Japan's Toray Industries (3402.T) said it will be the sole supplier of carbon fiber for Boeing Co's (BA.N) 777X passenger jet in a deal spread over ten years and worth a 1 trillion yen ($8.6 billion).
The Japanese company, which already makes the carbon fiber used in Boeing's 787 Dreamliner, will announce the agreement at a news conference in Tokyo on Monday, a Toray spokesman said. Toray will build a factory in the United States for 100 billion yen as part of the deal, the Nikkei business daily had reported earlier.
Toray's shares were up 3.8 percent in early trade at 839 yen, outperforming the Nikkei stock index which was down more than 2.5 percent. At one point, the stock rose as high as 855 yen, their highest level in nearly 7 years.
The supply contract will help cement the key role Japanese companies already play in Boeing's commercial aircraft business.Boeing estimates that around 22,000 engineers in Japan, or 40 percent of the nation's aerospace workforce, already work on its jets.
For Boeing, building in Japan also helped it secure sales in what was once Asia's biggest aviation market and where it still dominates with an 80 percent share.
Boeing has already said that Japanese companies, including Mitsubishi Heavy Industries (7011.T) and Kawasaki Heavy Industries (7012.T), will build one-fifth of the 777X.
After difficulties managing its extended 787 global supply chain, which caused delays in the program, Boeing decided to take a more conventional approach to building the 777X. The plane will have a metal fuselage, unlike the all-carbon-fiber Dreamliner.
