EMD Electronics, a chemical supplier to the semiconductor industry, plans to invest $1 billion in its U.S. operations through 2025 to keep pace with future industry demand and Arizona is on a short list of potential investment recipients.
EMD Electronics is the North American high-tech materials business of Merck KGaA, a multibillion dollar international conglomerate based in Darmstadt, Germany. The company has a large presence in Arizona after it acquired Tempe-based Versum Electronics in 2019.
EMD’s $1 billion investment pledge was announced last week and the company said it plans to direct funds to its existing operations in Arizona, California, Texas and Pennsylvania, though the company did not specify how much each site would receive.
There are about 2,000 EMD Electronics employees across the U.S. with regional offices in Tempe and Philadelphia.
David Nichols, EMD’s head of state and local corporate and government affairs, said Arizona is one of the "wishlist states" where the company wants to expand.
“We want to make a significant investment in Arizona, but I don't think we have a dollar number yet,” he told AZ Inno. “Arizona is a leading contender to be very competitive in our internal process to spend some of that money and expand our activities here.”
EMD’s Arizona team is based at the Arizona State University Research Park in Tempe. The company bought the 95,000 square-foot facility from Lexington Tempe L.P. for $22 million in February after previously leasing the space. This site houses about 180 employees in its semiconductor solutions team.
Chipmakers like Intel Corp. and Taiwan Semiconductor Manufacturing Co. are the ones actually building semiconductors, but their work requires help from suppliers like EMD.
Intel has started construction on its $20 billion project to build two new factories, or fabs, in Chandler and TSMC is making progress on its first-ever U.S. built fab in north Phoenix. As these factories come online in the next few years, suppliers in the area will have to ramp up their services as well.
The whole supply chain
EMD Electronics provides gases and chemical solutions for chipmakers, oftentimes working directly in the fabs alongside its customers. Specifically, EMD works on prototyping and testing chips as well as doping, cleaning, etching and patterning wafers as they move through the fabrication process.
Nichols said that the Covid-19 pandemic made it clear that the entire supply chain needs to be strong, not just its biggest players.
“It's not just semiconductor manufacturers, but all of the supply chain in the semiconductor business, that really is essential,” he said. “We are not going to have ventilators, if we don't have semiconductor chips, you know, we're not going to have a lot of the health care response materials if we don't have semiconductor chips.”
The demand for semiconductors will only increase as technology becomes more complex, but domestic chipmaking capacity is far behind China, Taiwan and South Korea, which now produce the vast majority of the world’s semiconductors.
U.S. lawmakers are considering the U.S. Innovation and Competition Act (USICA), which contains $52 billion for the semiconductor industry, but after the Senate passed the bill in June, the House has yet to consider it.
