Tata Electronics is in advanced discussions with German chemicals major Merck for an exclusive long-term supply agreement, according to people familiar with the matter. Under the potential deal, Merck would serve as a primary supplier of specialty chemicals and materials critical for semiconductor production at Tata’s upcoming Dholera facility.
The INR91,000 crore ($11 billion) Dholera fab, being developed in partnership with Powerchip Semiconductor Manufacturing Corp (PSMC) of Taiwan, is central to India’s plans to build a robust domestic semiconductor ecosystem. With construction underway and production targeted for 2026, securing a consistent supply of ultra-pure chemicals is seen as a vital step toward ensuring the project’s success.
“Tata Electronics is in active negotiations with Merck,” said one of the persons. “ Tata is evaluating the offer and is yet to sign on the dotted line but securing a chemicals partner is very much on their agenda. It will boil down to whether they agree to the exclusivity.”
Semiconductor production relies on over 150 chemicals and more than 30 gases and minerals across its processes. Analysts noted that an exclusive partnership with Merck would give Tata Electronics greater supply chain stability, a crucial advantage in the volatile global semiconductor market, while also enabling Merck’s entry into India’s rapidly growing semiconductor sector.
“We have been monitoring semiconductor manufacturing developments in India for the past couple of years,” a Merck spokesperson said. “We believe that India is becoming an increasingly important partner in the global semiconductor ecosystem. However, at this time it is too early to talk about concrete plans for India. We continue to closely follow opportunities that align with our strategic goals.”
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