Boosting Europes Tech Sector

A new European Commission strategy claims to identify ways to mobilise €100 billion in new private investments by 2020 to boost micro- and nano-electronic tech in Europe.

The Commission believes that this will be key to to creating opportunities for SMEs and stimulating innovation across the supply chain to lift Europe's industrial and technological competitiveness.

Indeed, all economic sectors would benefit from the strategy as at least 10% of GDP depends on electronic products and services, says the Commission.

The Commission believes that a new strategy is vital to ensure that Europe does not lose the capability to design and manufacture electronic components that are essential for the digital economy.

Issues

Technological Progress

Two main trends have characterised technology development in the electronics sector:
• The miniaturisation of components at the nano scale 
• The diversification of chip functions through the integration of micro-scale elements such as power transistors and electro-mechanical switches

In addition, new disruptive technologies and architectures are being researched.

Escalating Costs

The micro- and nano-electronics industry is very R&D intensive. Between 15 and 20% of turnover is typically spent on R&D. High investments are needed, and they can only be sustained by volume production.

Consolidation of the industry is on-going. It is estimated that a 10% share of the worldwide market is needed for a semiconductor company to sustain the investment to keep up with technology development. As a result, global alliances between companies are formed.

New Business Models

The micro- and nanoelectronics industrial landscape is changing drastically with a significant shift of volume production to Asia in the last 15 years. Overall, production in Europe has dropped to just less than 10% of world production in 2011.

Given the increased cost of setting up production facilities (“fabs”), tax breaks, land, cheap energy and other incentives as well as the availability of skilled labour force can play a major role in the decision where to build new capacity.

A “fabless” company can design its own components and outsource their manufacturing to another service, the “foundry”. The foundry model has expanded, especially in Asia. But foundries are extending their offer to include design, which may lead to problems in the access to production capacity in the future.

Equipment manufacturers have become a key part of the value chain, which is reflected in their prominent role in the international technology alliances

Current Strengths and Weaknesses

Europe's micro- and nanoelectronics industry is concentrated around major regional production and design sites (like Dresden, Eindhoven/Leuven and Grenoble). 

Europe is relatively absent in the production of computer and consumer related components that represent a large part of the total market. It leads though in electronics for automotive, energy applications and industrial automation, and is strong in designing electronics for mobile telecommunications.

European companies are also strong in smart micro-systems like health implants and sensing technologies, and in low power consumption components.  Europe has some of the most important equipment and materials suppliers.

Investment

Investments by European companies are relatively modest compared to investments made elsewhere. Europe's business attractiveness nevertheless remains high given the size of its consumption which is above 20% of the world market.

But competition with other regions in the world is stiff. Furthermore, public investment in R&D&I and policies to attract private investment remains highly fragmented across the EU.

A European Industrial Strategy

A European industrial strategy has been launched in order to:
• Ensure the availability of micro- and nanoelectronics that are needed for the competitiveness of key industries in Europe
• Attract higher investment in advanced manufacturing in Europe and reinforce industrial competitiveness
• Maintain leadership in equipment and material supply, and in areas such as energy-efficient components
• Build leadership in the design of chips in high growth markets
Building on Europe’s Strengths

An emphasis has been placed on reinforcing and building on the excellence of research and technology organisations (RTOs) in terms of facilities and staff.

In order to maximise return on investment and ensure excellence, further progress towards complementary specialisation and stronger cooperation between the main RTOs will be a key for success in line with the Smart Specialisation strategy of the EU.

Supporting SME Growth

SMEs play a key role in emerging areas like plastic and organic electronics. An important goal is to better integrate them in value chains. Supporting centres of excellence that help embed micro- and nanoelectronics in all types of products and services will be essential to spur innovation across the economy and mainly in non-technology SMEs.

EU–wide partnerships between end-user industries, public authorities and suppliers (large and small) of micro- and nanoelectronics will help open up new high growth areas like electric vehicles, energy-efficient buildings and smart cities and all types of mobile web services.

Towards a Roadmap for Investment

European Commission, Member States and regional authorities will: 
• Support R&D&I through institutional funding or grants
• Facilitate access to financing through loans and equities, notably regional funds and the innovation schemes of the European Investment Bank
• Develop, in partnership with industry, a manufacturing and piloting infrastructure to bridge the gap in the innovation chain and connect design with actual deployment
The Commission will pursue dialogue with stakeholders and set up an Electronics Leaders Group to elaborate and help implement a European Industrial Strategic Roadmap that will cover three complementary lines:
• Making chips smarter: The development of wafer (the raw material for the chips) sizes of between 200 mm and 300 mm. This will enable Europe to maintain and expand its leadership
• Making chips faster: The development of technologies for ultimate miniaturisation of 300mm wafer sizes
• Making chips cheaper: The development of new manufacturing technology for 450 mm-sized wafers

The roadmap will be established by the end of 2013 at the latest as a set of concrete actions, reinforcing notably Europe's clusters of excellence in manufacturing and design and ensuring openness to partnerships and alliances across the value chain.

The Joint Technology Initiative

The European Commission will propose a Joint Technology Initiative, which will cover three main interrelated areas:
• Design technologies, manufacturing processes and integration, equipment and materials for micro- and nanoelectronics
• Processes, methods, tools and platforms, reference designs and architectures for embedded/Cyber-Physical Systems
• Multi-disciplinary approaches for smart systems
The new JTI will provide a simplified funding structure. It will mainly support capital-intensive actions, which will require a tri-partite funding model involving the European Commission, Member States and industry.

Skills Gap

The access to a highly skilled workforce of engineers and technicians and to high quality graduates is essential for attracting private investments in electronics. Similar to the whole ICT sector, micro- and nanoelectronics suffers from an increasing skills gap and a mismatch between supply and demand of skills. The Commission will therefore continue to promote digital competences.