Shares of energy major Exxon Mobil Corp ( XOM ) are trading higher on Wednesday.

The company is preparing to increase its isopropyl alcohol (IPA) production, aiming to produce 99.999% ultra-pure IPA to meet the growing needs of the semiconductor sector.

Exxon’s Baton Rouge facility will undergo upgrades to manufacture this high-purity IPA to meet the growing demand by 2027.

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“Our experience and expertise at our Baton Rouge manufacturing complex uniquely position us to provide an end-to-end American supply chain for IPA to U.S.-based chip manufacturers,” the company said in a statement.

With the increasing size and complexity of semiconductors, next-gen chips require 99.999% pure IPA. This high purity is essential to avoid damage to the delicate circuitry of chips, particularly those measuring as small as 2 nanometers.

IPA is used in semiconductor manufacturing to dry wafer surfaces and remove impurities, making ultra-pure IPA a critical component in chip production.

The company is expected to spend $100 million for the expansion of the facility, according to a report from Reuters.

Exxon has been manufacturing IPA since 1920 and has continuously advanced its production techniques. During the COVID-19 pandemic in 2020, the company was the largest producer of IPA in the U.S. for hand sanitizers.

Price Action: XOM shares traded higher by 1.34% at $118.15 at last check Wednesday.

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