The ternary system Pd-Zn-Se was investigated at 340 degrees C. A complete isothermal phase diagram is given, containing a newly discovered ternary phase tau(2) of approximate composition Pd62Zn32Se, The reaction diffusion between Pd and ZnSe was investigated at 340 degrees C and the diffusion path is described. Thin film palladium contacts were annealed at 250 degrees C for 1-30 min. Lowest contact resistivities were reproducibly obtained after 2 min annealing. The results are related to the study of the ternary Pd-Zn-Se phase equilibria and Pd/ZnSe bulk reaction diffusion. A complex contact metallurgy is responsible for the attainment of good ohmic contact properties. (C) 1998 Elsevier Science B.V. All rights reserved.