Merck KGaA to spend $1 billion on U.S. operations to fix chip issues

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Merck KGaA to spend $1 billion on U.S. operations to fix chip issues

Dec 7 Reuters -- A German supplier of chemicals and materials used in making semiconductors said on Tuesday it is investing $1 billion in its U.S. operations and forming a joint venture with Palantir Technologies to solve chip industry supply chain problems.

Merck KGaA of Darmstadt, Germany -- which uses the name EMD Electronics for its North American electronics business to avoid confusion with the unaffiliated pharmaceutical company of the same name -- supplies a range of chemicals used by chip factories, which are expected to expand if U.S. lawmakers pass a $52 billion aid package to bolster domestic manufacturing.

The company plans to spend $1 billion on sites in Arizona, California, Texas and Pennsylvania through the year 2025.

Kai Beckmann, the chief executive of the German firm's electronics unit, said in a statement that the chip shortage needs industry-wide cooperation to deal with the supply chain issues consumers are currently facing.

Merck KGaA is forming a joint venture with analytics firm Palantir, according to the news agency. The joint venture will try to pull in data from material and chemical suppliers on one side and chip factories from the other and analyze it to improve efficiency.

Laura Matz, who will oversee the new joint venture, said that both the suppliers and chip factories have extensive trade secrets and have historically been reluctant to share data beyond their own organizations. Athinia will be housed within a Merck KGaA subsidiary called EMD Digital, which is separate from its electronics business.

Matz said that the problem of supply-chain inefficiency has been the main hurdle in solving the problem of supply-chain inefficiency for years and that it has been the main reason for the hesitance to share data. We couldn't get over it until we came up with the concept of how we're structuring the data in a way that there's no intellectual property contamination. Financial details of the joint venture with Palantir were not disclosed by Merck KGaA.