Merck KGaA, Darmstadt, Germany, announced plans to invest more than € 3 billion ($3.5 billion U.S.) over the next four years in innovation and capacities for its electronics business, which operates as EMD Electronics in the U.S. and Canada.
The investment is part of the firm’s Level Up growth program. The company also said it will continue to heavily invest in research and development in leading-edge material solutions, and plans to spend more than € 2 billion in long-term fixed assets (Capex).
In an interview with Fierce Electronics last month, Anand Nambiar, global head of semiconductor materials for the electronics business of Merck KGaA, hinted that the company would continue along a path of expansion that has included multiple acquisitions in the last eight years. “Our ambition is to continue to expand over the next five years, and in a variety of ways,” he said.
He added that market demand driven by 5G, AI, IoT and other technology trends has led some of the company’s customers to seek long-term supply contracts with EMD to allow them to lock in some level of access to needed materials in the years to come. That in turn means that EMD can expand with confidence. “All of these markets are driving growth, but in addition to all the known knowns, there exists the possibility our market could grow faster than expected,” Nambiar said.
The electronics business sector of Merch KGaAis aiming for an organic compound annual growth rate of 3% to 6% between 2021 and 2025, and is upgrading its top-line guidance for the second consecutive time as it is shifting from transformation into an execution and growth phase, the company further said in a statement.
“With our growth program Level Up, we are considerably extending our global production footprint and boosting R&D and innovation,” said Kai Beckmann, Member of the Executive Board of Merck KGaA, and CEO of the Electronics business. “Our highly attractive growth markets, such as semiconductors and OLED are expanding at an increasing rate. By tapping into this momentum, we are significantly enhancing our growth prospects.”
The new Level Up growth program focuses on four, mutually reinforcing key priorities: Scale, Technology, Portfolio, and Capabilities. Further investing in these four areas builds the foundation of the Electronics business sector’s more ambitious growth targets, in conjunction with the strong demand for electronics materials, particularly semiconductors, the company said, adding that the first two of those priorities directly connect with the foundry capacity build-outs that have been announced by several semiconductor manufacturers.