HONG KONG (Dow Jones)–Japan’s Covalent Materials Corp., which is part-owned by U.S. private equity firm Carlyle Group, is selling its silicon wafer business to a Taiwanese peer for Y35 billion.

Taiwan’s Sino-American Silicon Products Inc., or S.A.S., agreed to buy the business from Covalent, formerly known as Toshiba Ceramics Co.

In 2006, electronics giant Toshiba Corp. sold Covalent Materials to Carlyle Group and Japanese private equity firm Unison Capital for about Y91 billion. That deal marked a rare example of a management buyout backed by private equity. Management own a small percentage of the Tokyo-headquartered firm
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A Carlyle spokeswoman declined to say whether it made a profit on the sale. Unison Capital officials weren’t immediately available to comment.

Covalent’s silicon wafer products are widely used in the semiconductor industry. The company’s other main business, which involves ceramics products, isn’t included in this deal.

S.A.S. said that Covalent’s wafer business employed about 1,400 staff. It generated revenue of Y41 billion and operating income of Y500 million in the fiscal year ended 31 March. Citigroup acted as financial advisor to S.A.S. on the deal and underwriter for the acquisition financing.

S.A.S.’s acquisition would help it crack the tough Japanese market, “”which has the highest quality and precision standards and will create a truly global sales and operations infrastructure,”” said S.A.S. president Doris Hsu.

The company also noted that although Taiwanese companies are strong in semiconductor design and manufacturing, few have the production scale and technological strength to compete internationally.

S.A.S. said the deal was debt free and it expects the acquisition to add to the company’s earnings in 2012.