Merck Electronics betting big on Chinese market

German science and technology company Merck is accelerating investments in its electronics business in China, where an increasing number of chips and display panels are made by its clients like SMIC, BOE and TCL.

The company, which is better known for its pharmaceutical business, has been upgrading its chemical business with a new name and booming investment projects in China, including a 140-million-yuan (US$21 million) electronics technology facility in Shanghai.

Merck recently changed the name of its performance materials business to "electronics," representing the company’s “strategic focus on the electronics industry” and digital transformation wave with more data and chips, said Kai Beckmann, member of the company's executive board and chief executive officer of the electronics division.

China has become the world’s fastest-growing semiconductor materials market, with more than 9 percent growth in 2020 and 12 percent growth forecast for 2021, according to industry association SEMI. In 2020, the Chinese mainland supplanted South Korea as the world’s No. 2 semiconductor materials market. 

Merck Electronics’ more than 150 products are used across China by display panel makers and over 100 chipmakers, including tech giants like Shanghai-based SMIC, the Chinese mainland’s biggest chipmaker, and Beijing-based display giant BOE. Merck's display materials accelerate production of ultra-high-definition 8K television panels.

The company, which has a strong presence at Semicon China in Shanghai, sees huge demand in light of China’s national strategy for intelligent infrastructure, covering 5G, the Internet of Things, electric vehicles, data centers and satellites.

Shanghai is a global “portal” for Merck to develop its electronics business, said Allan Gabor, president of Merck China.

In 2020, China was the largest market for Merck Electronics, comprising around a quarter of its global sales. The division has 550 employees in China.

Merck has invested 940 million yuan in electronics in China.

The majority of Merck’s semiconductor materials in China are imported, but the company aims to gradually localize research, application and even production with the new Shanghai center.