By Emir Demircan, Senior Manager Advocacy and Public Policy SEMI Europe
European Union (EU) research, development and innovation programmes have proved successful in recent decades. The current framework programme (FP) Horizon 2020, with its 80 billion EUR total budget – around 17 billion EUR of which is allocated for Industrial Leadership – has produced unparalleled collaboration opportunities that no single European country can match on its own.
FPs are strategically positioned to strengthen the European electronics manufacturing industry, which generates high economic value and jobs. FP9 should build on the successes of Horizon 2020 and enhance Europe’s competitiveness in electronics. SEMI, representing the electronics manufacturing supply chain, recommends seven key points pertaining to FP9 for the consideration of the European Commission, the European Parliament and the Council.
Recommendation 1: The Digital economy relies on advances in electronics. FP9 should play a driving role in fully integrating electronics manufacturing players into the European digital economy.
One of the Commission’s priorities in recent years has been to enhance Europe’s position as a world leader in the digital economy. Fulfilling this mission requires an innovative electronics manufacturing industry in Europe. Indeed, electronics components and systems are virtually shaping all IoT-enabled and digital technologies, including autonomous transportation, wearables, augmented and virtual reality as well as artificial intelligence and machine learning. To move to a data-driven economy, Europe needs new materials, semiconductor manufacturing equipment and devices that enable supercomputing, rapid data processing and hyper-connectivity at low power – all in a safe, healthy and environmentally friendly way.
This can be only achieved with deeper, mission-oriented research supported by Horizon 2020 public-private partnerships, such as ICT and Factories of the Future, and joint-undertakings (e.g. ECSEL-JU) that pool resources across the electronics value chain in Europe. Under this light, FP9 can play a pivotal role by strategically positioning the European electronics manufacturing industry and strengthening its ecosystem, which would in parallel underpin EU’s intention to become a world leader in the digital economy.
Recommendation 2: The cost of research and development in electronics is increasing. To maintain rapid innovation in Europe, FP9 should provide unparalleled support to electronics manufacturing industry.
The semiconductor manufacturing industry already invests more in R&D (as a percentage of revenue) than any other sector in the world, according to the Semiconductor Industry Association. In the same vein, according to KPMG Global Semiconductor Outlook, the cost of research and innovation in the electronics manufacturing industry is increasing and larger R&D budgets as a percentage of planned revenue are required to maintain market position.
Likewise, many SEMI members state that developing next-generation processes and products aligned with emerging verticals is becoming more expensive. To this end, FP9 should provide larger public funding to the European electronics industry. As mentioned in the Lab-Fab-App Report of the Commission, many research and industry players support the idea of doubling FP9 budget (compared to Horizon 2020). Aligned with this proposal, the industry expects the budget for electronics-related research and innovation in FP9 to double the allocation under Horizon 2020.
Recommendation 3: Future applications need further collaboration. FP9 should build a stronger ecosystem in Europe, maintain a value-chain-approach and bear verticals in mind.
FP9 can extend the role that Horizon 2020 plays in building a genuine EU electronics-manufacturing ecosystem of research and technology organizations (RTOs), universities, large businesses, small to medium enterprises (SMEs) and startups along the value chain that innovates under common goals. First, further collaboration between large and SMEs and startups is needed in Europe, and this can be easily supported under FP9. Small and large companies offer two clear-cut yet complementary strengths: while smaller companies are dynamic and agile in developing new concepts, larger companies are better positioned to scale up new ideas with their extensive private funding instruments and testing and demonstration facilities. This would also help scale up European startups that are challenged to remain competitive and grow.
Second, FP9 should prioritize actions entailing collaborative research rather than single beneficiary schemes. Single beneficiary schemes can be powerful tools for very specific purposes, but they cannot fully support the formation of a strong industrial ecosystem in Europe. Third, the EU electronics manufacturing industry expects a complete value chain approach from FP9. Future EU-funded research actions should prioritize projects in electronics that involve players along the value chain, starting with materials and equipment providers and spanning chipmakers, system integrators as well as players from emerging “smart” verticals such as automotive, medical technologies and energy.
Recommendation 4: Incremental innovation drives growth. FP9 should equally support incremental and disruptive innovation, as they are complementary.
FP9 should cover the entire innovation process and support both breakthrough/disruptive and incremental innovation as they are complementary. Incremental innovation is the driving force behind Europe’s manufacturing SMEs growth and plays an instrumental role in increasing productivity, and most breakthroughs and disruptive technologies stem from incremental innovation. There is, therefore, no reason to prioritize disruptive/breakthrough innovation over incremental efforts in FP9. Ignoring this recommendation would largely discourage European industrial SMEs that are focused on incremental innovation and do not always have large resources needed for disruptive/breakthrough innovation.
Recommendation 5: Industrial Leadership Pillar of Horizon 2020 has proved its success. FP9 should not water it down, but reinforce it.
The Industrial Leadership Pillar is of crucial importance for applied researchers in the field of electronics manufacturing. The industry largely benefits from the tangible results generated by this Pillar. Any watering down of the Pillar’s “industrial” character by incorporating global/societal challenges would damage the success of Horizon 2020, and divert businesses from FP9. The Commission should not forget that industrial technology is the cornerstone of the innovation needed to tackle societal challenges including safety, environmental sustainability, mobility and an aging population.
In order to ensure the industry’s growing contribution to tackling societal challenges, FP9 should maintain the Industrial Leadership Pillar as a separate funding line. Likewise, future industrial technologies to be funded by FP9 should be thoroughly vetted by industry, research and government experts with a long-term vision and mastery of the subject matter, rather than a “citizens voting system” as proposed in the Lab-Fab-App Report.
Recommendation 6: A multidisciplinary skills-set will be decisive. FP9 should support the acquisition and upgrade of skills needs in the digital economy.
Electronics manufacturers increasingly need a multidisciplinary skills encompassing expertise in electronics, chemicals, materials, production, design, software, computer and data analytics. By leveraging talent from the worlds of industry and academia, EU-funded programmes have a great potential to generate the new skills and knowhow needed to fuel industry growth. While many Coordination and Support Actions under Horizon 2020 Programme have already addressed the issue of education and skills development, often Innovation Actions (IAs) and Research and Innovation Actions (RIAs) have not necessarily supported the acquisition of new skills aligned with emerging industry needs.
In FP9, this shortcoming can be addressed by promoting specific work packages and tasks pertaining to education and skills in IAs and RIAs such as “new curriculum development” or “industry-led training programmes” aimed at building a workforce focused on innovation.
Recommendation 7: Horizon 2020 has facilitated SME participation thanks to simplification. FP9 should pay attention to low success rate, minimize lost efforts and simplify further.
One of the biggest shortcomings of Horizon 2020 is a low success rate that drives a wedge between highly innovative companies and EU-funded R&D. According to the Lab-Fab-App Report, Horizon 2020 currently funds just 25 percent of the proposals evaluated as high quality, raising industry concerns that high-quality proposals receive no funding and should be avoided for the sake of time and efficiency. Clearly, the Commission cannot distance European organizations from EU-funded research, but there are potential solutions to the problem. One approach could be to extend the two-stage proposal process for industrial technologies to streamline the project application phase: in the first stage, only a short proposal is submitted and, if successful, a second detailed proposal is submitted for further evaluation.
In addition, FP9 should avoid comingling R&D financial instruments. Grants and loans have different purposes and cannot replace each other. While grants support chiefly research, development, innovation, testing and demonstration in collaborative projects, loans are perfect funding instruments for single beneficiaries to finance projects very close to markets or products that are already on the market. In this regard, blending funding instruments can distort practices that European R&D players are already used to, create complexities and barriers that prevent companies from joining FP9, and water down all the simplification efforts made through Horizon 2020.
In conclusion, Horizon 2020 has delivered tangible results in pushing the borders of Europe’s research and innovation. The Commission’s recent communications on “Building a European Data Economy” as well as “the Renewed EU Industrial Policy Strategy” have underlined a) the EU’s great potential in the digital economy and b) the need for further research, development and innovation in key enabling technologies such as electronics. SEMI believes that FP9 can bridge the Europe of today with the Europe of the future, powered by the digital economy, if the EU makes the right decisions.
Emir Demircan, Senior Manager Advocacy and Public Policy SEMI Europe
firstname.lastname@example.org; +32 (0) 2 609 5318
SEMI Global Update
February 6, 2018