German chip chemical supplier to spend $1 billion in U.S., pairs with Palantir on supply chain data

FILE PHOTO: The logo of U.S. software company Palantir Technologies is seen in Davos, Switzerland January 22, 2020. REUTERS/Arnd Wiegmann/File Photo

(Reuters) - A German supplier of chemicals and materials used in making semiconductors said on Tuesday that it is investing $1 billion in its U.S. operations and forming a joint venture with data analytics firm 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 aide package to bolster domestic manufacturing.

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

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

Merck KGaA also said Tuesday it is forming a joint venture with analytics firm Palantir. The joint venture will aim to pull in data from material and chemical suppliers on one side and chip factories from the other and analyze it to improve efficiency.

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

"That has been the hurdle of solving this problem (of supply-chain inefficiency) for years," Matz said of the hesitance to share data. "Until we came up with the concept of how we're structuring the data in a way that there's no (intellectual property) contamination, we couldn't get over it."

Merck KGaA did not disclose financial details of the joint venture with Palantir.

(Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing)

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