Demand for compound semiconductors -- integrated circuit (IC) chips made of such materials as gallium arsenide instead of silicon -- is expected to boom due to their use in mobile phones and DVD players, the Asahi Shimbun said.

The 50-50 joint firm capitalized at 20 billion yen (187 million dollars) will start operations in April and projects annual sales at a world-leading pace of 100 billion yen by March 2007, the paper said.

The new company will absorb a Fujitsu subsidiary and a Sumitomo Electric department with a combined 30 billion yen in annual sales at present, it said.

The global market for compound chips is expected to leap from 300 billion yen now to 500 billion in the year to March 2007, it said.

Compound semiconductors are more fragile than silicon chips, thereby slowing production, but are better at handling high-speed information flows, the paper said.

SPACE.WIRE