Versum Materials

Versum Materials was a global specialty materials company that provided high-purity chemicals and gases, delivery systems, services, and materials expertise essential for manufacturing integrated circuits and advanced flat-panel displays.^[1] Headquartered in Tempe, Arizona, the company was established on October 1, 2016, through a tax-free spin-off of Air Products and Chemicals, Inc.'s Electronic Materials Division.^[2][3] In October 2019, Merck KGaA, Darmstadt, Germany, acquired Versum for approximately €5.8 billion ($6.5 billion), integrating it into its electronics business, which operates as EMD Electronics in the United States and Canada.^[4] Versum's offerings included advanced gas and chemical delivery systems, such as the patented GasGuard and ChemGuard platforms, which ensured precise handling and distribution of ultra-pure materials in semiconductor fabrication processes.^[5] The company also supplied formulated chemistries, including chemical-mechanical planarization (CMP) slurries like Syton, used for wafer polishing to achieve smooth surfaces critical for device performance.^[6] These products supported key applications in electronics manufacturing, enabling innovations in high-performance computing, memory, and display technologies while meeting stringent purity and reliability standards.

History

Origins under Air Products

Air Products established its electronic materials division in the 1980s, initially concentrating on the production and supply of high-purity gases essential for semiconductor manufacturing processes.^[7] This focus addressed the growing demand for ultrapure materials in the electronics industry, positioning the division as a key provider of industrial and specialty gases, equipment, and technical services. By the early 1990s, the division had captured over one-fourth of the global market share in these areas.^[7] Throughout the 1990s and 2000s, the division advanced its portfolio through innovations in specialty gases, cleaners, etchants, and chemical delivery systems tailored for integrated circuits and display technologies.^[7] These developments supported critical semiconductor fabrication techniques, including chemical vapor deposition (CVD) for thin-film deposition and atomic layer deposition (ALD) for precise nanoscale control, enabling higher performance in electronic devices.^[8][9] For instance, in the mid-2000s, the division introduced high-k dielectric precursors, and in 2010, EXTREMA® ALD precursors to facilitate advanced logic and memory chip production at sub-22 nm nodes.^[8][9] The division achieved significant growth milestones, particularly through expansion into the Asia-Pacific markets, where it constructed seven industrial gas plants by 1992 to meet surging semiconductor demand in the region.^[7] This strategic move strengthened its global footprint and supply chain for electronic materials. By fiscal year 2015, the electronic materials division generated approximately $1 billion in sales and employed about 1,900 people worldwide.^[10]

Spin-off and initial public offering

In September 2015, Air Products and Chemicals, Inc. announced its intention to separate its Materials Technologies business through a tax-free spin-off to create an independent, publicly traded company focused on electronic materials.^[11] The move was designed to enable the business to pursue targeted growth in the semiconductor sector, where demand for advanced materials was accelerating due to innovations in chip manufacturing.^[11] The spin-off was completed on October 1, 2016, via a pro-rata distribution of Versum Materials, Inc. common stock to Air Products shareholders of record as of the close of business on September 21, 2016, at a ratio of one share of Versum for every two shares of Air Products held.^[12] This tax-free transaction separated the Electronics Materials Division, allowing Versum to operate autonomously while Air Products concentrated on its core industrial gases operations.^[2] Versum did not receive any cash proceeds from the distribution of shares.^[13] Following the distribution, Versum Materials common stock began "regular way" trading on the New York Stock Exchange under the ticker symbol VSM on October 3, 2016.^[2] In its initial trading period from October 3 through November 30, 2016, the stock reached a high of $28.00 per share and a low of $19.00 per share.^[14] As part of the transition to independence, Guillermo Novo was appointed president and chief executive officer of Versum Materials in September 2016, bringing over 30 years of experience in specialty chemicals and materials industries.^[15] The company's headquarters were established in Tempe, Arizona, to position it near key semiconductor hubs and support operational efficiency.^[16] The spin-off positioned Versum Materials to capitalize on the expanding electronic materials market, driven by demand from semiconductor fabrication processes.^[17]

Growth as an independent company

Following its spin-off from Air Products in 2016, Versum Materials experienced steady operational expansion as an independent entity, with net sales rising from $970.1 million in fiscal year 2016 to $1,126.9 million in 2017 and $1,372.3 million in 2018, reflecting a compound annual growth rate of approximately 19%.^[18] This growth was primarily fueled by robust demand in the semiconductor industry, particularly from leading memory manufacturers, as well as increasing needs in display technologies for advanced packaging solutions.^[18] The company's focus on high-purity chemicals and advanced materials positioned it to capture higher volumes amid global chip production ramps. Versum pursued key strategic initiatives to support this expansion, including selective increases in manufacturing capacity at its facilities in the United States and Taiwan to meet rising customer demands.^[14] In the U.S., operations at sites in Carlsbad, California, and Dallas, Texas, bolstered production of specialty gases and delivery systems.^[18] In Taiwan, the Nanke production facility and Hsinchu technical center enhanced local responsiveness for Asia-Pacific clients.^[18] Additionally, Versum strengthened ties with major chipmakers, such as TSMC, which recognized the company with an Excellent Performance Award in 2017 for innovations in post-etch residue removers and improved supply responsiveness.^[19] TSMC ranked among Versum's top four customers, collectively accounting for 53% of 2018 sales.^[18] Financially, Versum demonstrated resilience with net income of $197.5 million in fiscal 2018, up slightly from $193.3 million in 2017, supported by operating margins of 27.3%.^[18] The Materials segment drove this performance, generating $885.6 million in revenue—about 65% of total sales—through strong contributions from advanced packaging and deposition materials amid semiconductor market tailwinds.^[18] Despite these gains, Versum faced supply chain challenges in 2018, including disruptions in nitrous oxide availability stemming from a key supplier's reduced production since late 2016.^[18] The company mitigated these risks by implementing contingency plans, such as qualifying alternative suppliers and diversifying sourcing to ensure continuity for critical semiconductor applications.^[18] These measures helped maintain delivery reliability to major customers without significant revenue impacts.

Products and Services

Materials Segment

The Materials Segment of Versum Materials encompassed the production and supply of high-purity specialty chemicals and gases essential for semiconductor and display manufacturing processes. This segment focused on enabling advanced fabrication techniques, including thin film deposition, etching, and surface preparation, to support the creation of integrated circuits and optoelectronic devices. In fiscal year 2018, the Materials Segment generated approximately 65% of the company's total revenues, underscoring its central role in Versum's operations.^[18] High-purity specialty process gases formed a cornerstone of the segment's offerings, with products such as silane (SiH₄) and ammonia (NH₃) utilized in chemical vapor deposition (CVD) and atomic layer deposition (ALD) for depositing silicon-based layers in logic and memory chips. These gases also supported etching processes, where nitrogen trifluoride (NF₃) and other fluorinated compounds enabled precise removal of materials in high-aspect-ratio structures, critical for advanced nodes like 10 nm and below. Purity levels reached 99.9999% (6N) or higher, achieved through advanced purification technologies that minimized impurities to parts-per-billion or parts-per-trillion thresholds, ensuring defect-free wafer processing and high device yields.^[14][18][20] The segment also provided cleaners, etchants, and chemical-mechanical planarization (CMP) slurries tailored for wafer surface preparation. Cleaners, often formulated as aqueous or semi-aqueous solutions, removed residues from post-etch and post-CMP steps, preventing contamination in silicon and compound semiconductor production. Etchants complemented these by selectively removing layers during patterning, while CMP slurries—optimized for low defectivity—planarized deposited films, such as in shallow trench isolation for memory devices. These products were customized to align with specific customer process requirements, incorporating variations in pH, particle size, and chemical composition to enhance compatibility with diverse fabrication flows.^[14][18][21] Advanced materials within the segment included ultra-thin dielectric precursors and metal organics for ALD and CVD thin films, enabling the formation of high-k dielectrics and metal gates in logic chips. Examples encompassed organosilanes for insulating layers and organometallics like tungsten hexafluoride (WF₆) precursors for metallization, supporting self-aligned double patterning and 3D NAND architectures in memory applications. These materials extended to display technologies, contributing to the production of LEDs and OLEDs through precursors for thin film transistors and emissive layers in flat-panel displays. Overall, the segment's innovations addressed the demands of mobile devices, cloud computing, and IoT, with over 80% of sales directed toward the semiconductor industry.^[14][18]

Delivery Systems and Services Segment

The Delivery Systems and Services (DS&S) segment of Versum Materials specialized in designing, manufacturing, installing, operating, and maintaining advanced gas, chemical, and slurry delivery and distribution systems tailored for semiconductor manufacturing environments. These systems enabled the safe, consistent, and efficient handling of process materials, supporting high-volume production in fabrication facilities (fabs).^[18] Proprietary products in this segment included gas and chemical delivery systems featuring specialized cylinders, valves, and abatement equipment to manage hazardous materials with minimal risk of contamination or release. Engineered solutions such as bulk delivery systems and point-of-use panels facilitated precise material flow control, from storage to the production tool, optimizing throughput and reducing operational downtime.^[18][14] Versum's DS&S offerings extended to comprehensive services, encompassing custom system design, turnkey installation during fab construction, ongoing maintenance, and recycling programs for spent materials to promote sustainability and cost efficiency. The MEGASYS branded on-site services, for instance, provided inventory management, real-time monitoring, and technical support at over 30 customer locations worldwide, employing more than 400 dedicated staff.^[18][22] In fiscal year 2018, the DS&S segment generated sales of $483.7 million, accounting for approximately 35% of Versum's total net sales of $1,372.3 million, with growth fueled by expanded equipment installations and service contracts in key semiconductor hubs like Korea and China. This segment's integration with customer fabs emphasized seamless compatibility with high-purity gases, chemicals, and slurries, ensuring uninterrupted supply chains for advanced node technologies.^[18] Safety and efficiency were core to DS&S solutions, incorporating advanced features such as automated leak detection, purity monitoring from source to point-of-use, and programmable controls that minimized human error and enhanced process reliability in high-stakes manufacturing settings.^[18][14] Following the 2019 acquisition by Merck KGaA, these products and services were integrated into the company's Electronics business sector.^[4]

Operations

Global Facilities and Manufacturing

Versum Materials operated a network of 15 production facilities and seven research and development centers primarily in North America and Asia during its independent period, enabling efficient manufacturing of electronic materials close to key semiconductor customers. In the United States, major sites included the headquarters and production facility in Tempe, Arizona (leased), as well as manufacturing operations in Allentown and Tamaqua, Pennsylvania (leased and owned, respectively), Carlsbad, California (owned), and additional locations in Dallas, Texas (owned), Catoosa, Oklahoma (leased), and Indianapolis, Indiana (leased). These U.S. facilities supported the production of high-purity gases, chemicals, and delivery systems, with a focus on serving North American semiconductor fabrication plants.^[18] In Asia, Versum maintained significant manufacturing presence to align with the region's dominant semiconductor industry, including owned production sites in Nanke, Taiwan; Ulsan, Ansan, Banwol, Siheung, and Pyeongtaek, South Korea; and Shanghai, China, as well as a leased R&D facility in Hsinchu, Taiwan. These facilities produced critical materials such as CMP slurries and precursors, with expansions including a new delivery systems plant in Shanghai commencing operations in 2018 and a state-of-the-art laboratory under construction in South Korea. Europe featured subsidiary entities in the United Kingdom (Versum Materials UK Limited) and Germany (Versum Materials Germany GmbH), primarily for sales and distribution rather than large-scale manufacturing. By 2019, these global operations supported approximately 2,300 employees worldwide.^[18][1] Versum's supply chain strategy emphasized geographic diversification to mitigate risks from raw material volatility and geopolitical factors, sourcing inputs from multiple global suppliers. This approach facilitated just-in-time inventory management and rapid delivery to electronics customers, minimizing stock levels while ensuring supply reliability for time-sensitive semiconductor production. In manufacturing, the company prioritized sustainability through environmental compliance, safety protocols, and waste reduction initiatives, particularly in high-purity gas production processes, as part of broader stewardship efforts to limit environmental impact.^[18] Following the 2019 acquisition by Merck KGaA, Versum's operations were integrated into the company's Electronics business sector (operating as EMD Electronics in the United States and Canada). Key post-acquisition developments as of 2025 include the purchase of the Tempe, Arizona facility in 2021 for $22 million to support expanded manufacturing,^[23] construction of a new integrated specialty gases facility in Allentown, Pennsylvania announced in 2023 (expected to create nearly 200 jobs),^[24] and establishment of a new Electronics Technology Center in China in 2020 for analytics and application testing.^[25] In 2021, the business sector was renamed Electronics to reflect its focus.

Research and Development

Versum Materials invested approximately $49.1 million in research and development in fiscal year 2018, representing about 3.6% of its total sales of $1.37 billion.^[18] The company maintained seven research and development facilities worldwide, including key technical centers in Tempe, Arizona, and Hsinchu, Taiwan, which supported innovation in advanced semiconductor materials.^[18] A core focus of Versum's R&D efforts was developing precursors essential for next-generation semiconductor architectures, including those used in 3D NAND flash memory and FinFET transistors, enabling conformal deposition in complex three-dimensional structures.^[26] Versum engaged in joint development programs with customers and third parties, such as universities and original equipment manufacturers, to co-develop materials tailored for advanced process nodes, including 5nm technologies.^[18] These collaborations extended to industry efforts on sustainable solutions, with a growing emphasis on low global warming potential (GWP) gases to reduce emissions in semiconductor manufacturing.^[27] By 2018, Versum's patent portfolio encompassed approximately 1,700 patents globally, including 400 in the United States and 1,300 foreign patents, with ongoing applications exceeding 900; this portfolio highlighted innovations in deposition precursors and environmentally sustainable materials.^[18]

Acquisition and Integration

Deal Announcement and Terms

In December 2018, Entegris Inc. approached Versum Materials with a proposal for a merger of equals, leading to a definitive agreement announced on January 28, 2019, under which Versum shareholders would receive 1.120 shares of Entegris common stock for each share of Versum common stock, implying an initial value of approximately $35 per Versum share based on Entegris' closing price of $31.32 on January 25, 2019, the last trading day before the announcement.^[28][29] The proposed all-stock transaction valued the combined entity at around $9 billion in enterprise value and was positioned as a strategic combination to strengthen their positions in advanced materials for semiconductors. On February 27, 2019, Merck KGaA, Darmstadt, Germany, submitted an unsolicited cash proposal to acquire all outstanding shares of Versum for $48 per share, representing a 51.7% premium to Versum's unaffected closing price of $31.61 on January 25, 2019, and a premium of about 17% over the then-implied value of the Entegris merger consideration.^[30][31] Versum's board of directors initially rejected the proposal, citing fiduciary duties and the ongoing Entegris merger, but Merck proceeded with a hostile tender offer commencing on March 26, 2019, at the same $48 per share price, urging shareholders to reject the Entegris deal.^[32] Negotiations intensified as Entegris sought to match or improve its offer, but on April 7, 2019, Merck revised its proposal to $53 per share. On April 12, 2019, Versum entered into a definitive merger agreement with Merck KGaA for $53 per share in cash, without interest and less any required withholding taxes, valuing the equity at approximately $5.7 billion and the enterprise at $6.5 billion including net debt.^[1][33] This superior offer prompted Versum to terminate its merger agreement with Entegris, resulting in a $140 million termination fee paid to Entegris.^[34] The transaction was seen as a strong strategic fit, bolstering Merck's Electronics business unit—focused on semiconductor and display materials—by integrating Versum's specialized expertise in high-purity chemicals, delivery systems, and advanced materials for chip manufacturing, creating a more comprehensive global provider in the sector.^[1][33] The agreement was subject to customary closing conditions, including regulatory approvals and shareholder approval. It underwent review by the U.S. Federal Trade Commission under the Hart-Scott-Rodino Act for antitrust compliance, with no significant divestitures required.^[35] Versum shareholders overwhelmingly approved the merger on June 17, 2019, with approximately 99% of votes cast in favor.^[36]

Completion and Post-Acquisition Developments

The acquisition of Versum Materials by Merck KGaA, Darmstadt, Germany, was completed on October 7, 2019, for approximately €5.8 billion in an all-cash transaction.^[4] Following the closure, Versum's common stock was delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934.^[35][37] Versum was subsequently integrated into Merck's Performance Materials business sector, which was rebranded as Electronics in 2021 to reflect its focus on semiconductor and display solutions.^[38] The integration preserved Versum's headquarters in Tempe, Arizona, as a central hub for the combined electronic materials operations in the United States.^[37][39] Key post-acquisition developments included the full integration of M Chemical Co., Ltd.—acquired by Merck in 2023—into Versum Materials Korea Co., Ltd., effective April 1, 2024, to streamline operations and bolster semiconductor materials production in South Korea.^[40] Additionally, in April 2021, Merck announced a €20 million investment to expand research, development, and manufacturing capabilities at its Shizuoka site in Japan, enhancing production of advanced deposition materials critical for next-generation semiconductors.^[41] In October 2024, Merck acquired Unity-SC to strengthen metrology solutions in its Optronics business unit.^[42] In August 2025, Merck divested its Surface Solutions business, refining the Electronics sector's focus on semiconductor and display materials.^[43] As of 2025, Versum's legacy operations contribute to the Electronics business sector's projected mid-single-digit organic sales growth, with a reported 4.8% organic net sales increase in the third quarter driven by demand for AI chip materials and advanced nodes.^[44][45] The sector emphasizes innovations like AI-driven materials platforms to accelerate development for heterogeneous integration and energy-efficient computing.^[46] Versum's employee base has been fully incorporated into Merck's Electronics operations, amid a global workforce exceeding 62,000.^[47] The merger has realized synergies by combining Versum's delivery systems expertise with Merck's materials portfolio, solidifying the group's leadership in the semiconductor supply chain for high-purity chemicals, gases, and process solutions.^[4]