Europe: Prioritizing Markets and Investments to Regain Global Market Share

Europe: Prioritizing Markets and Investments to Regain Global Market Share

By Heinz Kundert, president, SEMI Europe

Valentine’s Day was just a bit more special this year, with the publication of the industrial roadmap for achieving the 10/100/20 strategy to reinforce Europe’s global competitiveness, published on February 14  Drafted by a group of industry players at the request of the European Commission (aka Electronics Leaders Group-ELG)[1], the roadmap suggests that Europe focus on differentiation and invest in vertical integration with systems and end-user applications in new and existing high-growth markets such as automotive, energy or the opportunities offered by the Internet of Things.

During ISS Europe 2014 in Salzburg, a panel discussion including Joël Hartmann (STMicroelectronics), Bob Hollands (ASM), Reinhard Ploss (Infineon) and Rutger Wiljburg (GlobalFoundries) centered on the need for Europe to focus on differentiation and create outstanding technologies — this will allow European chip producers to gain a significant share of new growth markets opened up by the Internet of Things. Some called for increased investment in R&D to reinforce Europe’s knowledge-based differentiation, while others suggested that now is the time to support manufacturing.

Who will invest in manufacturing in Europe?

The question of “who will invest in new capacity and new equipment?” has been on everyone’s mind, and often lips, since the 10/100/20 strategy was launched. The ELG estimates that, in terms of fab capacity alone, an additional 250 000 wafers/month (300mm equivalent) would need to be produced to achieve the ambitious goal of doubling current chip production by 2020-2025 – that’s basically three new fabs. The ISS Europe panelists felt that attracting an outsider to invest in manufacturing capacity in Europe is an option, but first European players should consider the potential of working together on the basis of a foundry model. This would involve alliances between existing fabs and developing a business model that goes beyond the traditional categories of IDM, fab-light, fab-less, design, IP-provider and foundry.

New EU state aid rules, currently under discussion, would allow public/private large-scale investment in manufacturing if it qualified as an ‘important project of common European interest.’  Such a project would need the contribution of at least two Member States and several companies and should impact a number of companies across the supply chain and across Europe. To translate the legal mumbo-jumbo: a couple of companies in Europe, from across the supply chain, could co-invest in a European foundry and then share capacity. Public funding could cover up to 100 percent of the funding gap (no maximum thresholds), covering costs such as land, buildings, materials, supplies, obtaining/defending IP, and CAPEX and OPEX until first industrial deployment.

What technologies will Europe invest in?

Admittedly, investing in capacity is not enough. Fabs need to run at full capacity so Europe needs end markets for the additional chips. The industry has decided not to play catch-up on commodities, but rather to focus on differentiation for emerging high-growth markets, as listed in figure 1 below. With EU policies and funding already directed at products and services in e-health, energy, smart cities and security for example, Europe can lead demand in these markets. And vertical integration across the supply chain, linking research to design, materials, equipment, manufacturing and end-user applications can give Europe the competitive edge it needs.


Figure 1-ELG market targets, 14 February 2014

The ELG will now focus on listing the technologies that Europe should invest in to achieve the 10/100/20 vision, with an action list expected for June 2014. The February 14  roadmap suggests looking at technologies such as: very low power technologies and methodologies, high performing low power technology based on SOI, photonics integration, 3D/multilayer silicon, language, compile, debug chains for highly parallel systems, reuse and legacy, new non-volatile memory technologies, as well as organic materials, organic semiconductors, Gallium Nitride, reliable systems on unreliable components.

How far have we come?

EU 10/100/20 is an ambitious vision — it is in our industry’s hands to make it happen.

A little more than five years ago, our industry started advocating to public authorities to support this industry. Here’s a quick look at how far we have come:

  • We asked for a single European strategy, supported by both industry and public authorities — we received two: the EU Key Enabling Technologies strategy and the EU 10/100/20 Electronics Strategy. Both have helped raise general awareness of our industry and earmarked public funding for the R&D and innovation priorities set by the industry.
  • We asked for a level global playing field and amending EU state aid rules to allow large-scale public/private investment in manufacturing — it is now possible to combine public funds from different EU/national funding instruments and the EU is discussing new state aid rules to allow large-scale public private investment in manufacturing, under an ‘important project of common European interest.’

The regulatory framework has improved, momentum has built up — it is in the hands of our industry to make the 10/100/20 vision a reality.

Further details on these latest developments are available at

Download the SEMI Advocacy Update for a quick summary to the industrial roadmap – click here.

SEMI Europe’s advocacy work is supported by the SEMI Europe Advocacy Partners:

[1] The Electronics Leaders Group (ELG) was set up by European Commission Vice-President Neelie Kroes following the publication of her EU 10/100/20 strategy in May 2013. The members of the group, appointed by Kroes herself, are ARM, ASML, CEA, Fraunhofer, GlobalFoundries, imec, Infineon, Intel, NXP, SOITEC, STMicroelectronics.


March 6, 2014