(Reuters) -Germany’s Merck on Wednesday said it will invest about 300 million euros ($328 million) to develop an integrated specialty gas plant in Hometown, Pennsylvania, to support development of its semiconductor business.

Merck said the plant is the largest of its kind in the world. Speciality gases are a key component in the semiconductor manufacturing process.

“Despite near-term cautions due to the industry’s cyclical nature, the demand for semiconductor materials remains very promising long term,” said Kai Beckmann, head of the group’s electronics division.

European firms have been seeking to locate their semiconductor production facilities in the United States to take advantage of subsidies under President Joe Biden’s $52 billion chips act signed last year.

The act was designed to boost domestic production for key electronic components, which are key for economic growth, amid rising tension with China over technology.

Beckmann said it was a “high priority” for many economies to localise production of such components.

Besides making pharmaceuticals and lab equipment, family-controlled conglomerate Merck supplies chemicals and materials used in making semiconductors.

The investment announced on Wednesday expands an existing Merck semiconductor manufacturing site and is part of a plan announced in 2021 to invest more than 3 billion euros in innovation and capacity expansion by 2025.

($1 = 0.9149 euros)

(Reporting by Andrey Sychev in Gdansk, Editing by Rachel More and Sharon Singleton)