Taiyo Nippon Sanso (TNSC) has reportedly decided to withdraw from Evonik Degussa Monosilane Japan, a joint venture company for the production of monosilane that was agreed upon in 2009.

Three years ago TNSC and Evonik Degussa Japan reached agreement to set-up a joint venture (TNSC, 75%) to handle the purification, filling and management of monosilane gas produced by Evonik Monosilane Japan, with the product marketed exclusively by the Taiyo Nippon Sanso Group.

With the continuation of the global recession, however, the demand in the electronics sector has also been sluggish. In addition, the production of thin film silicon PV cells and LCD’s, which had been expected to expand, has actually shrunk due to concern about the electric power shortage and the appreciation of the yen caused by the earthquake in Japan last year.

As a result of both of these factors, production and sales for monosilane gas have also decreased below the amount that had initially been expected.

With all of this in mind, TNSC has taken its decision to withdraw from the joint venture.

But the decision does come at a cost, with TNSC having to foot an extraordinary loss of up to ¥23.3bn, which will be declared in its second quarter closing.

This is made up of a penalty of around ¥19.8bn for the early termination of the agreement of joint activities, and the losses due to liquidation of the joint venture and other related costs of around ¥3.5bn.