The two founded the 50-50 joint venture SSLM in 2011, with hopes of combining their strengths to broaden their market shares of the material -- sapphire wafers -- in emerging countries and elsewhere. Their ambitions were shattered by the rise of low-cost manufacturers in China.
Sumitomo Chemical is the global leader in high-purity alumina, a raw material for the wafers. The Japanese company teamed up with Samsung, which was vying to turn LEDs into a core business at the time. However, the electronics giant has since decided to drastically shrink its LED business and withdrawn its investment in the joint venture.
For now, Sumitomo Chemical is looking to turn SSLM's plant in Daegu, South Korea, into a dedicated manufacturing base for lithium-ion battery separators.
Separators are a crucial component that ensures the safe performance of lithium-ion batteries. SSLM has been shipping them to Panasonic, as well as to electric car maker Tesla Motors' Gigafactory, a U.S. battery production complex jointly created with Panasonic.
Sumitomo Chemical wants to boost its competitive edge against rivals, such as Japan's Toray Industries and Asahi Kasei, by making the most of the Daegu plant's clean room and other existing facilities and lifting its production capacity quickly at a relatively low cost.
With demand for lithium-ion batteries expected to grow sharply as electric vehicles spread, the company will also consider utilizing unused space at the South Korean plant.
The exit from the sapphire wafer business comes as Sumitomo Chemical continues to work toward consolidating its operations. As a part of the efforts, the company withdrew from the diesel-particulate filter business last fall.