Arch-Air Liquide, Merck-Praxair: New Global Alliances To Slug It Out in Semiconductor Chemicals
Two new global alliances, both linking major gas suppliers with chemical makers, will compete to sell high-purity process gases and chemicals, related equipment, and site services to the worldwide semiconductor industry.
One alliance links Merck KGaA Electronic Chemicals (Darmstadt, Germany) and Praxair, Inc. (Danbury, CT). The second combines the marketing efforts of Air Liquide Electronics (Paris, France) and Arch Chemicals, Inc. (Norwalk, CT), Olin Corp.'s specialty chemical spinoff. Merck and Praxair estimate the world microelectronics industry bought $2.7 billion worth of specialized gases and chemicals in 1998.
The latter deal appears the more significant of the two. It combines Merck, Europe's largest electronics chemical supplier, with Praxair, North America's second-largest (after Air Products & Chemicals) electronics gases vendor. Neither partner was a factor on the other company's turf.
Although Merck and Praxair will not form a separate joint venture, they will establish one sales force and combine product line. They will operate a single logistics and warehousing operation and use a one invoicing system. Their goal is to display a single interface to their customers.
The Arch-Air Liquide deal is less sweeping. It does not create a united sales organization. Instead, each company will continue to market its own products and services, while promoting one another's complementary services. Arch, however, provides many high-end products that Merck does not make. These include photoresists, photoimagable polyimides, and dopants.
In addition to broader product lines, both alliances provide more complete cradle-to-grave chemical management. Many semiconductor manufacturers prefer integrated chemical management services because it frees resources to work on improving yield of their high value-added integrated circuits.
The Merck-Praxair alliance also promises customers "tangible savings on operating costs" through shared local warehousing and logistics. It also sees "significant cost savings" through shared project management and procurement in the installation of turnkey gas and chemical dispensing systems.
The $5 billion Merck Group produces high-purity semiconductor acids, bases, solvents, etchants, and thin film chemical vapor deposition (CVD) precursors at plants in Germany, France, Singapore, and Taiwan. It also provides a full line of chemical delivery equipment, including chemical cabinets and waste treatment solutions.
Praxair Semiconductor Materials supplies more than 40 specialized grades of gas through a network of gas generators and warehouses in Asia, Europe, and the United States. It currently has 16 contracts to manage all gas operations at customer sites, and operates more than 24 on-site nitrogen plants. It also manufactures a complete line of advanced gas-handling equipment. Praxair had sales of $4.8 billion in 1998.
Air Liquide provides a similar range of ultrapure gases and gas handling equipment, as well as gas and chemical management services. It also builds and operates on-site systems to generate, purify, and distribute chemical liquids. Air Liquide Electronics accounted for 13% of parent Air Liquide Group's $6.8 billion sales in 1998.
Arch's Semiconductor Chemicals and Services group provides a broad range of process chemicals for semiconductor manufacturing. They include photoresists and photoimagable polyimides; subparts-per-billion acids, etchants, solvents, and chemical mechanical planarization (CMP) slurries; thin film precursors, dopants, etchants, and halogen sources; as well as on-site chemical management services. Arch, with $900 million in sales, produces water and performance chemicals in addition to microelectronic materials.