By Brenda Goh and Sarah Wu

SHANGHAI/TAIPEI (Reuters) – German supplier of chemicals and materials used in making semiconductors, Merck KGaA, said on Tuesday it had signed a contract to open a semiconductor base in the Chinese city of Zhangjiagang, describing it as its largest single electronics business investment in the country.

The company said in a statement the deal was signed with local authorities.

The new 69-acre base will house production plants for thin film materials and electronic specialty gasses, warehouses, and operation centers.

“China is the largest end market for semiconductors with more than half of the world’s total chip output going to China. Given the unprecedented capacity investment and expansion of domestic chip manufacturers, China is currently also the fastest growing semiconductor manufacturing market worldwide,” Merck China President Allan Gabor said in a statement. “We believe a golden era for China’s semiconductor industry has just begun.”

Merck said earlier this year it will invest at least another one billion yuan ($150.18 million) in China by 2025 to support the chip industry. Of that amount, 550 million yuan ($82.60 million) will go towards the new Zhangjiagang base, Merck told Reuters.

Zhangjiagang is a county-level city under the administration of Suzhou city, which is about 100 kilometres east of Shanghai.

($1 = 6.6587 Chinese yuan renminbi)

(This story has been refiled to add company name dropped from first paragraph)

(Reporting by Brenda Goh in Shanghai and Sarah Wu in Taipei; Additional reporting by Roxanne Liu; Editing by Kirsten Donovan and Bernadette Baum)