Electronic chemicals draw investment

As computer chip shortages idle automobile plants and other manufacturing facilities, Merck KGaA, Huntsman, and JSR are investing to increase capacity for the chemical raw materials needed to make the chips.

The electronics division of Merck KGaA, which operates as EMD Electronics in the US and Canada, says it plans to spend $3.5 billion on R&D and capacity expansions through 2025, with $2.3 billion going to capital expenditures.

The division supplies materials and chemicals used in manufacturing semiconductors and displays. Merck says it will invest in facilities in the US, South Korea, Germany, Taiwan, Japan, and China—plants that it says are geographically close to its key customers. The company also plans to seek acquisitions in those countries, which are important electronic manufacturers.

In the US, Huntsman is partway through an expansion of its specialty amines plant in Conroe, Texas, and expects to have the new capacity on-line in 2023. Among the products made at the site are quaternary amines used as alternatives to tetramethylammonium hydroxide for etching silicon chips. The plant upgrades will include purification, formulation, and packaging capabilities, which Huntsman says will help stabilize supply for its customers.

In another development, the Japanese specialty chemical firm JSR has signed a $514 million deal to buy the rest of Inpria, a metal oxide photoresist specialist based in Corvalis, Oregon. JSR already owns 21% of Inpria, having invested in it in 2017 and 2020. Inpria says JSR’s global operations will help it ramp up product introductions.

Inpria’s photoresists are used in extreme ultraviolet lithography (EUV), a chip-patterning method that uses high-energy, short-wavelength light to achieve semiconductor patterns less than half the size of those created by conventional methods. EUV is expensive and difficult, but industry insiders expect its use to grow quickly in the coming years.

One chipmaker already using EUV is Taiwan Semiconductor Manufacturing, which invested in Inpria’s series C funding round in early 2020. Now operating mainly in Taiwan, the company is working on a $12 billion semiconductor plant in Arizona. Intel, which is starting to work with EUV and also invested in Inpria, plans to spend $20 billion to build two chip plants in Arizona. Samsung, the other major chip company using EUV, invested in Inpria in 2014 and 2017.

Chip shortages have hit the auto industry especially hard, according to the Semiconductor Industry Association, a US trade group. Chipmakers shifted their output toward health care, remote work, online classroom, and graphic card applications early in the pandemic, in response to high demand from those markets and reduced orders from automakers. Demand for new cars then rebounded more quickly than expected, without much reduction in demand elsewhere.