Shin Etsu Chemical : establishes a manufacturing and sales JV in China that will construct a new optical fiber preform plant

New company's plant will help capture the increasing demand in China and globally for key material used in optical communications

Shin-Etsu Chemical Co., Ltd. (Head Office: Tokyo, President: Shunzo Mori) has agreed to establish a joint-venture company with Yangtze Optical Fibre and Cable Joint Stock Limited Company (YOFC), China's largest optical fiber maker. The contract was signed on June 23, 2015, and the new company will construct a plant for optical fiber preform, a key material for optical communications.

The new joint-venture company will engage in the manufacture and sales of optical fiber preform. Shin-Etsu Chemical will hold a 51% share and YOFC a 49% share in this new company. The capital of the JV will be ¥8 billion, and the total investment amount is expected to be about ¥12.5 billion.

The plant will be located in an industrial park in Qianjiang City, in the south-central part of Hubei Province, and the plant is scheduled to begin operations at the end of 2016. With the operation of the new plant, Shin-Etsu Chemical's production capacity of optical fiber preform will increase by about 40% over its present level.

Shin-Etsu Chemical began manufacturing and sales of optical fiber preform from 1983. Presently, from its main optical fiber preform plant at Shin-Etsu Chemical's Kashima Plant in Ibaragi Prefecture, Japan, Shin-Etsu is supplying customers in both Japan and outside of Japan. In 2010, in order to meet the expanding demand for optical fiber preform in China, Shin-Etsu Chemical established a joint-venture company for the manufacture and sales of optical fiber preform in Jiangsu Province together with China's Jiangsu Fasten Hongsheng Group Co., Ltd. and The Netherlands' TKH Group N.V. In 2012, the new company's plant began manufacturing operations, and since then this company has been steadily expanding its production volume.

In China, with the increase in the volume of communication data along with the development of the country's infrastructure, demand for optical fiber is greatly expanding. The complementary interests of Shin-Etsu Chemical in strengthening its sales of optical fiber preform in China and YOFC in expanding the manufacturing and sales of optical fiber and optical fiber cable led to the establishment of this new joint-venture company.

Optical fiber manufactured in China is supplied not only to China but also to the world, and it holds about 50% of the world market, and further growth in the market size is expected. Shin-Etsu Chemical will continue to promote the development of its optical fiber preform business to meet the expected future expansion of this market.

On the occasion of the establishment of this joint venture, Shin-Etsu Chemical President Shunzo Mori made the following statement: "It is a great honor and I am very pleased that we will have a joint-venture company with YOFC, China's largest optical fiber maker. Shin-Etsu Chemical, which is strong in the optical fiber preform business, and YOFC, which is a leading company in the optical fiber and optical fiber cable business, have joined together in this venture to further develop our businesses in these fields."

In addition, YOFC's President and General Manager Zhuang Dan made the following statement: "Looking towards the prospects for the future, the competition in both domestic and global optical fiber and optical cable markets is expected to become more severe; however, market demand for YOFC's products is expected to grow, and we are still optimistic about the prospects for the continued steady growth of the industry. YOFC will aggressively promote our growth strategies of "perfecting the industry value chain, diversifying production line processes, having multiple production bases in regional areas and pursuing globalization" Going forward, we will continue to strive to achieve continued innovation in technologies, create new markets, lower production costs and strengthen company management. In order to continue the sustained and steady growth of our company, we will aim to improve the company's competitive power and further strengthen the level of management ability that is at the company's core, and we intend to do our best to attain even stronger operating results."

Outline of the joint-venture company:
1. Company name: Shin-Etsu YOFC Optical Preform Co., Ltd.
2. Address: Qianjiang City, Hubei Province, China (about 150 km west of Wuhan City)
3. Main business: Manufacturing and sales of optical fiber preform
4. Date of establishment: August 2015 (scheduled)
5. Capital: ¥8 billion
6. Capital ratio:
　 Shin-Etsu Chemical Co., Ltd.: 51%,
　 Yangtze Optical Fibre and Cable Joint Stock Limited Company: 49％
7. Production capacity: The equivalent of 15,000,000 km/year of optical fiber

・About YOFC
YOFC is based in Wuhan City, the provincial capital of Hubei Province, and is carrying out the integrated manufacturing of such products as optical preform, optical fiber and optical cable. The company is a high-tech company that is the leading company in China's optical communication industry, and in December 2014, the company was listed on the Hong Kong Stock Exchange.
Information concerning YOFC can be found at: http://www.yofc.com