EN Official Journal of the European Union C 67/175

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A European Strategy for Micro- and Nanoelectronic Components and Systems’

COM(2013) 298 final

2014/C 67/36

Rapporteur Ms BATUT

On 3 July 2013 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A European strategy for micro- and nanoelectronic components and systems

COM(2013) 298 final.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 30 September 2013.

At its 493rd plenary session, held on 16 and 17 October 2013 (meeting of 16 October), the European Economic and Social Committee adopted the following opinion by 112 votes to 1 with 1 abstention.

1. Conclusions and recommendations

1.1 The EESC welcomes the Commission's desire to create European leadership in the field of micro- and nanoelectronic components and systems and, by means of this cross-border project, to bring together with all speed the Member States, research, investments and energies, in order to turn excellence into production and jobs.

1.2 The EESC believes that micro- and nanoelectronic components and systems can provide the basis for a new industrial revolution and that, to this end, even more than a European industrial "strategy", a genuine "common industrial policy" of public interest is needed in this field, coordinated by the Commission so that European companies are in a position to take the lead in production and on the markets. This aspect is missing from the Commission's proposal.

1.3 In the EESC's view, the few existing clusters of excellence, which are crucial in terms of stimulating European efforts, must be expanded and further developed. Enabling less advanced entities across the EU to benefit from the broad public and private funding programme proposed in the Communication would enhance their potential. In this context, the system of state aid and subsidies needs to be revised because the issue faced by the EU in high-tech industries is not competition between EU firms, it is rather the absence of globally competitive leader firms in many high-tech sectors. The policy should be made more flexible in relation to this cutting-edge sector, not just for the Joint Technology Initiative proposed, but also in order to help companies achieve global scale, as happens in Asia and America.

1.4 The EESC believes that the strategy presented in the Communication should seek to enable Europe to catch up and to establish European competences throughout the value chain – product and market leaders, contract manufacturers, platforms, core technology producers and design houses – and that the Union should protect the interests of its companies in each free trade agreement currently under negotiation (Japan, USA). The Committee supports the Eurocentric approach of the European Commission and is concerned about its implementation in the framework of the global value chain. Indeed the real weaknesses of Europe are the lack of product and market presence, and the paucity of leading product companies. However, the EESC recommends the Commission not to neglect the development of strong Member States as the basic elements of cross border synergies.

1.5 The Committee wholeheartedly welcomes the strategy on micro- and nanoelectronic components and systems, but would point out that it must conform to Articles 3(3) TEU and 9 and 11 TFEU. Since the roadmap is not due to be established until the end of 2013, the EESC recommends that account be taken of the socio-economic impact on living creatures and on sustainable development resulting from the growing use in our daily lives of micro- and nanoelectronic components and the materials involved, on research, employment, training, the crucial development of skills and abilities, and on public health and the health of workers in the sector.

1.6 It recommends establishing, alongside the Electronic Leaders Group, new forms of citizens' governance, in view of the scale of the public investments sought - EUR 5 billion over seven years - and the strategic importance of the sector.

1.7 The EESC recommends a mid-term assessment of the strategy.

2. Introduction

2.1 As part of its policy on stimulating investment to create a stronger European industry for growth and economic recovery (COM(2012) 582 final), the European Commission has published a Communication on micro- and nanoelectronic components and systems, which it had already defined in an earlier Communication (COM(2012) 341 final) as "Key Enabling Technologies (KETs)", which correspond to key initiative No 6 of the Europe 2020 strategy, under Horizon 2020.

2.2 Micro- and nanoelectronic components and systems as enabling technologies underpin a range of product categories that are now indispensable for all activities and contribute to innovation and competitiveness. The principle nine product categories are (1) computers, (2) computer peripherals and office equipment, (3) consumer electronics, (4) server and storage devices, (5) networking equipment, (6)automotive electronics, (7) medical electronics, (8) industrial electronics and (9) military and aerospace electronics.

2.3 The EESC is pleased to see that, with this new Communication, the Commission has followed up some of the recommendations it had occasion to make in its previous opinions (1), and that it is showing a genuine will to take action to win back markets. Success will depend on making better use of research results and placing more emphasis on leader companies and products.

2.4 As the Commission itself states, the global turnover for this sector alone stood at around EUR 230 billion in 2012 and the value of products comprising micro- and nanoelectronic components and systems represents around EUR 1 600 billion worldwide. Observing that, on the one hand, EU support for R&D&I has been stagnating for 10 years (Communication, point 5.2) and, on the other, that over the last 15 years there has been a significant shift of volume production to Asia, which has both the patent holders and a skilled workforce (Communication, point 3.3), the Commission proposes to develop a new European industrial strategy for electronics and recommends coordinated public investment and public-private partnerships to attract EUR 10 billion of new public and private investment in "advanced technologies".

3. Summary of the Communication

3.1 For Europe to catch up and keep pace with the United States and Asia in the production of micro- and nanoelectronic components and systems, the Commission proposes: — increasing and coordinating investment in research and development and innovation (R&D&I) and pooling the efforts of the Member States and the EU through closer cross-border cooperation; — strengthening Europe's existing centres of excellence in order to maintain leadership; — taking steps to make European digital carriers (silicon chips) more effective and less expensive (moving towards 450 mm wafers - the so-called "More Moore" track, and smarter wafers - the so-called "More than Moore" track); — mobilising EUR 10 billion over seven years, half from regional, national and European public sources and half from public-private partnerships, so as to cover the value and innovation chain, including from the framework of Horizon 2020 (2). The Commission's objectives are therefore: — to provide Europe's key industries with more European manufactured micro- and nanoelectronic components and systems; — to strengthen the supply chain and ecosystems for these technologies by providing more opportunities for SMEs; — to increase investment in advanced manufacturing techniques; — to stimulate innovation in all areas, including in design, to boost Europe's industrial competitiveness.

4. General comments

4.1 Nanotechnologies are used in all electronics and optoelectronics products. They represent what are known as 'top-down' technologies, which use more finely structured (micro) materials as a basis for creating components such as transistors, capacitors and electrical interconnections. Cutting edge research is now adopting a "bottom-up" approach, where smaller, usually molecular structures are assembled into integrated structures of nano entities (sized from 1 to 100 nanometres), such as nanotubes, which already have intrinsic electrical conductivity, and these will improve performance and extend the capacity of silicon even further. As was outlined in point 2.2, the domains affected by electronic components and systems are extremely varied, affecting almost every dimension of industrial and commercial activities as well as most every facet of our personal lives. We are now beyond the stage where this list can be an exhaustive one.

4.2 The Committee welcomes the focus on a genuine industrial strategy for electronics, which will determine innovation capacity in all sectors of the economy and Europe's competitiveness and future, and welcomes the fact that the Commission wants this strategy to be a common driver for the Member States in order to make Europe a leader in this field. On the world market in Key Enabling Technologies (KETs), competition is fierce and capital is moving to areas outside Europe. In order to restore its position in the world, the EU should provide Member States with conditions suited to the industries in question.

4.3 The Communication proposes an extremely Eurocentric strategy based on filling the gaps in the value chain of the European electronic industry. However, value chains in the electronics industry are global, not regional. The three principal actors are: lead firms, contract manufacturers, and platform leaders. Dozens of other entities play important roles in the broader industry, including software vendors, production equipment manufacturers, distributors, and producers of more generic components and subsystems. The value captured by the most powerful firms in global value chains - lead firms with global brands and component suppliers with strong positions of "platform leadership" - can be extremely high. The Communication is imprecise as to where in the global value chain the Commission plans to target its efforts and whether its ambitions extend beyond generic components and sub-systems.

4.4 In order to attract the necessary significant investment to this sector, the Commission wishes to promote cooperation and cross-fertilisation and expects researchers and leaders from the electronics industry (AENEAS & CATRENE Board members, "Nanoelectronics beyond 2020") to assist it in drawing up, by the end of 2013, the roadmap which will guide the strategy.

4.5 Welcoming this strong will to move forward, the EESC believes that the strategy should be warmly welcomed. Beyond a European industrial strategy, what is needed in this field is a genuine "common industrial policy", which offers researchers a comprehensive short- and long-term political vision. This is an area crucial to Europe's survival. The aim is to benefit from a critical mass, so as to turn research into products, and then into marketable products. It is therefore crucial to establish, on the one hand, industrial forecasts of at least five years, as competing third-country companies do, and on the other, links with civil society. Although there is expertise, it has developed in certain niche areas and, between the design stage and the sale of the final product, SMEs specialising in this area are short on resources, skills and visibility. The EU needs strategies, products and leaders. The Communication does not take this aspect sufficiently into account.

4.6 In the first four product categories detailed in point 2.2, there is only one global leader from Europe. There is a more important European presence in the other sectors, but in no sector does Europe have a dominant position. The EESC regrets that the Commission's strategy is not more explicit in regard to these barriers to entry into the global value chain. An essential first step would be to repatriate contract manufacturing.

4.7 The EESC welcomes the Commission's recognition that there is an urgent need to step up and, first and foremost, coordinate the various efforts the public authorities are making in this area so as to ensure that the EU maintains its ownership of these technologies, even when they are sold all over the world.

4.8 In the EESC's view, it is absolutely vital to encourage cross-border synergies and equally as vital to stimulate Member State energies as a basis for the synergistic interaction. Europe can be no more than the sum of its parts. Member States themselves have the intellectual assets to make a global impact. The issue is as much energy; vision and ambition within borders as it cross border synergy.

4.9 Coordination will need to be extremely well structured so that the fragmentation that already exists at the level of the Member States is not compounded by the regional or indeed university level (clusters of excellence). The strategy must be tailored to the intrinsic features of the micro- and nanoelectronics sector.

4.10 The EESC believes that there needs to be a balance between a strategy based on market demand and a needed common industrial policy. The market cannot be the sole reference (cf. Communication, second paragraph of point 5.3; Annex, Point 4). Even so, the EU must not turn its back on market-based discovery.

4.11 A stronger European industry and a new strategy for electronic components and systems are entirely welcome, but they must conform to Articles 3 TEU and 9 and 11 TFEU. Despite the complexity of all these factors, the socio-economic impacts of the development of nanotechnologies and development through nanotechnologies should be mentioned.

4.11.1 The Committee considers that the data on the number of jobs in the sector, and on the training, qualifications and skills required, should be analysed and quantified. Jobs are currently being created, but there is a lack of skills. This mismatch needs to be addressed and doing so will require long-term investment, which can also be quantified. The ultimate objective is for all the stakeholders concerned to come together to strengthen the EU's position in the world of electronic components and systems. The Committee regrets that the Commission has omitted these aspects in its Communication, although they were covered in some depth in its previous text, issued in 2012 (COM(2012) 582 final), and also regrets that no mention is made of the sums involved.

4.11.2 Electronic devices are amongst the products containing nanoparticles which are or will be available to consumers. They are in the components of hybrid molecular electronics, semi-conductors, nanotubes and nanowires, as well as advanced molecular electronics. Low-voltage and ultra-low-voltage nanoelectronics are important areas of research and development working towards the emergence of new circuits operating close to the theoretical limit of energy consumption per bit. The EU should take into account the impact of wear, of deterioration at the end of life of nanomaterials contained in current electronic devices, or in those under development or to come in the future, in terms of sustainable development and preserving the environment and living creatures, even though the European Commission's current definition of nanomaterials does not include health as an issue in relation to micro- and nanoelectronics. The precautionary principle should be applied.

5. Specific comments

5.1 A genuine industrial strategy

5.1.1 The Committee endorses the Commission's strategy for closing the gaps in the value chain in relation to production and reversing the trend by bringing the missing links in the micro- and nanoelectronic technologies value chain back to Europe. However, it is curious about the reasons for the 10 years of stagnation (recognised explicitly in point 5.2 of the Communication) in EU support for R&D&I, despite its world-class reputation, which have prevented the European Union from taking its place on the world market at the crucial moment of China's awakening. Analysing these reasons, as well as the dynamics of the global value chain discussed in section 4 of this opinion, would prevent future errors, and to that end perhaps the strategies of other regions of the world should be taken as inspiration and useful ways to encourage certain types of production to return to Europe should be found.

5.1.2 The EESC believes that competitiveness based on reducing labour costs has decimated entire sectors (textiles, shoes, tyres, metallurgy, etc.). Contract manufacturing has had the equivalent effect in electronics. The electronics strategy should take account of this and allow for the definition of new forms of competitiveness, based on factors such as skills, excellence and the creation of more clusters, the dissemination of knowledge to more companies, internal flexibility, etc.

5.1.3 The Committee believes that, above and beyond financial support, coordinated EU protection could bolster SMEs and the brands they produce. The issues of patents, trade-secret protection, and ways of combating cybercrime and patent theft should be addressed in the strategy. Multilateral free trade opens all borders, outside the coordinated regulation that could be provided by the WTO. The EESC considers that the strategy presented in the Communication should be taken into account in each free trade agreement currently under negotiation (Japan, USA). Free trade agreements, contrary to the wishes of the founding fathers for the European Union, open up the markets of partners who do not necessarily have the same rules.

5.2 Funding

5.2.1 The race for markets requires investments that the Member States, in the grip of the crisis and the budget cuts demanded by the EU, are no longer able to provide. The Commission is urging the private sector to step in. However, the crisis has made it more difficult for SMEs, particularly SMEs involved in innovation, to get access to credit, to the point that they are being strangled by their banks.

5.2.2 The Committee welcomes the fact that the Commission also focuses on their financing, thereby helping to loosen the noose.

5.2.3 Public contributors' capacity for action is limited, given their deficits and public debt, including welfare systems. The means of supervision available to them to check that businesses actually are engaging in maintaining and expanding their design and manufacturing activities in Europe (point 7.1, final paragraph) have not been sufficiently developed. The Committee believes that the system of State aid and subsidies could be made more flexible in order to ensure: 1. that the sector's companies have more capacity to react on this future world market; 2. that there is exchange of good practices between all researchers; 3. that new centres of excellence can emerge in cities prepared to host them; 4. that solidarity rules prevent intra-European dumping; 5. that the procedures and criteria for accessing funds are simplified and banks informed.

5.2.3.1 The EESC calls for a clarification of the relationship with the Structural Funds and the EIB, particularly for the EU countries that are on their knees as a result of the severe financial crisis, where the massive contraction in public spending, combined with the freeze on private investment, has made all aid illusory and where the Structural Funds have already ceased to be any kind of miracle cure. The EESC suggests that the EU arrange for the possibility of the relevant researchers in these countries joining the best European research centres.

5.2.3.2 As far as private funding is concerned, the EESC considers that, although it can make a contribution, it is risky to predicate a long-term strategy on it.

5.3 Coordination

5.3.1 The EESC endorses the role the EU intends to play as a coordinator of the various forces, and supports the Commission's decision to use Article 187 of the Treaty and set up a joint undertaking (the new Joint Technology Initiative). By itself, the market does not play a "role", having no political will to give impetus to guidelines.

5.3.2 EU level is the appropriate level for organising a cross-cutting approach, avoiding the duplication of research, mobilising value chains and commercialising the results in the best conditions. Account should be taken of levels of development of research which differ between Member States, so that not only are clusters of excellence promoted, but the new funds made accessible to all. When the same business model cannot be applied everywhere, small start-ups must be able to receive assistance as well.

5.3.3 Account will have to be taken of the fact that the objective of ensuring vertical integration of IT systems (the former ARTEMIS programme) and nanoelectronics (the former ENIAC JTI) by establishing horizontal transnational cooperation between businesses and universities, is an ambitious one. In the crucible of new discoveries, understanding nano properties will require an increasingly multi-disciplinary approach and the EESC would welcome clarifications regarding the specificities of the regions and clusters of excellence, and about protection for the information that will need to be circulated and the patents that are filed.

5.4 Socio-economic impacts

5.4.1 These are not addressed in the Communication. The Communication aims to increase efficiency, but nothing can be achieved, especially in this area, without taking account of human capital (Articles 3(3) TEU, 9 and 11 TFEU).

5.4.1.1 Employment

— According to the Commission, 200 000 people are employed directly by micro- and nanoelectronics firms and the sector is also indirectly responsible for 1 million jobs. There is a constantly expanding need for skills.

— At the end of the value chain, firms must succeed in translating their investments into results (in terms of quality, profits and markets). The EU is at the cutting edge of world research, and must succeed in converting this into jobs.

— The EU must extend the high levels of expertise achieved in niche areas, by expanding information, training and qualifications, etc.

— The EESC urges that projects should not be financed at the expense of support for social inclusion and combating poverty, and points out that a properly trained, qualified and paid workforce is a measure of the quality of the final product.

5.4.1.2 Training

— The EESC urges the Commission to recall the message of its Communication COM(2012) 582 final (chapter III-D). Human capital and skills and anticipating needs are key to the success of any initiatives in the field of micro- and nanoelectronic components, which are by their nature constantly evolving. The Commission has already introduced a skills comparability classification that will support mobility within the EU.

— Due to the lack of harmonisation, situations differ between the Member States in terms of taxation, education, access to capital and labour costs. The EESC believes the Commission is right to emphasise skills. It would urge that every measure be taken to facilitate within the EU the convergence of the training, qualifications, know-how and diplomas needed to cover the value chain of the European micro- and nanoelectronic industry.

5.4.1.3 Health

5.4.1.3.1 The OECD defines nanotechnology as the set of technologies that enables the manipulation, study or exploitation of very small structures and systems (2009). Whether natural or manufactured, these materials are essential to nanotechnology and are handled and used by people, as citizens and as workers.

5.4.1.3.2 The EESC considers that, in a Communication which aims to make the EU a world-class player in this area, it is vital to sound a note of caution where this is called for and to mention the risks to human health, and to draw attention to the precautionary principle, so as to ensure that everyone can reap the rewards and that the risks can be minimised as much as possible so that we do not go down the asbestos path again. Certain current and future components of nanoelectronic systems do not stop at pulmonary, blood-brain or placental barriers. They have a considerable surface of interaction.

5.4.1.3.3 Furthermore, the health sector itself uses nanoelectronic systems and contributes in this way to the development of research: it must be remembered that its ability to do this currently comes from welfare systems which are a market for research, provided that crisis, unemployment and deficits permit it.

5.4.1.4 Sustainable development

5.4.1.4.1 The EESC draws attention to the Strategy for smart, sustainable and inclusive growth called for by the Commission (EU 2020; COM(2010) 2020 final) and considers that the European strategy for micro- and nanoelectronic components and systems is at the heart of this issue.

5.4.1.4.2 The strategy must, from the very start, recognise that the industry we wish to develop is already producing specific forms of waste and is certain to produce others, and that, from the research stage onwards, the lifecycle of micro- and nanomaterials needs to be managed and financed. This is particularly true for manufactured materials and the systems that use them (see the "bottom-up" approach), especially since all the risks have not yet been identified. In relation to them, consideration should perhaps be given to supplementing the Energy Taxation Directive (3).

5.4.1.4.3 The EESC considers that the proposed industrial strategy can be classed as a public works policy and, as such, must comply with sustainable development requirements.

5.4.1.5 Governance

Some Member States have organised public debates on this industrial revolution. At the end of the value chain, the challenge is to win the confidence of citizen-consumers so that they buy European.

The EESC therefore calls for stakeholders to be involved and for the issues of risk management and the definition of responsible innovation to be discussed. Taking account of the collective interest and the responsibilities of actors, and identifying issues and conflicts of interest will help to find solutions which are socially acceptable to citizens who are aware of the investments sought and the strategic importance of the sector.

Brussels, 16 October 2013. The President of the European Economic and Social Committee Henri MALOSSE

(1) OJ C 44, 15.2.2013, p. 88; OJ C 54, 19.2.2011, p. 58.

(2) COM (2011) 808 final, Horizon 2020 - The Framework Programme for Research and Innovation.

(3) COM(2011) 169 final.