operation becoming one of the leading global suppliers of quartz devices.
They note demand for quartz devices by the wireless and automotive sectors is rising but at the same time, heavy fluctuations in demand have led to severe price competition and other changes in the market.
"Against the growing need to manufacture products of reduced size and increased functionality in high volume is the necessity of investing increasing amounts on R&D and production facilities. To remain competitive companies must increase the speed of the development cycle and improve production efficiency," the companies said in a statement.
The quartz devices operation specially crystal units and crystal oscilloscopes for mobile phones already accounts for 60 per cent of Toyo's net sales. Epson's quartz device business, an important part of its electronic devices segment and worth Yen 40.2 billion ($392 million) in annual sales to the end of March 2004, specializes in tuning fork crystal units and clock type crystal oscillators.
The current plan calls for the new company to be a subsidiary of Epson, and to continue the business of Toyo Communications.