(L-R): Luc Van den hove, IMEC; Eicke Weber, Fraunhofer; Heinz Kundert, SEMI; Michael Peo, Infineon Technologies

Industrialists call on EU to scrap subsidy rules

European technology company leaders are pushing the European Commission to rewrite the rules for funding and R&D to allow public funds to be used not just for pre-competitive research but applied product development.

Meeting in Brussels with representatives from the European Commission in late May, the leaders of the High-Level Group put together by microelectronics manufacturing group SEMI Europe argued they need a change in the rules to justify continued investment in the continent in the face of more attractive conditions being offered by China and the US. The group has prepared a report recommending that the European Union focus funding on six key enabling technology (KET) areas and provide much greater support for manufacturing.

“We have excellent research in Europe,” claimed Professor Gabriel Crean, vice president of technology for CEA and ‘sherpa’ of the chairman of the High-Level Group. “The question is: where will our manufacturing be? If we don’t have manufacturing, what’s the point in doing all this R&D?”

Crean used the example of lithium-ion batteries to demonstrate “the disconnect between R&D and manufacturing”. He claimed that European-based organisations had published almost a third of all patents on this battery technology but had “zero manufacturing in Europe”. Asia, on the other hand, is currently responsible for almost 90 per cent of lithium-ion batteries.

Crean pointed out that the US has used $1.4bn to encourage the building of two major battery plants there to support its automotive industry, one of them owned by France-based Saft. “There is no possibility to present to organisations the type of support to set up a facility like that in Europe.”

Geneviève Fioraso, deputy mayor of Grenoble, which is home to one of only a few fabs in Europe able to manufacture semiconductor wafers on leading-edge processes, said the EU would only agree to approved public assistance for if the lines were used for R&D, although the plan was only viable if Crolles2 was used for wafer production as well as R&D.

“We need to broaden the R&D definition,” argued Crean. “If you look at Korean, Chinese and US Federal R&D, it mainly goes to applied development. We need a significant rebalancing of the innovation budget. It’s black and white. It makes no sense to fund research where the applied value chain is broken.”

Milan Nitzschke, vice president of sustainable development at SolarWorld, said: “Europe is very well positioned in terms of turning money into knowhow. The vice versa is more difficult: turning knowhow into money.”

The High-Level Group plan has secured the tentative backing of several Directorates General (DG) within the European Commission. “This group has produced a set of convincing arguments and we will look at these different recommendations. The timing is perfect. We are in a situation where we have to prepare the 8th Framework, where policies and instruments can be revisited. With my colleagues from DG Research, I will use this report to ensure that the right direction will be taken.”

In a press conference following the meeting, Eicke Weber, director of the Fraunhofer Institute for Solar Energy (ISE) said: “I am encouraged that this whole KET approach was stimulated by the Commission.” But he admitted that the backing for the plan in the meeting from DG members remained lukewarm: “I was a little disappointed that they are sitting on their hands a little. I would have expected them to know by now what they plan to do.”

Obstacles remain for any plan to rewrite the rules on R&D and industrial subsidies or tax breaks within the EU: they may need agreement from the Council of Ministers and not just the Commission.

Heinz Kundert, president of SEMI Europe, said: “Everybody knows what the problem is. The question is how we implement it.”

“Some recommendations can be followed within the structure we have today,” claimed André-Jacques Auberton Hervé, president and CEO of semiconductor wafer maker Soitec.

A key problem for the proposals is that the current rules for industrial subsidy are designed to prevent countries giving their own companies a market advantage within Europe and are policed by the Competition DG.

Michael Peo, senior principal for funding and cooperation at Infineon Technologies, warned: “There is one part of the Commission that is not onboard: it’s DG Comp.”

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