Electronics industry set for growth in city thanks to upcoming technological revolution, says Merck chief

With the Shanghai government identifying new materials as one of its strategic priority industries in its latest development plan, German science and technology giant Merck is striving to create more innovation-driven growth in China with an upgraded localization strategy.

Earlier this year, Shanghai released its 14th Five-Year Plan (2021-25), which requires the accelerated development of six key industries: electronic information, automobiles, high-end equipment, new materials, life science and healthcare, and modern consumer goods.

Materials science is to play a critical role in driving the technological revolution. With the emergence of digital technology－such as 5G communications, data-driven artificial intelligence applications, augmented reality and virtual reality－powerful chips and new forms of displays will play a more important role.

In these areas, Merck comes into play, according to Allan Gabor, president of Merck China and managing director of Merck Electronics China.

"Merck's electronics business will bring a unique perspective with its semiconductor materials and display materials in this increasingly digitalized world. We believe there is a decade of materials-driven innovation ahead," he said.

Merck is among the most successful multinationals in China operating in the three business areas of healthcare, life science and electronics.

Merck defines its electronics business as "the company behind the company", which further advances the development of the digital industry.

To get closer to customers, Merck has its Chinese headquarters of its electronics business in Shanghai.

"In Shanghai, we can have access to top talent and get embedded into the dynamic local innovation ecosystem," Gabor said. He noted that Merck is fully committed to empowering Shanghai and the entire Yangtze River Delta for high-tech, innovation-driven growth.

Over the past decade, it has invested 1 billion yuan ($154.08 million) in the electronics industry in China, including in its latest investment project, the Electronics Technology Center in Shanghai. The 140 million yuan project will feature cuttingedge equipment and capabilities for analytics, application testing and sampling for a wide range of semiconductor and display materials. It is expected to be operational in 2022.

According to Gabor, Merck's ambition is to sustainably influence every sector in China. It will expand its local footprint in Shanghai and further across the country.

To better address the increasing demand of customers efficiently, Merck plans to invest in building more localized production and a resilient supply chain across its three business areas.

Last year, Merck opened its largest M Lab Collaboration Center in Shanghai. Offering customized solutions and services, it has helped biopharmaceutical and biologics companies improve their processes from drug discovery and development to manufacturing. This saves costs and increases their products' speed to market.

At the same time, Merck will continue to drive innovation along with local customers and partners. The company also puts a high value on innovation-driven growth.

For example, Merck opened its first innovation center known as Innovation Hub in Shanghai in 2019.It also established a 100 million yuan seed fund to support tech startups in the region.

Such a move will foster innovation across healthcare, life science and performance materials, all of which are closely related to Merck's core businesses.

"Looking ahead, technological convergence and advancement are happening at a breathtaking speed. Only by continuously strengthening our local capabilities, can we help unleash more and faster innovation in China, with China," said Gabor.

Merck intends to embed itself into the dynamic local industrial and innovation ecosystem, especially in emerging high-tech areas such as AI, bioelectronics, semiconductor manufacturing and future displays.

"Shanghai has been pioneering in most of these areas thanks to its open and inclusive environment, strong talent and industry base, and highly sophisticated supply chain networks around the city," Gabor said.

He added that the company's recent investments have demonstrated its strong confidence in the market. Gabor also applauded the highly decisive and effective performance of the local government in the management of the COVID-19 outbreak.

"Merck was among the first multinationals to resume production in Shanghai, and so far there has been no single major disruption of our local supply despite uncertainties around the world," Gabor said.

In addition, Merck drew up new objectives for sustainability with a goal of cutting its greenhouse gas emissions by 50 percent from 2020 to 2030. It has been taking measures to enhance energy efficiency, reduce production emissions, and purchase more power generated by renewable sources.

The power produced out of renewable energy resources will account for 80 percent of power demanded by Merck by 2030, according to the company. The company plans to achieve net zero carbon operations along its entire value chain by 2040.