Sanyo's loss-making semiconductor unit, which includes red and infrared laser diode manufacturing, is set to be spun out as a separate business. Consumer electronics firm Sanyo is planning to turn its semiconductor business into a separate entity.

According to a Reuters report, the Japanese company will spin off the loss-making division in July, and eventually plans to raise capital through a share issue in the new business.

Although Sanyo?s semiconductor products are primarily silicon-based devices, the company also manufactures compound semiconductor laser diodes, mainly for DVD applications. It was a pioneer of AlGaInP devices emitting at 635 nm and more recently it had been working on the development of GaN-based blue lasers.

It also makes AlGaAs lasers that emit in the 780-830 nm wavelength range. Sanyo claims that the low operating current and high operating temperature that are a characteristic of its lasers are realized through the use of a misoriented substrate and a strain-compensated active layer.

Sanyo is currently undergoing a massive restructuring program and is expected to cut thousands of jobs and shut down many plants. Dealing with the high-cost semiconductor division is seen as perhaps the most critical part of the company-wide program.