Let’s Get the EU on the Right Track

Let’s Get the EU on the Right Track

By Heinz Kundert, SEMI Europe President

On 3 March, EU Commission President Barroso talked about “Europe 2020,” and specifically what we need to do to get Europe “back on track” after the economic crisis Barroso talked about innovation as the key to smart and sustainable growth for the EU. But innovation is not enough. We need to focus again on manufacturing, which ultimately creates local jobs and contributes to GDP.

Barroso stressed the importance of building an economy based on knowledge and innovation. The Commission proposed a target for driving innovation: 3% of the EU's gross domestic product should be invested in research and development R&D efforts. In addition, they have proposed seven innovation initiatives, and SEMI Europe has taken a stance on five of these initiatives:

1. Industrial Policy for Globalization: The EU’s challenge is to respond to the effects of the economic crisis on industry. One goal is to promote the competitiveness of Europe's manufacturing industries and help those industries take advantage of the opportunities presented by globalisation and the green economy. A strong competitive industrial base is needed, with tactics including ‘smart' regulation, setting standards, and promoting clusters.

SEMI and PV Group emphasize that semiconductors are critical to Europe and must be prioritized on the EU agenda to keep leading European industries – such as automotive, telecom, aerospace and defence – competitive. While SEMI recognizes that the EU is working on promoting the competitiveness of the EU, the situation demands urgency as companies leave Europe seeking lower costs of operation. SEMI recommends that the EU:

  • Declare the European Semiconductor Industry as a “Strategic Industry” by: financially supporting European semiconductor manufacturing poles to compete on a worldwide level; working with industry to prepare a plan for strengthening the European semiconductor manufacturing base; and reaching quick agreement between Member States and EU on priority segments for Lead Markets that take advantage of Semiconductor Technologies.
  • Provide Competitive Incentive Packages for the European Semiconductor Value Chain (both R&D andManufacturing) including: for any future semiconductor manufacturing project in Europe, provide incentive package comparable to the ones offered in Asia; introduce and expand tax credits schemes for R&D as a stimulus for innovation; revise the EU’s existing state aid rules for investments in semiconductor manufacturing; and set up a European organization as single point of contact for concluding discussions around incentive packages in a fast and efficient way.

2. Innovation Union: The EU spends less of its gross domestic product (2%) on innovation (R&D) than the U.S. (2.6%) and Japan (3.4%). Initiating a single EU patent, setting up a patent court, and improving access to intellectual property protection are the right steps to foster innovation. In addition, Europe must both increase R&D investments and enhance their efficiency. Therefore we support the EC Commissioner for Research to maintain the 3% target of GDP investment in Research.

SEMI emphasizes that patent issues are critical, including:

  • Harmonization of Asian with European Patent Systems: Work has to be done to create an international efficient system for European companies dealing outside of Europe.
  • Improvements of the European Patent System: SEMI is requesting reduced European Patent Office prosecution time; European Patent Convention (EPC) language regime adoption; and no patent maintenance fees.
  • Trade Secret Protection Mechanism in Europe: Use the U.S. Uniform Trade Secrets Act as a basis for a corresponding legislative initiative in the EU.

To successfully compete with other regions of the world, Europe must both increase the R&D investments and enhance their efficiency. These steps would be in the right direction:

  • Evolve the funding mechanisms to enable high-impact strategic programmes irrespective of the geographical location. Review R&D funding principles to allow for higher levels of funding for strategic contributions. Funding must be assigned to projects addressing technical challenges through regional and national programmes, inter-governmental collaboration in the EUREKA cluster CATRENE; Joint Undertakings like ARTEMIS JU and ENIAC JU; and FP7 Calls for projects.
  • Enhance cross-border cooperation through ENIAC and allow EC to fund research institutes and academia from one Member State when working with an industry located in another Member State, in order to bring more European strengths together.
  • Significantly increase the R&D funding levels for semiconductor technologies.
  • Offer easier access for SMEs to the EU funding: simplify bureaucratic procedures and improve the overall timeline by speeding up funding decisions and payments.
  • Strengthen European industry resilience to crisis, by setting up a funding scheme that would help research institutes in periods of crisis.

3. / 4. New Skills and Jobs/Youth Education: The unemployment rate for young people is over 21%, with almost a third of Europe’s population aged 25-64 (77 million people) with no, or low, formal qualifications. By 2020, 16 million more jobs in Europe will require high qualifications and there will be 12 million fewer jobs for the low-skilled. However, less than 33% of adults aged 25 to 34 has a university degree compared to 40% in the U.S. and over 50% in Japan. The EU needs to raise the quality of education and training at all levels. Initiatives include launching a youth employment framework, with policies that include work-experience schemes.

SEMI emphasizes that this is a complex issue, but that lack of engineers already impacts the competitiveness of some of Europe’s leading-edge companies. The right incentives should be provided to:

  • Intensify cooperation between the providers of education, training and businesses: Funding alone will not solve the problem, as the EU needs to promote the importance of education.
  • Prepare the workforce for the future needs industry involvement: We need to better anticipate future skills needs through improved labour market information, and be more open to global talent.
  • Increase the number of women in technical studies: The lack of gender diversity has negative consequences for the EU.
  • Resolve education and immigration issues: Most students will return to their country of origin after completing degrees in Europe, so the EU is subsidizing education of students without reaping the benefits. Information on surpluses and shortages of skills across EU countries should be quantified and taken into account in immigration policies.
  • Help students learn about new technologies and develop and interest in them: High Tech U is a SEMI program that put students in contact with new technologies so it is a step in the right direction. In the last years, the High-Tech U curriculum, sponsored by leadng companies such as ST, Infineon, Soitec and ASML, has touched hundreds of teachers and students in Europe. More programs like this are needed.

5. Resource Efficiency Boosting renewable energy's share of the energy portfolio to 20% by 2020 could create more than 600,000 jobs, while energy-efficiency efforts could create one million jobs. The EC’s goal is to achieve 12% of Europe’s electricity from PV by 2020. The EU recognizes that increased support is necessary for the governments of the member states.

SEMI recommends that the EU:

  • Declare the European Renewable Energy Industry and PV in particular as Strategic Industries: Several countries in Asia (especially China) have declared their PV industry as one of their national strategic priorities and implemented PV supportive industry policies.
  • Support PV market deployment in European Member States: There’s a need for: reduced barriers to establish Feed-in Tariffs for PV in Member State countries, increased awareness of private and commercial investors for the advantages of PV systems, and specific PV goals in the national action plans of the Member State countries.
  • Provide Competitive Incentive Packages for the European PV Value Chain: Support European PV R&D and manufacturing projects (new fab or fab expansion/ upgrade) with competitive incentive packages.
  • Increase budgets for R&D projects in the FP 7 and coming FP 8 programme: This includes enhancing cross-border cooperation by allowing the EC to fund research institutes and academia from one Member State when working with an industry located in another Member State.

In summary, the EU Commission knows what the problems are and is aware of many of the solutions. We need to work together to address our agenda with a goal of helping get the EU on the “right track”— before it’s too late to be competitive in emerging markets. I urge you to get involved by contacting Carlos Lee at clee@semi.org. To learn about SEMI Europe lobbying efforts in action, please read about the recent Brussels Forum.

April 6, 2010