TLDRs;
- Merck opens $582M Taiwan plant to boost semiconductor material production.
- New Kaohsiung facility improves supply resilience amid geopolitical uncertainties.
- Merck now meets 80% of Taiwan’s thin-film material demand.
- Expansion creates opportunities for EPC, logistics, and safety service providers.
German pharmaceutical and chemical giant Merck Group has unveiled plans to build a €500 million (US$582 million) semiconductor materials facility in Taiwan, signaling a major expansion of its presence in the Asia-Pacific chip market.
The new plant, located in Kaohsiung’s Lujhu District, is set to ramp production in 2026, as Merck seeks to meet growing demand for advanced materials and specialty gases across the region.
Strengthening Supply Amid Geopolitical Risks
The company emphasized that the facility is designed to bolster supply resilience for its semiconductor customers amid ongoing geopolitical uncertainties.
Taiwan, a critical hub for chip manufacturing, has become increasingly strategic as the global semiconductor industry faces potential disruptions from trade tensions and regional security concerns. By expanding locally, Merck hopes to ensure continuity of materials supply for Taiwan’s leading chipmakers.
Currently, Merck provides more than half of the semiconductor materials and specialty gases used in Taiwan, and the new facility is expected to increase this share once full-scale production begins.
The company also reported that it can now satisfy 80% of Taiwan’s demand for thin-film materials, a significant jump from 54% last year, underscoring its growing influence in the local semiconductor ecosystem.
Details of Production and Capacity
Merck’s Kaohsiung site will manufacture key chemical compounds, including Atomic Layer Deposition (ALD) and Chemical Vapor Deposition (CVD) precursors, specialty gases, and photoresists. However, the company has not disclosed exact capacity by product line, leaving some uncertainty regarding its impact on potential supply bottlenecks.
Analysts anticipate that Taiwan Semiconductor Manufacturing Company (TSMC) will increase 3nm wafer production by roughly 20,000 wafers per month in 2026, with 2nm output expected to reach 80,000 to 90,000 wafers per month by year-end. While Merck has not confirmed whether long-term agreements with TSMC or United Microelectronics Corporation (UMC) are in place, its expanded production capacity could play a critical role in supporting these next-generation semiconductor nodes.
Opportunities for Industry Partners
Merck’s investment also creates opportunities for Engineering, Procurement, and Construction (EPC) contractors who specialize in cleanroom construction, as well as logistics and hazardous materials management firms. Companies providing waste treatment, equipment calibration, and safety compliance services may also benefit as production ramps up.
The broader semiconductor industry in Taiwan is poised for significant investment, with TSMC expected to spend between $48 billion and $50 billion on capital expenditures in 2026, driven by its 2nm expansion.
Materials suppliers like Merck, along with rivals including Entegris, DuPont, Tokyo Ohka Kogyo, and JSR Corporation, are positioning themselves to capture a growing share of the supply chain and the follow-on business surrounding wafer fabrication.
Strategic Implications for APAC
Merck’s expansion highlights the increasing importance of Asia in global semiconductor supply chains. By securing a stronger foothold in Taiwan, the company not only ensures its own market presence but also supports the broader APAC region’s goal of supply chain resilience.
As semiconductor demand grows, particularly in AI and advanced computing applications, facilities like Merck’s Kaohsiung plant will become vital to meeting the region’s technological ambitions.
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