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Merck to pour capital into Korea's AI chip industry

Feb. 2, 2024 - 18:00 By Jie Ye-eun
From left: Safa Kutup Kurt, head of operations and digital solutions at Merck; Benjamin Hein, head of the specialty gases business unit at Merck; Kim Woo-kyu, managing director of Merck Korea; Anand Nambiar, head of formulated materials business unit at Merck; and Suresh Rajaraman, head of thin films business unit at Merck speak with local media reports in a press briefing in Seoul on Friday. (Merck Korea)

Merck, the science and technology juggernaut based in Germany, will continue to put capital into Korea in line with the growth of the country's semiconductors industry while expanding cooperation with key clients and the world's two largest memory chip producers, Samsung Electronics and SK hynix.

The German firm is seeking to leverage its capabilities to supply materials and equipment needed for chip manufacturing as its Korean clients increase their investments into artificial intelligence semiconductors.

“The AI applications and the AI megatrend are going to accelerate and require more hardware in the future," Anand Nambiar, chief commercial officer and head of formulated materials business at Merck, said in a press briefing in Seoul, Friday.

"We expect maybe by the end of the decade that there will be another round of investments that are needed in order for us to meet the customer needs in Korea itself. ... Our customers are investing in fabs here and we look forward to co-investing with them as they progress,” he added.

In its 2021 spending plan, Merck announced its intention to invest 600 million euros ($648 million) in Korea by 2025. As part of the plan, it merged with Korean thin film materials company M Chemicals last year. It has spent some 300 million euros so far for the acquisition and expansion of its Pyeongtaek, Gyeonggi Province, OLED material manufacturing business site.

Nambiar did not provide the exact amount of additional investment, since the company will decide on the size of investment this year and next, as the global chip market is expected to make a rebound in 2024.

He forecast the chip industry to grow by 3 to 6 percent per year for the next five years with the emergence of various AI applications. Nambiar said key Korean clients Samsung and SK are contributing to advancements the AI chips industry, which together account for more than 60 percent of the memory market.

Nambiar added, "The Korean market continues to be one of the most exciting parts of the industry. The Korean customers are very well positioned and they've taken leadership, particularly in the memory sector. So we're making sure that we are present with them to win in this marketplace."

At the CES 2024 tech show in Las Vegas last month, the chief commercial officer had a meeting with Samsung Electronics co-CEO Kyung Kye-hyun, who oversees the tech giant's chips business, to discuss market trends upon Kyung's visit to Merck's booth.

"CES was all about AI and that was essentially what Kyung also communicated to us and we talked about some of this in terms of the opportunities that it creates for semiconductor companies and materials suppliers together," Nambiar said. "I think I would share with you his excitement that AI applications will be the key driver of growth for the semiconductor industry for the next decade.

"And the question is how do we continue building that partnership by co-investing with Samsung and delivering the right levels of innovation and the right level of supply chain resilience in order for us to support them to make them successful. ... We're the company behind the companies advancing digital living and we want to be part of that support network for Samsung in the future."

Kim Woo-kyu, managing director of Merck Korea, agreed, saying, "Korea is the powerhouse in memory that no one can refute." He was optimistic about Samsung and SK maintaining their supremacy in the market into the future as well.

"Our clients are preparing to build about 10 (semiconductor) mega fabs here as part of their research and production efforts to maintain leadership. Accordingly, Merck attaches great importance to the Korean market to support the (market) leaders," Kim added.