Merck KGaA, a major supplier of specialty materials for semiconductor manufacturing, says it can navigate rising geopolitical tensions between the US and China with what it calls its China for China strategy. 

“This is not a political response,” Kai Beckmann, chief executive officer of Merck’s electronics business, told reporters in Taipei on Friday. Merck, better known for its pharmaceutical products, has long pursued a model of manufacturing close to customers, or local for local, “and translated that means we have a China for China model.”

As the tech race between the US and China heats up with escalating export controls on advanced tech from Washington, executives and companies are looking to adapt by developing supply chains to serve each market — one for China’s domestic consumption and another for the rest of the world. Beckmann said Merck follows its customers wherever they go.

Kai Beckmann, chief executive officer of Merck

The German company adopted the ‘China for China’ strategy in 2018 to meet surging demand for its LCD panels there. “That model has survived all the different turbulences. It’s still a valid approach to our customers in any market, not just in China,” Beckmann said. Merck didn’t miss a single order during the port disruptions and logistics snarls caused by Covid lockdowns in recent years, he added.

A more sophisticated tool for adding resilience to the chip supply chain could be Merck’s relatively new data-sharing platform for the industry, called Athinia, which it developed in partnership with Palantir Technologies Inc. The idea with that project is to analyze data from the chip factory to predict problems and find ways to improve manufacturing. And it can also be used to help navigate events like geopolitical unrest, Beckmann said.

Member companies, including Micron Technology Inc. and Tokyo Electron Ltd., share their data to help create models that can be used to simulate production. That makes it possible to digitally evaluate the suitability of one material as a replacement for another, which may suddenly be in short supply due to larger-scale events.