Merck opens major Kaohsiung chip fab

INSULATED: The company said it is less exposed to global complications, as it has built a strong footprint worldwide, and has multiple sources of rare earths and raw minerals Merck Group yesterday said it would ramp up production next year at its new flagship facility in Kaohsiung’s Lujhu District (路竹) to satisfy growing demand for advanced semiconductor materials and specialty gases, and to address supply resilience issues amid mounting geopolitical risks.Merck made the remarks during a news conference before the inauguration of its 500 million euros (US$582.1 million) facility, which is also to supply other markets in the Asia-Pacific region, it said.Merck executive board deputy chair and electronics CEO Kai Beckmann told reporters the company adopted a “local-for-local” strategy about seven years ago to address the cycle time of the development of customers’ products, but the group now sees that approach as more about enhancing resilience in supply.Merck Group Taiwan managing director John Lee (李俊隆) said the group can supply more than 50 percent of semiconductor materials and specialty gases to local customers via its plants in Taiwan, adding that the localization rate would go up after the new facility enters volume production next year.For thin-film materials, Merck is capable of satisfying 80 percent of local demand, compared with 54 percent last year, Lee said. Merck last month also launched a capacity expansion project to increase the supply of formation materials used in semiconductor manufacturing, Lee said.That aligns with Taiwanese customers’ advance toward cutting-edge semiconductor technologies and artificial intelligence-related technologies, he added.Beckmann said Merck also applied its “local-for-local” strategy in other regions of the world to provide locally built capacity.Asked whether Merck is gaining an upper hand over rivals in supplying semiconductor materials to Taiwan Semiconductor Manufacturing Co (台積電), which is reportedly avoiding sourcing key equipment and materials from China, Beckmann said that the company’s “local-for-local” approach in China aimed to build local capacity for Chinese customers and does not export key equipment or strategic materials.As for whether the company would be affected by the growing weaponization of key raw materials such as rare earths, Beckmann said he would “try to find something positive in that complication, because it sounds all very complicated and negative.”Merck would be less exposed to that issue, as it has built a strong global footprint, allowing it to differentiate itself, Beckmann said, adding that the company has expanded its technology offerings and material portfolios, and developed multiple sources of rare earths and minerals.