(Yicai) Oct. 14 -- Wacker Chemie's specialty silicone capacity expansion project in Zhangjiagang in China's eastern Jiangsu province is expected to come on stream next year, according to the German Chemicals giant's chief executive officer.

The expansion project for Wacker's specialty silicone production is progressing smoothly and will likely be completed and go into production early next year, Christian Hartel, who is also the company's president, told Yicai in an interview.

Last year, Wacker announced it would invest EUR150 million (USD164 million) to hike its specialty silicon production in Zhangjiagang to meet growing demand. It was the firm's largest single investment since the facility was commissioned in 2010.

The Zhangjiagang site accounts for about 15 percent to 20 percent of the firm's global silicones capacity, a percentage that will continue to rise through increasing investments in China, Hartel noted.

"Our business is driven a lot by demand from big megatrends, like sustainability and electric vehicles," Hartel pointed out. "Especially in China, the demand is even stronger, which is why we are investing in here."

Silicones are used in large quantities in high-tech products, Hartel said. For instance, people typically use three to four times as much silicone in EVs as in combustion engine cars.

"We are increasingly focusing our research on EVs in China, where many of our customers are located," he added. "Research and development need to be closer to them."

In addition to silicone specialties, Wacker is also Europe's largest producer of polysilicon, the basic raw material for ultrapure silicon wafers, which are further processed to make computer chips. At present, nearly half of all computer microchips contain Wacker polysilicon.

In 2022, Wacker invested in a joint venture with Chinese specialty silane manufacturer Sico Performance Material. The JV's production site in Shandong province is also upgrading and expanding its capacity, including that of organofunctional silanes, which are used in high-end manufacturing industries such as semiconductors.

When asked whether the company will change its investment strategy in China because of global macroeconomic uncertainties, Hartel explained that Wacker is more than 100 years old, so it has to adapt to changes based on economic cycles. "I think in every uncertainty, there's also opportunity, and we should look at this more from a medium- to long-term view," he noted.

Wacker will focus more on improving margins than on volume growth, which means investing more in efficiency and expanding the portfolio of specialty products, Hartel said at a recent company event.

"The world economy is more in a little downturn at the moment, but the need for high-tech, specialized innovative solutions for the future is absolutely there," he told Yicai. "It's a big megatrend and we keep following it."

In many global markets, including China, it is more difficult to maintain margin growth due to intensifying competition and falling prices, Hartel explained. "So we need to be faster and more innovative to have better products, including using more automated technologies, in order to be more profitable."

Editor: Futura Costaglione