Germany’s Merck to Invest in its US Chips Business

13.04.2023 - Germany’s Merck plans to invest some €300 million in an integrated specialty gas plant in Hometown, Pennsylvania, to support the development of its semiconductor business.

The pharmaceuticals, chemicals and life sciences group said the decision to go ahead with the project follows an agreement with the state of Pennsylvania to support expansion of its semiconductor site. Specialty gases are a key component in the semiconductor manufacturing process.

The facility, which Merck said will be the largest of its kind worldwide, is part of the Level Up growth program announced by the German group’s Electronics business sector in late 2022 that foresees investment of €3 billion in innovation and capacity expansion projects by 2025.

Even as a non-US player, Merck will be able to benefit from the altogether $52 billion in investment aid budgeted for new projects under the chips act signed by US President Joe Biden in August 2022.

The act is designed to boost domestic production for key electronic components, against the backdrop of rising tensions between the US and China over key technologies.

Merck’s agreement with Pennsylvania includes incentive targets associated with creating at least 68 new jobs and significant potential investments that the German player said will enable it to “capture and grow its semiconductor materials business in North America and Europe and provide supplemental capacity to supply Asia.”

“Despite near-term cautions due to the industry’s cyclical nature, the demand for semiconductor materials remains very promising long term,” said Kai Beckmann, head of the Electronics division.

As part of its Level Up program, Merck said it is “significantly investing” in R&D and manufacturing capacities in the division’s US sites, primarily in Arizona, California, Texas and Pennsylvania.

By the end of this year’s first half, Merck expects to start up its new factory near Phoenix, Arizona area, where it makes equipment for its Delivery Systems & Services (DS&S) business. The new site, it said, is dedicated to further growing its gas and chemical delivery systems business and providing key supplemental capacity to the semiconductor ecosystem.

In 2022, the Darmstadt-based manufacturer expanded its semiconductor materials production capacities in Asia, investing in a new DS&S facility in Taiwan, as well as in its China Electronics Technology Center, where it added a production facility for organic light-emitting diode (OLED) materials at Shanghai.

Last year, Merck also acquired the chemical business of South Korea’s Mecaro and broke ground for a second facility in Taiwan that will produce specialty gases and semiconductor materials for thin film and structuring applications, starting in 2025.

Author: Dede Williams, Freelance Journalist