Taiwanese display maker Prime View International will buy E Ink, a company whose pioneering electronic paper is used to make digital book readers from Amazon.com and Sony.

Prime View said on Monday it would pay about $215 million for E Ink, whose flexible digital displays are used in Amazon's Kindle and the Sony Reader. Privately held E Ink emerged from a Massachusetts Institute of Technology laboratory about a decade ago.

The market for digital book readers is among the fastest-growing segments of the troubled consumer electronics industry. Research firm Suppli estimates the fledgling market will grow from 1.1 million units last year to 20 million in 2012.

E Ink Vice President Sriram Peruvemba said the deal would provide the financing and manpower needed to fuel development of color displays, slated for mass production at the end of 2010.

Kindle and Sony Reader displays are currently available only in black and white.

E-Ink and Prime View are already close business partners, with E-Ink providing the front part of flexible displays to Amazon and Sony. Prime View makes the back end and assembles the displays.

Cambridge, Massachusetts-based E Ink had sales of $18 million in the first quarter, about a third of Prime View's revenue during the period, according to Peruvemba.

Besides providing displays to nearly 20 manufacturers of electronic book readers, E Ink products are used in cell phones, signage, memory devices and battery indicators.

E Ink holds more than 100 patents on its electrophoretic ink technology, in which electric charges are sent along a grid embedded in the paper. The charges cause tiny black and white particles to move up and down, creating text and images.

(Reporting by Jim Finkle; editing by John Wallace)

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