Merck KGaA has raised its 2026 financial outlook as demand for materials used in advanced semiconductor manufacturing accelerates, extending the AI investment cycle beyond chip designers and equipment makers into the specialist chemistry and process-control businesses required to produce leading-edge processors.

The Darmstadt-based science and technology group reported second-quarter sales of €5.4 billion, representing organic growth of 4.1%, while EBITDA pre rose organically by 9.3% to €1.6 billion. Merck now expects full-year sales of between €21 billion and €21.8 billion and EBITDA pre of €5.9 billion to €6.3 billion, supported by stronger operating performance and reduced foreign-exchange pressure.

Although Merck spans healthcare, life sciences, and electronics, its semiconductor operations provided one of the clearest growth signals. Semiconductor Solutions recorded organic sales growth of 17.3%, while the wider Electronics division grew organically by 11.7%, with Merck attributing the acceleration to demand associated with advanced AI applications.

Reported Electronics revenue nevertheless slipped slightly to €871 million because Merck divested its Surface Solutions business last year and continued to face currency headwinds. EBITDA pre for Electronics increased organically by 87.5% to €244 million, although the company said the comparison was influenced by one-off effects in the previous year alongside stronger sales and tighter cost management.

AI processors consume more than silicon

Advanced semiconductor fabrication relies on a sequence of deposition, cleaning, etching, patterning, packaging, inspection, and measurement processes, with each new generation demanding tighter tolerances and more complex materials. As chipmakers attempt to increase computing performance without simply enlarging individual dies, those supporting processes become more technically demanding and more economically significant.

Merck supplies specialty materials and delivery systems across parts of that production chain, which gives it exposure as advanced-node manufacturing increases both the complexity of each wafer and the quantity of specialised material required. The effect becomes still more pronounced as AI accelerators use sophisticated packaging to combine processors, high-bandwidth memory, and other components into increasingly dense systems.

The trend sits alongside the machinery investment already visible in Europe’s semiconductor equipment industry, where AI demand has lifted orders for tools used in leading-edge production. Materials, inspection, and advanced packaging occupy less conspicuous positions in the same supply chain, but a shortage or quality failure at any of those stages can restrict output even when processor designs and lithography equipment are available.

Merck has consequently been broadening its Electronics business beyond its established materials portfolio. In May, the company opened a €20 million facility in Saint-Ismier, France, to increase capacity for metrology and inspection technologies used in advanced packaging and heterogeneous integration, where multiple chip components are combined into a single system.

Those manufacturing steps are becoming more important as the semiconductor industry reaches physical and economic limits in conventional scaling. Rather than relying solely on smaller transistor features, chipmakers increasingly combine specialised compute dies, memory, and other components through advanced packaging, although the approach raises the cost of defects because more expensive parts are brought together in a single package.

Merck’s position also gives Europe’s semiconductor debate a different complexion from policy focused chiefly on attracting fabrication plants. The continent already has significant strengths in equipment, materials, chemicals, power semiconductors, automotive chips, and research, while remaining dependent on globally distributed capacity and US- and Asian-controlled portions of the technology stack.

Investment in specialist materials, metrology, and packaging can therefore deepen European participation in the AI supply chain without producing an entirely sovereign processor industry. Merck’s French expansion is modest beside the multibillion-euro cost of an advanced fabrication plant, but such facilities depend on precisely the inspection and process-control capabilities that Saint-Ismier is intended to provide.

The semiconductor cycle remains uneven outside AI. Merck said its Optronics business was roughly stable and noted that elevated memory prices continued to weigh on consumer electronics demand, illustrating how strong accelerator and data-centre investment is masking softer conditions elsewhere in electronics.

Nor does AI demand remove the normal risks attached to semiconductor capital expenditure. Chipmakers and infrastructure providers are committing large sums on assumptions about sustained demand for training and inference, while suppliers further down the chain have to expand capacity before the eventual scale and shape of that market are certain.

For Merck, current spending is already visible before an AI processor reaches a server rack. Semiconductor Solutions generated €684 million of second-quarter sales and accounted for most of the Electronics division, while its double-digit organic growth shows that the hardware cycle is becoming material to businesses several layers removed from the companies selling finished accelerators.

As advanced packaging and manufacturing complexity increase, constraints around AI chips will be determined by chemistry, inspection, process control, and production yield as well as processor designs. Merck’s quarter shows those quieter parts of the semiconductor chain already sharing in the investment boom.