Europe’s Semiconductor CEOs Back ‘Internet Of Things’ Research Drive

An industry group of 11 European electronics industry chief executives, including the heads of ARM, Infineon and STMicroelectronics, has recommended that the European Commission create research centres focused on the “Internet of Things” as part of a strategy to reverse the decline in Europe’s share of the worldwide semiconductor industry.

The recommendation is part of a document delivered to the EC on Friday by an Electronics Leaders’ Group set up last year by the Commission as part of its Electronics Strategy for Europe, which aims to facilitate industry investment of 100 billion euros (£82bn) by 2020, whilst doubling the value of EU microprocessor production and creating 250,000 jobs in Europe.

The European semiconductor industry employs about 250,000 people directly, with about 2.5 million employed in the overall value chain, while micro- and nano-electronic components and systems drive at least 10 percent of Europe’s GDP, according to the EC.

‘Smart Everything Everywhere’

The research centres, part of an initiative called “Smart Everything Everywhere”, would be funded through a public-private partnership programme called Electronic Components and Systems for European Leadership (ECSEL), which is planned to launch around May of this year and has a total planned budget of at least 5 billion euros over the next seven years. ECSEL is itself part of Horizon 2020, the European framework programme for the next seven years.

The plan, called “A European Industrial Strategic Roadmap for Micro- and Nano-Electronic Components and Systems”, identifies the Internet of Things as the next frontier for digital technology, after being driven progressively by military, corporate and most recently consumer markets.

“The Internet of Things, with its underlying cyber physical components, promises to provide a new level of connectivity, intelligence and capability to all sectors,” the report states. “This will also create a significant potential for change in the nature and mix of products, but also in their creation, marketing and support.”

The report’s authors call for the centres to focus on specific areas including autonomous mobile devices and smart personal companions.

“They will cover skills extending from chip design to embedded software and cyber physical systems and offer a one stop shop for low-tech or non ICT industries wishing to embrace the opportunities that SmartX/IoT provides,” the report states.

SmartX refers to emerging markets such as smart homes and smart grids. The report argues that Europe can capture 60 percent of the emerging Internet of Things/SmartX market, as well as to gain 20 percent of the projected growth in mobile and wireless communications, by 2020.

Supply-side development

The projected research centres are intended to help stimulate demand for Internet of Things-type devices, part of an overall goal to double the economic value of the semiconductor component production in Europe by the 2020 to 2025 period. The centres are also intended to help capture new markets, which the report also argues is necessary to reach the EC’s target.

“To achieve the ‘doubling in Europe’ objective will require increasing the value and quantity of semiconductor production, but also the demand for it,” the report states.

On the supply side, the group believes Europe can increase capacity by 70,000 wafers per month beginning in 2016 or 2017, an average of 10 percent increased capacity per year, partly through an upcoming transition to a larger wafer size that is expected to lower production costs.

The industry group is set to develop concrete actions based on the report’s ideas by June of this year.

Semiconductor growth

With its Electronics Strategy for Europe, the EC is looking to boost Europe’s share of the worldwide semiconductor market, which grew to more than 15 percent of world production in the 1990s but has fallen back to below 10 percent in the past decade – following Japan with 22 percent, South Korea with 18 percent, Taiwan with 17 percent and the US with 13 percent.

The EC wants to build on Europe’s strengths in vertically integrated markets such as automotive, energy, security and smartcards and leading positions in new markets such as sensors and microsystems, as well as strengths in virtual components, low-power processors, and the supply of equipment, materials and intellectual property.

“I want us in the driver’s seat,” stated European Commission vice president Neelie Kroes. “The sector wants to be back in the driver’s seat. So my message is this: we are going to make Europe the place to make and buy innovative micro and nano-electronics.”

Intel said last November that it is planning to provide not just chips, but end-to-end services for Internet of Things devices, including security, development platforms and analytics, as it seeks a leadership role in the IoT market. In September Intel launched its first IoT-oriented chip, and established a business unit targeting the market in November.

Do you know all about the Internet of Things? Take our quiz.