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# 52013SC0255

**COMMISSION STAFF WORKING DOCUMENT Impact Assessment Accompanying the document Proposal for a Council Regulation on the ECSEL Joint Undertaking /\* SWD/2013/0255 final \*/**

  

COMMISSION STAFF WORKING DOCUMENT

Impact Assessment

Accompanying the document

Proposal for a Council Regulation

on the ECSEL Joint Undertaking

TABLE OF CONTENTS

Introduction.................................................................................................................................. 5

1........... Procedural Issues And Consultation
Of Interested Parties................................................ 5

1.1........ Organisation and Timing.................................................................................................. 5

1.2........ Consultation of the IA Board.......................................................................................... 6

1.3........ Inter-service Impact Assessment
Steering Group (IASG)................................................ 7

1.4........ Consultation and Expertise.............................................................................................. 7

1.5........ Results from the on-line public
consultation...................................................................... 8

1.6........ Results from the study on future
impact of ARTEMIS and ENIAC................................ 13

1.6.1..... Main findings................................................................................................................ 13

1.6.2..... Main recommendations................................................................................................. 14

1.7........ Stakeholders views - summary...................................................................................... 15

2........... Problem definition......................................................................................................... 16

2.1........ Electronic components: An
important industry with significant growth and a massive economic footprint            18

2.2........ Embedded systems: driving
innovation across industry................................................... 18

2.3........ Key technologies for addressing
the societal challenges.................................................. 19

2.4........ Technological and economic
context............................................................................. 19

2.4.1..... Fierce global competition and
changing business models................................................ 20

2.4.2..... Declining market shares of
production........................................................................... 20

2.4.3..... High costs of R&D&I and
fragmented European landscape........................................... 21

2.4.4..... Fast-paced innovation, seizing the
opportunities ahead................................................... 21

2.5........ Achievements and lessons learned
from the current ENIAC and ARTEMIS JUs............ 23

2.5.1..... Governance and objectives........................................................................................... 23

2.5.2..... Achievements............................................................................................................... 24

2.5.3..... Issues in meeting the initial
objectives............................................................................. 26

2.6........ Key problems and their drivers..................................................................................... 27

2.7........ Who is affected and how.............................................................................................. 31

2.8........ The need for public intervention..................................................................................... 31

2.9........ The right to act............................................................................................................. 32

2.10...... Subsidiarity................................................................................................................... 32

2.11...... Baseline scenario.......................................................................................................... 33

3........... Objectives.................................................................................................................... 33

3.1........ General Objectives....................................................................................................... 33

3.2........ Specific Objectives....................................................................................................... 34

3.3........ Operational Objectives................................................................................................. 39

3.4........ How do objectives relate to the
problem statement........................................................ 45

4........... Policy Options.............................................................................................................. 45

4.1........ Options........................................................................................................................ 45

4.1.1..... Option (a) Baseline -
Business-as-usual: continue within Horizon 2020 with renewed ENIAC and ARTEMIS
JUs.................................................................................................................................... 46

4.1.2..... Option (b) Zero Option: use of the
collaborative research projects under the EU Framework Programme Horizon 2020............................................................................................................................ 47

4.1.3..... Adapting the scope of the new JTI................................................................................ 47

4.1.4..... Option (c) Implement a contractual
Public-Private Partnership....................................... 47

4.1.5..... Options (d) and (e) Implement a
new institutional Public-Private Partnership.................. 48

4.2........ Discarded options......................................................................................................... 48

4.2.1..... No action at all............................................................................................................. 48

4.2.2..... Early winding-up........................................................................................................... 49

4.3........ Proposed budget.......................................................................................................... 49

4.3.1..... Operational budget....................................................................................................... 49

4.3.2..... Administrative budget................................................................................................... 50

5........... Analysis of the Impact................................................................................................... 51

5.1........ General impact............................................................................................................. 51

5.1.1..... Economic impact.......................................................................................................... 52

5.1.1.1.. Competitiveness and investment.................................................................................... 52

5.1.1.2.. Research and innovation............................................................................................... 52

5.1.1.3.. Stakeholders................................................................................................................ 52

5.1.1.4.. Estimated leverage effect............................................................................................... 53

5.1.2..... Societal impact............................................................................................................. 54

5.1.2.1.. Employment................................................................................................................. 54

5.1.2.2.. Addressing societal challenges....................................................................................... 54

5.1.3..... Environmental impact.................................................................................................... 55

5.1.3.1.. Energy efficiency........................................................................................................... 55

5.1.3.2.. Recycling and materials................................................................................................. 55

5.2........ Impact of options.......................................................................................................... 55

5.2.1..... Impact of bi- or tripartite
initiative.................................................................................. 55

5.2.2..... Impact of joining forces................................................................................................. 56

5.2.3..... Specific impact on the various
stakeholders................................................................... 56

6........... Preferred policy option................................................................................................. 58

6.1........ Comparing the options.................................................................................................. 58

6.2........ Implementation and governance.................................................................................... 60

7........... Evaluation and monitoring............................................................................................. 63

7.1........ Mid-term and final evaluations....................................................................................... 63

7.2........ Monitoring the JTI progress.......................................................................................... 64

7.3........ Monitoring the JU operations
progress.......................................................................... 65

Annex 1 – Context of the initiative............................................................................................... 66

Annex 2 – Recommendations from the two
interim evaluations..................................................... 78

Annex 3 – Profiles of the ENIAC and ARTEMIS
JUs and EPoSS ETP....................................... 82

Annex 4 – Final report of the study on the
future impact of ARTEMIS and ENIAC...................... 93

Annex 5 – Sources..................................................................................................................... 94

Annex 6 – Glossary of Terms...................................................................................................... 98

Introduction

This document is the impact assessment for
a Joint Technology Initiative (JTI) on electronic components and systems set up
as a Joint Undertaking on the basis of Article 187 TFEU. It is proposed as part
of the implementation of the EU Framework Programme for Research and Innovation
Horizon 2020 [1].

Under the Seventh Framework Programme, two
Joint Undertakings (JU) ENIAC and ARTEMIS were established respectively in the
field of nanoelectronics and embedded computing systems. The objective of those
initiatives was to increase and leverage private and public investments in
research and innovation in two complementary domains of high importance for the
entire industrial fabric in Europe. Their profiles and achievements to date are
described in Annex 2.

Building on the experience gained with
ENIAC and ARTEMIS, the present initiative is based on a simplified single
structure, a focused scope of actions reinforcing the synergies between the
areas of electronic components and embedded systems and a major simplification
of the implementation modalities. The initiative is a central pillar of the
EU's strategy for electronic components and systems in Europe. The strategy
aims at drawing more than a €100 billion of additional private investment in
innovation and production in the field, creating more than 250 000 induced
jobs in the next 7 years, and ensuring the best use of electronics to spur
growth across the economy.

The procedure that was followed is in
accordance with the Commission's guidelines for ex-ante impact assessments [2].

1.           Procedural
Issues And Consultation Of Interested Parties

1.1.        Organisation
and Timing

The consultations on the new initiative in
the field of electronic components and systems started in early 2011 and ran
until March 2013. This included:

·
Identification and analysis of economic data,
carrying out literature searches and assessing results from R&D projects;

·
Participating in the inter-service Impact
Assessment Steering Group from June 2012 to December 2012;

·
Carrying out a study on "Future Impact of
ENIAC and ARTEMIS" from 16 July 2012 to 15 December 2012;

·
Launching the second interim evaluation of ENIAC
and ARTEMIS JUs on 10 September 2012;

·
Organising and analysing stakeholder
consultations:

·
Public consultation on "Future Joint
Technology Initiative(s) on electronic components and embedded systems",
open between 20 July 2012 and 12 October 2012;

·
Meetings with representatives of Member States and associated countries held on 6 July, 21 September, 18 October and 5
December 2012, 31 January and 3 March 2013;

·
Consultation meetings with representatives of
the 3 ETPs (AENEAS, EPoSS and ARTEMIS-IA) together on 18 February and 23
November 2011, 30 March and 18 October 2012, 5 February, 4th March,
and 12th June 2013;

·
Bilateral meetings with Member States that
provide the highest contributions to ENIAC and ARTEMIS JUs: France on 3 October
2012, Germany on 12 October 2012, Austria on 17 November 2012, the Netherlands
on 19 October 2012 and Italy on 26 November 2012; and

·
Discussion with high-level representatives of
industrial and academic stakeholders at the "European Nanoelectronics
Forum 2012" in Munich on 20-21 November 2012.

1.2.        Consultation
of the IA Board

The Impact Assessment Board assessed the draft
version of the present impact assessment and issued its opinion on 27 February
2013. The Impact Assessment Board approved the Impact Assessment Report and
suggested certain improvements and modifications.

The Impact Assessment report was amended in
line with these suggestions. In particular

· Information on the 2nd interim evaluation of the ARTEMIS
and ENIAC JU is included and an assessment of the various options along the key
recommendations of the 1st and 2nd interim evaluation is
incorporated;

· The description of the policy options is improved;

· The impact of the options is assessed against the baseline option;

· The section on monitoring and evaluation is strengthened; and

· The structure of the Impact Assessment Report is improved with the
detailed description of the context given Annex 1 to the report.

1.3.        Inter-service
Impact Assessment Steering Group (IASG)

The IASG was set up jointly with DG RTD's
services dealing with the JTIs in their areas of responsibility (Innovative Medicines
Initiative, Clean Sky, Fuel Cells & Hydrogen, and Bio-based Industries).
The meetings of the IASG in 2012 contributed to the planning, coordination and
discussion of the impact assessment reports of the new JTIs being considered
under Horizon 2020. Besides DG RTD and CONNECT, the IASG gathered many services
including SG, LS, BUDG, AGRI, COMP, EMPL, ENER, ENTR, ENV, ESTAT, HR, MARKT,
MOVE, SANCO.

1.4.        Consultation and Expertise

The impact assessment report draws on the
extensive consultations with stakeholders from the electronic components and
systems sector and with Member States as listed above. It also draws on the
results of studies and evaluations of the current JUs and on the work of the
High-Level Group on Key Enabling Technologies (KETs) [3].

The study about the Future Impact of ENIAC
and ARTEMIS [4] examined notably the scope of the new initiative and the means
to maximise its impact on technology progress and on competitiveness and growth
for the European industry. The main results of the study are summarised below
in Section 1.6.

In total more than 20 meetings were held
with stakeholders.

In the meetings with representatives of the
European Technology Platforms ARTEMIS, ENIAC and EPoSS, each representing some
hundreds stakeholders, the desired scope of the new initiative was reviewed in
detail. This resulted in the publication of a High Level Strategic Research and
Innovation Agenda of the ICT Components and Systems Industry [5].

Public authorities were consulted through
an informal "Public Authorities Reflection Group" set up in mid-2012.
All Member States and Associated Countries to the Framework Programme were
invited through the FP7 ICT Committee and the Public Authorities Boards of
ARTEMIS and ENIAC JU. Fifteen States were regularly represented in these
meetings. The consultation of Member States was essential as one of the options
for the implementation of the JTI is a tripartite model in which the Member
States financially contribute, similarly to the current ARTEMIS and ENIAC JUs.

A public consultation was launched on 20
July 2012. It was on-line for twelve weeks until 12 October 2012. The analysis
of the contributions was published at the end of November 2012 [6]. A summary
report is given in Section 1.5. Through the public consultation, the views from
a wide set of stakeholders were obtained. Special attention was given to
solicit opinions on the participation of SMEs.

Structures of the relevant industry
associations and statistics of participations in ARTEMIS and ENIAC calls for
proposals were analysed with respect to the SME participation/participant
profiles. The objective was to assess whether the policy put forward has a
positive impact on SMEs and provides effective incentives to facilitate SME
participation.

For the economic analysis underpinning the
problem definition, the report draws primarily on public domain data and recent
studies conducted by the Commission. As indicated above this context is
provided in Annex 1.

1.5.        Results from the on-line public consultation

The on-line consultation was conducted
through the institutional platform (IPM) of the European Commission between 20
July and 12 October 2012. It consisted of 21 questions covering the policy and
economic context, the assessment of the current ENIAC and ARTEMIS initiatives,
potential improvements and the model for future initiative(s) under Horizon
2020 as well as related performance indicators. The consultation was widely
publicised through several institutional channels and repeated e-mailing
campaigns to over 1,000 contacts representative of all stakeholder categories.

The consultation received 151
contributions. Figure 1 shows the distribution between categories of
respondents.

Figure 1 – Respondents to the public consultation

Companies and research organisations
constitute more than 85% of the respondents. The representational goal of the
consultation is thus achieved. The contributions originated in a large majority
from the 23 European countries involved in the current JTIs, with more than 1/4
of the respondents from Germany and France. The industrial associations
currently member of the ARTEMIS and ENIAC JUs responded for their
constituencies (representing respectively 206 and 126 members) which gives
their views more weight.

The respondents are active in all major
sectors in which the use of electronic components and embedded systems is
essential, showing the relevance of their views. Also, 60% of respondents have
applied for funding from one or both of the current initiatives and half of
them received funding. The highest degree of familiarity with the current JTIs
is by industry and RTOs. Half of the contributors are involved in activities
related to systems while semiconductor design and manufacturing is of interest
to roughly 2/3 of the respondents. The large semiconductor companies that
replied participate in both current JTIs. Half of the respondents are active in
communications and computing.

Key directions for action and areas to
tackle include the need for:

·
Investing more in R&D&I and
manufacturing,

·
Increasing Europe's technology portfolio, and

·
Strengthening the innovation ecosystem.

According to the respondents, this can be
achieved by:

·
Improving coordination of activities between EU
and Member States, and

·
Providing the financial means to compete at a
global level

in order to:

·
Achieve critical mass required for disruptive
and/or breakthrough research,

·
Provide level-playing field conditions to foster
European competitiveness in the sector, and

·
Provide public support for large-scale
investments in research and innovation.

These latter three areas are strongly
advocated by private companies. The highest priority for industry is to
strengthen cooperation between the public and private sectors. Overall there is
the expectation that the JTI will increase the European market share in
electronic components and embedded systems.

How to implement and improve a future
initiative?

Figure 2 shows that there is a balanced
opinion regarding the different implementation options for a future JTI. The
two industrial associations involved in the current JTIs least favour the bipartite
JTI (irrelevant and neutral respectively) as it would pool a too small budget and
has the same administrative burden as the tripartite JTI. The comments by the
respondents indicate that their opinion is largely based on their experience
with the current JTIs. They may not have fully grasped the impact of the potential
improvements considered for a future initiative which may explain the somewhat
lower scoring of the improved tripartite JTI.

Figure 2 - Implementation model for future JTI

In Figure 3, the responses on potential
improvements for a future JTI show a general agreement on the high importance
of lighter financial rules and decision-making. The need for specific rules for
participation in innovation activities (supporting higher TRLs) received a less
strong support. The views on the single point of contact ("one-stop
shop") are mixed although a majority of SMEs and academics expressed a
strong desire. This reflects a need for simplification of administrative
procedures.

Figure 3 - Potential improvements

There is strong support for multi-annual
commitments by Member States, for better synchronisation of procedures, for
simplification and reduction of national rules, and for industry to keep
research activities in Europe. The European Union should invest more in the
electronic components and systems. Support for the latter view is followed
closely by the wish to see more investment by Member States and also by industry
(all above 60% of opinions).

Ex-post evaluation of JTIs' achievements

The evaluation of the two existing JTIs is
positive in all criteria and is consistent between ARTEMIS and ENIAC as shown
in Figure 4 and Figure 5.

Figure 4 - ARTEMIS achievements

Figure 5 - ENIAC achievements

AENEAS indicates that 'the level of
cooperation and collaboration is actually high in the domain'. There is
generally a more positive opinion on the role of the JTI in bringing together
the relevant stakeholders in the spirit of open innovation. The latter reflects
mostly the strong agreement from the large companies in both initiatives.

Timeframe for impact

The evaluation of the coverage and the
impact of the future JTI along the innovation chain (see Figure 6 and Figure 7) show an overwhelming support for
projects with TRLs between 2 to 7 or 8 and a relatively short term impact at
2-5 years. It also shows the need for continuous support of upstream research
to help new concepts emerge.

Figure 6 - TRL range

Figure 7 - Distance to market

System
integration receives, by far, the highest rating as a priority theme for the
future JTI focus, while design and prototyping/demonstrators is in second place.
Large companies favour demonstrators, SMEs prefer prototyping. The majority of
respondents, including the industrial associations, are in favour of a
programme that is more roadmap-driven.

SMEs' position in the future initiative

SMEs are particularly keen on improving
time-to-market. For them, the role of the JTI is to improve cooperation and
coordination of the private sector on innovative demonstrators.

There is a general favourable opinion on
the necessity of facilitating access to financing for SMEs. All stakeholders,
except large companies, support higher funding rates for SMEs. Favourable rules
for the participation of SMEs are seen as strongly effective, though this view
is not strongly shared by large companies and RTOs.

1.6.        Results from the study on future impact of ARTEMIS and
ENIAC

The study [4] was conducted by a team of
experts with extensive experience in the field of the current JTIs. The study
consisted of desk research and about 30 interviews of a representative sample
of stakeholders involved in the ARTEMIS and ENIAC JUs.

1.6.1.     Main
findings

According to the study team, the JTIs
definitely need to be continued. There is a need to continue to support the
European electronic components and systems industry in order to strengthen the
position of the industry in global value chains and to reinforce the European
innovation system in the global innovation network.

Figure 8 - Value chain coverage of ARTEMIS and
ENIAC

As shown in Figure 8 there are
complementarities and strong links between the various parts of the value chain
covered by ENIAC and ARTEMIS. These links are set to grow as the components
industry seeks to capture opportunities in the higher parts of the value chain.
Embedded systems suppliers also seek to better exploit possibilities brought by
the increasing performance and functionalities of components. Continued focused
research and innovation actions along the tracks of the current two JTIs are
needed. These actions should be led by appropriate stakeholders including SMEs.

Integration of operations of the two JTIs
is advisable. This would involve setting up an efficient and effective
one-stop-shop for managing programmes for the European electronic components
and systems industry. Integration furthermore creates scope for cross-cutting
activities. Large parts of the current research agendas could benefit from more
strategic focusing.

1.6.2.     Main
recommendations

The recommendations on the shaping of the
future JTI initiative are divided into two major groups: the first concerns the
development of the research and innovation agenda and the second group deals
with how to implement this agenda and related governance/funding issues.

Developing the research and innovation
agenda:

To further develop the research and
innovation agenda a number of conclusions can be drawn:

1.
Focus on key areas from the double perspective
of positioning EU industry in the global value chain(s) and strengthening the
relevant parts of the European innovation ecosystem. In terms of building a
research and innovation agenda, this has several consequences:

· Maintain a clear focus on the European value added for the
stakeholders (industry, Member States, research organisations and the relevant
regions) to deliver more than the sum of national or single firm interests.

· To maximise impact, address the whole innovation chain including
higher TRLs (avoiding the so-called valley of death). This becomes even more
important with the growing costs and risks of investment at higher TRLs. This
may require an increasing involvement of users (firms and/or public
organisations, e.g. automotive, aerospace, or healthcare and energy sectors) in
the new JTI.

· Balancing short term and long term interests and ensuring that each
stakeholder group has its own role (industry for the market orientation,
science for the longer term opportunities and public government for the general
public interest) will be key issues.

2.
A full integration of the research agendas of
the two JTIs is not advised although there is a clear need to have continuity
from electronic components to systems so as to avoid important gaps in the
value chain. There are significant areas of synergy and some overlaps between
the fields covered by the two running JTIs. Developments in technology
(interdisciplinary fields) and markets (e.g. the further integration of
complete systems on a chip) increase the importance of these synergy areas. It
is therefore essential to create scope for cross-cutting activities between the
agendas of the two running JTIs.

3.
Agility and flexibility are needed. As the speed
of developments increases and technological barriers narrow, the ability to
respond fast – and not to "protect" obsolete trajectories – is
needed. In line with the previous point, the new JTIs should create room for
identifying and responding to new needs and opportunities which may come in
parallel to the envisioned roadmaps.

4.
The participation of SMEs is better than
generally perceived (Figure 9) but needs strengthening. SMEs may actually
benefit from clearly recognisable focus areas in the research agenda that are linked
to specific parts of the industry value chain.

Figure 9 - SME participation in ARTEMIS and ENIAC
projects

Implementing the research and innovation
agenda:

With regard to the implementation of the
research agendas and issues of governance and funding, the following
conclusions were drawn:

1.
Both the stakeholder analysis and the evaluation
of the scenarios show a strong preference for a "one-stop-shop"
organisation. Stakeholder preferences, the SWOT-analyses and the analysis
underpinning the scenarios all confirm the need for continuation of the present
tripartite model in which European Union and Member States' funding come
together with industry funding[1].
The actual implementation of the tripartite model might be improved by
integrating funding commitments from the Union with those of the Member States
(and possible other sources in the future).

2.
Continue working on aligning research agendas
and priorities from a multi-level governance perspective to include regional
and other funding (loans, etc.) options. Unified operations and making the
one-stop-shop work requires considerable effort of coordination. It will
require from industry an effort to focus and prioritise taking into account its
own interests, the public interest, a visionary medium to longer term
technological outlook and market opportunities. To achieve such a focus, high
quality strategic analysis will be required including the identification of
cross-cutting activities and relevant multi-level alignment of funding.

3.
Moving the programmes closer to the market (e.g.
by supporting higher TRLs in the form of pilots and other close to market
initiatives) requires a highly professional and strategic management of the
programmes as the supported activities become deeper entangled in the
competitive operations of firms.

1.7.        Stakeholders
views - summary

From the above it can be seen that stakeholders
consider the two existing JTIs in ICT as being of high value.

The current initiatives ENIAC and ARTEMIS
JU involve industrial stakeholders (both large companies and SMEs) and the
research community (universities and RTOs) from across Europe. Member States
are directly involved in the governance structures and contribute financially.
The industrial and research communities are represented through the industrial
associations AENEAS and ARTEMIS-IA.

The consultations show that all actors are
motivated and committed to the JTIs. According to industry, the JTIs helped
bringing together relevant stakeholders and facilitated cooperation in the
implementation of the industrial Strategic Research Agendas. The JTIs pooled
private resources and public funds from Member States and the European Union.

For the new JTI, all stakeholders strongly
support the following two main specific objectives:

·
Achieve critical mass by pooling public and
private resources; and

·
Provide public support for large scale
demonstrators and pilots.

The new initiative should facilitate
efficient transnational research and support cooperation on innovation across
value chains closer to the market. The design of complex electronic components
and systems should be covered as well as manufacturing and technology
development.

Member States insist on the most effective
spending of public money in the interests of their national industries and
research communities. All participating Member States acknowledge the
importance of a strong industry in electronic components and systems. Member
States showed interest in participating in a tripartite model, where the level
of funding requires pooling of resources and stronger alignment of strategies
at regional, national and EU level.

Some Member States are aware of the
difficulties currently faced by participants, notably through the application
of national eligibility criteria and the lack of synchronisation and alignment
of national contracting and funding terms. Differences in national agreements
create different terms of participation amongst the beneficiaries and lead to
inefficiencies. This is a main difficulty signalled by stakeholders regarding
the tripartite model for the JTI.

For SMEs ease of participation is of
paramount importance. They strongly favour more targeted support, an opinion
that is shared by the Member States.

The need for multi-annual financial
commitments of public authorities is equally highlighted.

These various opinions have been taken into
account when considering the options for the new JTI in electronic components
and systems as set out in the remainder of this report.

2.           Problem
definition

The next Framework Programme for Research
and Innovation, Horizon 2020 [1], states the strategic importance of ICT for
Europe and the ambition for building on Europe's strengths to boost innovation
and grow business. ICT plays an essential role as it provides the key basic
infrastructures, technologies and systems for economic and social prosperity and
as it is at the origin of new private and public products and services.
European industry needs to remain at the cutting edge of technological
developments in ICT as many technologies enter a new disruptive phase. This opens
new opportunities. Electronic components and systems are at the core of all ICT
products and services, and apart from being a significant industry by itself,
are at the origin of many productivity improvements. They fuel innovation across
the economy and have a key role in addressing societal challenges.

To address its aims, Horizon 2020 is
structured around three complementary and interlinked priorities - Excellent
Science, Industrial Leadership, and Societal Challenges. Within Industrial
Leadership support is foreseen for research and innovation to achieve
industrial leadership in key enabling technologies – including electronic
components and systems. Important market failures such as private sector
underinvestment in R&D and insufficient financing for growth of innovative
SMEs will be addressed.

Two specific activity lines within the
Industrial Leadership of Horizon 2020 concern the electronic components and
systems:

·
A new generation of components and systems:
engineering of advanced and smart embedded components and systems. The
objective is to maintain and reinforce European leadership in technologies
related to smart embedded components and systems. It includes micro-nano-bio
systems, organic electronics, large area integration, underlying technologies
for the Internet of Things (IoT) including platforms to support the delivery of
advanced services, smart integrated systems, systems of systems and complex
systems engineering.

·
Micro- and nanoelectronics and photonics: The
objective is to build on the excellence of Europe in this key enabling
technology and support the competitiveness and market leadership of its
industry. Activities will include research and innovation on design, advanced
processes, pilot lines for fabrication, related production technologies and
demonstration actions to validate technology developments and innovative
business models.

The specific objective 'Leadership in
enabling and industrial technologies' will follow a more technology-driven
approach to develop enabling technologies that can be used in multiple areas,
industries and services. Applications of these technologies to meet societal
challenges will be supported together with the Societal Challenges priority. Stakeholders
representing the different perspectives must be fully involved in priority
setting and its implementation. In certain cases, jointly funded public-private
partnerships are to be set up.

The preamble to Horizon 2020 states that 'a
greater impact should also be achieved by combining Horizon 2020 and private
sector funds within public-private partnerships in key areas where research and
innovation could contribute to Europe's wider competitiveness goals and help
tackle societal challenges. The public-private partnerships in the form of
Joint Technology Initiatives launched under Decision No 1982/2006/EC of the
European Parliament and of the Council of 18 December 2006 concerning the
Seventh Framework programme of the European Community for research,
technological development and demonstration activities (2007-13) may be
continued using more fit-for-purpose structures' The set-up of a Joint
Undertaking for R&D&I in electronic components and systems is an
essential pillar for an EU-wide strategy to attract more private investment in
support of an industry-driven European roadmap for leadership in the field.

2.1.        Electronic
components: An important industry with significant growth and a massive
economic footprint

The electronics value chains already
support an important part of the worldwide economy. This proportion will
continue to increase as electronics becomes even more prominent in society and
as products and services more heavily embed digital technologies. The figures
below underline the importance of the sector:

·
The worldwide value of the industry addressed by
this initiative is in the order of some €230 billion ($300 billion) for the
semiconductor industry and around €1.600 billion for the electronic systems.

·
Despite the recent financial and economic
setbacks, the worldwide market for semiconductor components (Figure 10) has
continued to grow by 5% per annum from the beginning of the millennium. Further
growth of the same magnitude has been predicted for the remaining part of the
current decade [7].

Figure 10 - Worldwide market

·
Progress in semiconductors[2] is the main driver behind the
high growth rates of the digital sector which has today a total value of around
€3.000 billion worldwide.

·
In Europe, more than 200.000 people are directly
employed in the semiconductor sector alone with a growing shortage of skills.

·
The impact of electronics on the whole economy,
from automotive to health, energy, aerospace or agro industries amounts to 10%
of the worldwide GDP.

·
As an example, with the increasing
electrification of cars and the move towards greener vehicles, electronics will
represent more than half of the value of the car by 2020. It already represents
more than a third of the value in today's medium and high range cars.

In brief, electronics is at the centre of
improved productivity and sustainability of modern manufacturing, higher value
products and innovation in services in all sectors.

2.2.        Embedded systems: driving innovation across industry

Embedded ICT systems include the software,
computing and networking technologies that are specifically designed in order
to be integrated in all types of products and services such as but not limited
to cars, planes, home appliances, medical equipment, factories or energy
equipment. Their requirements depend on the physical systems in which they are
embedded and often include efficient energy consumption, high safety and
dependability features, and the ability to respond in real time as well as stringent
size constraints. Embedded systems are the technology that enables the whole
economy and society to benefit fully from ICT progress.

An important part of embedded systems is
developed by end user companies such as automotive, energy, aerospace or
engineering companies. However there is also a large community of suppliers of
such systems, mostly SMEs but equally large companies. A rough estimate shows
that there are more than two million people in the EU employed to develop,
implement and maintain embedded systems mainly in user industry.

In 2010, the global embedded systems market
accounted for around €850 billion. The overall industry is growing quickly (12%
per year) and should reach €1.5 trillion in revenue by 2015. It is part of key
markets of European industry. For example, between 7% and 12% in civil avionic
costs are in embedded systems (hardware, software services) and up to 35% of
R&D cost is in embedded systems. The figures are even higher in automotive
with 25% of vehicle cost in embedded systems and 80% of product innovation
coming from embedded systems.

2.3.        Key
technologies for addressing the societal challenges

Electronics components and systems are not
only found in PCs and mobile devices; they also include the sensors, cameras
and actuators in all types of artefacts including the smart grids for lower
energy consumption or implants and sophisticated medical equipment for
healthcare. They provide the building blocks for security systems, for safety
and energy efficiency of transport systems and for food safety and
environmental monitoring.

Nowadays there is not a single societal
challenge in which electronics is not at the basis of innovative solutions to
address that challenge.

2.4.        Technological and economic context

Europe is facing
two main challenges in the field of electronic components and systems:

·
The need to be in control of the key elements of
the value chain, i.e. "components and systems design",
"components manufacturing", and "integration of electronic components
into final products". The electronics value chain extends beyond
manufacturing of chips and includes the whole user industry from automotive to
aerospace up to web-based services. Each of its elements is essential to ensure
sustainability of value creation from electronics in Europe[3].

·
The need to cover the full innovation chain as e.g.
highlighted by the KET report [3]. While there is excellent research capacity
in Europe, the steps to innovation and industrial production need to be
strengthened so that businesses and citizens can fully benefit from
leading-edge technologies.

If Europe loses its electronics
manufacturing capability/capacity the relevant supply chains and design activities
may shift outside Europe and the competitiveness of the whole economic fabric
depending on electronics will be at risk. To ensure control of the value chains
and improve its innovation system, Europe needs to overcome following
difficulties (see Annex 1 for further details):

·
Fierce global competition and changing business
models;

·
Declining market shares of production;

·
High costs of R&D&I and fragmented
European landscape; and

·
Fast-paced innovation, seizing the opportunities
ahead.

2.4.1.     Fierce
global competition and changing business models

In electronics, a shift of production to Asia has been a major trend in the last 5 years as illustrated in Figure 11 [7]. This trend is reinforced by
changing business models resulting in new industrial actors emerging with the
foundry model. Foundries now already account for nearly 10% of the worldwide
production and these are mainly located in Asia.

Figure 11 - Regional share of IC production

2.4.2.     Declining
market shares of production

Europe is home to 3
large European IDMs ranked 8th, 13th and 14th
for worldwide sales in 2012 [8]. However, the market share of European semiconductor
companies is declining and is presently below 10% as shown in Figure 12 [7].

Figure 12 - European semiconductor market shares

2.4.3.     High
costs of R&D&I and fragmented European landscape

Mastering complexity requires heavy
investment in R&D&I and spending huge capital in production and design
facilities as research on devices and production are intimately intertwined. Such
investments can only be justified by volume production in particular through
commoditisation (e.g. mass market products). This has led to a concentration of
industry. It is estimated that nowadays a semiconductor company must capture a
10% share of the worldwide market to afford the investment to keep up with the
state-of-the-art technology development.

Two main factors explain Europe's weaker
position in this field. Those are underinvestment and fragmentation of efforts.
Although in absolute terms investments by EU companies is in the order of
billions of euros, investments remain relatively modest compared to the
worldwide competition.

2.4.4.     Fast-paced
innovation, seizing the opportunities ahead

As illustrated in Figure 13 and Figure 14, the European industry and the
affiliated research and innovation partners are well positioned in critical
industrial areas. Europe has world leading companies in electronic components
and systems in automotive [9], industrial automation, energy applications and
communications. However, it is relatively absent in computer and consumer
related components and systems that constitute a large part of the market [9].

Figure 13 - European markets

Figure 14 - Shares of automotive semiconductors

The outlook for embedded systems in Europe is challenged by two main factors. Firstly, generic ICT platforms at devices,
applications and content level are mostly dominated by non-EU actors (e.g.
operating systems, smartphones, and web-platforms for e-commerce or social
networks). Secondly, embedded systems are increasingly networked and connected
to the Internet[4]
leading to new business opportunities but also to the entry of new players. The
blurring of barriers between sectors such as the web industry and the embedded
systems supply industry however also creates new opportunities. Seizing these
will require notably more cross-sector sharing of tools and technologies that
are today separate. Furthermore it will require more interaction between
software development, hardware development and end-users.

The close relationship between the
electronic components industry and the industrial fabric and the proximity with
systems integrators is therefore of paramount importance for Europe. At the
same time, R&D in Europe needs to keep pace with worldwide competition. If
the manufacturing industry would start to lose ground in Europe, R&D&I
may disappear as well and with it the whole ecosystem, including the user
industries.

2.5.        Achievements and lessons learned from the current ENIAC
and ARTEMIS JUs

2.5.1.     Governance
and objectives

Both the ARTEMIS and ENIAC JUs were set-up
under the Article 171 of the Treaty (now Article 187 of the TFEU) along with
the other JTIs (IMI, CleanSky and FCH). Both ENIAC and ARTEMIS JUs are tripartite
initiatives mobilising funding from the EU, Member States and private members.

ENIAC and ARTEMIS JUs have similar
governance structures as shown in Figure 15 [10].

Figure 15 – Current JUs governance structure

The governance structure has four bodies as
follows:

·
Governing Board – The Governing Board has
overall responsibility for implementing and supervising the execution of the
JTI programme and takes all decisions of a strategic nature. 50% of the voting
rights are for the Industrial Association and 50% for the public authorities
(Commission and participating States). The distribution of the votes for the
public authorities is established annually in proportion to the funds committed
to the JTI's activities.

·
Industry and Research Committee – It is inter
alia responsible for the drafting of the multiannual strategic plan and the
annual work programme.

·
Public Authorities Board – Composed of national
public authorities and the Commission. It is inter alia responsible for
decisions on the allocation of public funds following open calls for proposals.

·
The Executive Director – He/she is the legal
representative of the Joint Undertaking and ensures its day-to-day management.
A Secretariat supports the Executive Director in all his/her tasks.

The objectives of ENIAC and ARTEMIS JUs essentially
are:

·
To define and implement a research agenda in
their fields.

·
To support activities required for the
implementation of the research agenda notably by awarding funding to
participants in selected projects following competitive calls for proposals.

·
To promote a public-private partnership aiming
at mobilising and pooling public and private resources to increase the overall
R&D investment in their fields.

·
To achieve synergy and coordination of European
R&D efforts.

·
To promote the involvement of SMEs in its
activities.

2.5.2.     Achievements

Two interim evaluations of the current ARTEMIS
and ENIAC JUs [11, 12] were completed in 2010 and 2012. Both interim
evaluations confirmed that the original motivations for the establishment of
the ARTEMIS and ENIAC JU are still valid and acknowledge the significant value
and achievements obtained. Both evaluations highlight the crucial role of the
Strategic Research Agenda (SRA). If the first evaluation was focused on
addressing issues related to the start-up of the JUs, the second evaluation
assessed the concrete impact of the two JUs. Many of the recommendations relate
to the 'next generation JUs'. These recommendations have been discussed in the
design of the new JU with the stakeholders and have been taken into account in
the current Impact Assessment (see in particular in Section 2.6 and 3). The
recommendations relate to e.g. the support of innovation-related actions
(addressing higher TRLs), the use of a simpler financial regulation in line
with the recommendations made by the 'Ideal house' group [13] and the need for
appropriate metrics to measure the impact and the success of projects and the
initiative as a whole. The second interim evaluation published its final report
in May 2013.

In the period 2008-2011, the two JUs
supported a total of 84 projects (44 for ARTEMIS JU and 40 for ENIAC JU). Annex
2 gives an overview of their results.

As reported by the ENIAC JU, the impact and
leverage of the initiative on the semiconductor industry is observed in the
following achievements:

·
It defined and implemented a Strategic Research
Agenda strengthening the relevant areas in which Europe improved its
competitiveness by directing funding to the priority subjects, in particular to
"Energy Efficiency" (29%) and "Materials, Equipment and
Manufacturing" (25%).

·
The first projects approaching completion in
2012 demonstrated significant advances of the state of the art in their
respective fields, strengthening the global competitive position of the
European industry.

·
It leveraged the public investments, increasing
the amounts contributed by the ENIAC Member States by a factor of 2.5 (from €62
million in 2008 to €150 million in 2012) and the EU contributions by a factor
of 3.5 (from €35 million in 2008 to €125 million in 2012). The private sector
increased its contributions by a factor of 5 (from about €110 million in 2008
to an estimate amount exceeding €550 million in 2012).

·
It engaged the whole ecosystem, allowing the
countries with smaller national programmes in nanoelectronics to contribute to
a combined level equivalent to the three leading nations.

·
It created opportunities to contribute for the
SMEs that represent the majority of the participating organizations with 41%,
inducing collaboration of the large industry (29% of the participating
organizations) and the academic and industrial research (30%).

·
The project proposal, submission and evaluation
mechanisms allow to execute the whole cycle within 7-9 months.

·
It is thus far the only mechanism that already
engaged in implementing the KET policy to the extent to which they are
compatible with the existing regulations, rules and procedures, playing the
role of a catalyst federating all contributors towards re-engaging the European
semiconductor industry on a path of profitable growth.

·
It induced a new quality of collaboration
between the stakeholders that resulted in remarkable progress in the past and
provides a solid basis for the future strategic perspectives.

As reported by the ARTEMIS JU, the
following achievements are highlighted:

·
The distribution of investment over the 8
ARTEMIS Strategic Research Agenda Sub-Programmes shows a large take-up of safety-critical
systems (with 32%) and architectures (with 26%). Safety-critical systems are
significant because of its high importance for the transport and health
industries, attracting larger projects with directly relevant outcomes for
industry. In the area of architectures fundamental technologies (especially for
low-power-multi-core architectures) are introduced in industrial applications
(i.e. respecting high system reliability demands).

·
After four Calls, ARTEMIS JU has running
projects representing a total R&D&I investment of €708 million,
comprising €228 million national contributions, €116 million contribution by
the EU and €363 million from industry.

·
ARTEMIS JU has achieved its high-level goals of reducing
fragmentation by enlarging the typical project 'footprint' at a European level.

·
Creation of ARTEMIS JU "Centre of
Innovation Excellence" (CoIE) - a formalization of the "Self-sustaining
Innovation Ecosystem" concept. To date, there are three such CoIEs, notably
on safety-critical (electronic) engineering, on process automation and on
energy-efficiency in intelligent buildings.

·
Two of these CoIEs are the kernel of two
corresponding "ARTEMIS Innovation Pilot Projects" (AIPPs) that were
selected in 2012.

·
Of the 586 unique entities participating in
ARTEMIS JU projects the high level of SME participation (36%) was made possible
by the national contribution, favourable to SMEs and the emergence of local
ARTEMIS networks supportive of SME integration, such as the ARTEMIS "mirrors"
in Austria, Hungary, Denmark and Spain ("Prometeo").

As can be seen from the above, overall the
two JUs demonstrated that they play a significant role as a catalyst in stimulating
ambitious projects and increasing the engagement of the private sector. The JUs
provide a framework in which national and European public authorities can combine
support for topics of strategic importance. This capability has been
convincingly demonstrated by the ENIAC JU in successfully jump-starting the
implementation of the KET recommendations in nanoelectronics and by the ARTEMIS
JU's in its first trial of large Artemis Innovation Pilot Projects within their
call for proposals in 2012.

2.5.3.     Issues
in meeting the initial objectives

Besides the successes mentioned above,
there are some particular problems faced by the JUs in meeting their
objectives. The second interim evaluation identified a gap in the value chain
existing at the system level, in disruptive product innovation and in computing
and operating platform infrastructures. 'Europe's ability to meet
such [related] challenges is threatened by significant 'gaps' – not only in
research or general technological competence, but most significantly in the
industrial value chain'. Considering the interdependence of activities in
ENIAC and ARTEMIS JU for putting products in the market, these findings clearly
outline the need to address the whole value chain in the future initiative(s).
On a general level, both interim evaluations of the ENIAC and ARTEMIS JUs identify
the need to ensure that the initiatives implement an over-arching European
strategy.

During the period 2008-2012, the total
spending by the Member States participating in the initiatives amounts to respectively
395 M€ and 228 M€ for ENIAC JU and ARTEMIS JU. This is well below the
792 M€ and 738 M€ initially foreseen. In the case of the ENIAC JU the
spending of the Member States is below the 1.8 MS/JU ratio indicated in the Council
regulations.

Regarding the tripartite construction of
both JUs, one important challenge ahead is in aligning content and procedure
with the expectations and processes of the participating Member States. The
experience so far however shows that it was possible to a certain extent to meet
the objectives although with a ramping up slower than originally foreseen.

In addition to the above further more
operational observations can be drawn from the present set-up:

·
There is a lack of synchronisation of national
procedures (for both contracting and payments) creating delays in the
implementation of projects.

·
The obligation for the participants to conclude
two grant agreements (JU and national) constitutes an administrative burden.

·
The variety of national eligibility criteria has
an impact on the way consortia are built.

·
The 'hard-coded' dependency between national
commitments and the EU (1.8 ratio) hampered the EU budget execution when
national contributions were low or when national funding rates deviated from
the anticipated public funding ratio: 1/3 (JU) and 2/3 (national)
ratio, in particular in the case of ENIAC pilot lines.

·
Requirements of the EU Framework Financial Rules
put a significant burden on the operations of the JU.

Those difficulties however were no
show-stoppers but required continuous efforts from all parties to make the
system work. Any future initiative would greatly benefit from addressing these
up-front through a simplified operating model in line with the overall simplification
goals as proposed in Horizon 2020.

2.6.        Key problems and their drivers

In their analysis the interim evaluation
panels of the ARTEMIS and ENIAC JU identified several issues to be addressed in
the implementation of the Joint Undertakings in order to strengthen and improve
their relevance, effectiveness, efficiency, and research quality. For
completeness a succinct table is presented below where recommendations are
bundled into six categories.

Table 1 - Synthetic presentation of the
recommendations from the two interim evaluations [11, 12]

Recommendations || Ref[5] || Constituency

An integrated European strategy

A mid- to long-term overarching EU research, development and innovation strategy in Electronic Components and Systems (ECS) should be clearly defined and used as a key 'driver' for funding decisions. || 2-17 || European Commission

Place greater emphasis on strategic, European aims in proposal evaluation & selection processes. Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy. || 1-16 2-1 || Joint Undertakings and Industrial Associations

ARTEMIS & ENIAC should continue their initiatives to be more closely aligned with ITEA2 and CATRENE, respectively, retaining some flexibility over the assignment of the most appropriate funding stream. || 1-18 2-7 || JTI-EUREKA coordination

Allow for a more efficient implementation

Future JUs in these domains to continue the tripartite JTI model. || 1-1 || All

Construct/draft the new Council Regulations, as a PPP with reduced Financial Regulations and Staff Regulations. || 1-9 2-8 || European Commission

Regulations should allow JTIs to support innovation-related activities other than R&D. || 1-10 || European Commission

The ENIAC & ARTEMIS JUs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into one legal entity. || 2-6 || European Commission

Improved governance and strategic planning

Focus the JU Governing Board on strategic issues and reduce its administrative burden in order to attract participation from high-level industry representatives. || 2-9 || Joint Undertakings

Engage better with the JTI constituencies so as to promote and facilitate participation in project proposals, especially by SMEs. AENEAS, should play a more active role in the definition of the overall objectives and strategy of the ENIAC JU and keep up to date the Strategic Research Agenda. || 1-8 2-2 || Industrial Associations

Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects. || 1-7 2-4 || Industrial Associations, Joint Undertakings

Specific support mechanisms for enhancing the project management processes in JU projects should be developed and implemented. Management costs should be 100% funded by the EC for all JU projects. || 2-14 || Joint Undertakings and European Commission

Establish a mechanism for recovering some of their operation costs from non-member beneficiaries of the JUs. || 1-13 1-15 || European Commission, Joint Undertakings

Strengthened commitment and alignment with priorities of Member States

Member States should commit to a multi-annual funding system. || 1-2 2-12 || Member States

Compliance with the JTI Council Regulations || 1-3 || Member States

Give early annual indication of support for specific topics. || 1-5 || Member States

Harmonisation of conditions of participation

Regulations should allow JTIs to accept funding from other sources || 1-11 || European Commission

Member State participation rules, funding rates and procedures should be harmonised wherever possible. Regulations should allow the EU to make additional financial contributions for strategic purposes, projects which are mission-critical. An ‘early warning system’ to identify mismatches in funding of member states should be implemented. || 1-4 2-10 || Member States

The proportion of funding for projects targeting generic applications and services (applications projects) should be increased || 2-5 || ARTEMIS  JU and Industrial Association

Streamlined operations including better monitoring and evaluation

Establish processes to give early feedback to proposers. || 1-17 || Joint Undertakings

JU projects should be subject to only one joint JU and MS project review and reporting process. || 2-15 || Joint Undertakings and Member States

Lead the establishment of processes to monitor progress toward JU objectives. || 1-6 || Industrial Associations

Appropriate metrics and data gathering for measuring the impact and success of projects should be developed and used to support assessment of the benefits of these JUs. || 1-14 2-16 || European Commission, Joint Undertakings

ENIAC should monitor more closely and rigorously the actual and planned exploitation of project results, and the measures put in place by project partners to achieve such planned exploitation. A detailed deployment and commercialisation strategy for ARTEMIS project results should be defined. || 2-3 || Joint Undertakings

An integrated European strategy in
electronic components and systems

The second interim evaluation recommended
that the JTIs need an overarching European research strategy. Such a strategy
would reduce fragmentation, avoid duplication of efforts, allow the development
of a sustainable electronic components and systems industrial ecosystem and
provide a means to address cross-cutting issues where components and embedded
software interact.  Furthermore such a strategy would allow a better
positioning of different existing instruments including relevant EUREKA clusters and provide an effective means for European stakeholders to keep pace with
technology, to get access to advanced components and to consolidate leadership
in electronic systems for key economic sectors.

Provide a legal base for a more
efficient implementation

Both interim evaluations recommended the
implementation of the future JTI on a legal basis that is better attuned to the
specificities of Public-Private Partnerships with a lighter administrative
overhead and greater flexibility.

Improved governance and strategic
planning

Both interim evaluations observed that the
Governing Board spend too much time on operational monitoring and too little
time on discussing strategic issues. The second interim evaluation noted that
the administrative burden should be reduced in order to attract the participation
from high-level industry representatives. Improved governance and the
involvement of high-level industry representative will result in better and strategic
planning that will engage stakeholders and better reflect the research
priorities including those from the Member States. In this context the second
interim evaluation report also indicated that industrial associations should
play a more active role in the definition of the overall objectives and
strategy of the JTIs and should engage more actively with stakeholders so as to
promote and facilitate participation in project proposals, especially by SMEs,
and develop and keep up-to-date the Strategic Research Agenda.

Strengthened commitment and alignment
with priorities of Member States

Both interim evaluations recommended that Member
States should commit to a multi-annual funding system. This would allow for
strategic agenda setting (see above) and allow stakeholders to plan ahead. The
latter is essential considering the size of the investments and the need for
sustaining research over a longer period of time.

Harmonisation of conditions for
participation

The interim evaluations highlighted the
need for harmonisation between national procedures and criteria among the
participating Member States. Member State participation rules, funding rates
and procedures should be harmonised and synchronised wherever possible,
adopting best practice as the guiding principle.

Streamlined operations including better
monitoring and evaluation

Both interim evaluations recommended
various recommendations as to how to streamline operations and provide for a
better monitoring and evaluation. In particular it is recommended that the
evaluation and selection process should be reviewed to improve the match of the
project portfolio with the overarching strategy (see above).  Appropriate
metrics/key performance indicators should facilitate the evaluation of the
progress towards the set objectives.  The JUs are notably requested to improve
the check of the exploitation plan at the proposal level and its follow-up
along the life of the project and beyond. Furthermore the need for participants
to sign two grant agreements (with the JU and the Member State) may delay the
start of the projects. Projects supported in the JTI should be subject to only
one (i.e. the JU) project review and reporting process.

2.7.        Who
is affected and how

The initiative targets the competitiveness
of the European electronic components and systems industry. Industrial
stakeholders are the primary actors. The initiative will support existing companies
in improving their competitiveness and in growing/maintaining their
manufacturing base. It will moreover support the creation and growing of new
companies, in particular in the domain of design. It furthermore targets
industry that depends on electronics to innovate such as the automotive,
medical equipment, aerospace and energy industries. This constitutes a large
part of European industry.

It will affect the European citizens by
providing the technologies that are needed to tackle key societal challenges.
Citizens will e.g. have an increased choice of energy efficient products with
improved functionalities and access to new related services.

2.8.        The
need for public intervention

The Horizon 2020 Framework Programme
identified that 'ICT underpins innovation and competitiveness across a broad
range of private and public markets and sectors, and enables scientific progress
in all disciplines. To master increasingly complex and multidisciplinary
technology and business chains in ICT, partnering, risk-sharing and
mobilisation of critical mass across the Union are needed. Union level action
helps industry address a single market perspective and achieve economies of
scale and scope. Collaboration around common, open technology platforms with
spill-over and leverage effects allow a wide range of stakeholders to benefit
from new developments and apply further innovations.' This is getting truer
as both hardware and software are intimately integrated in powerful systems giving
more value to the system integrators. This requires much closer cooperation
along the whole development value chain [6]. As indicated in section 2.4, this
line of argumentation equally applies to electronic components and systems.

Through Horizon 2020 in general and Joint
Technology Initiatives in particular, private companies can collaborate with
partners across Europe at a scale that is not possible at national level [14].
In the public consultation both industrial and academic actors endorsed the
need for support to collaborate at different stages of the innovation chain in
order to ensure that research results actually reach the market and are not shelved
in academic or industry research labs [6].

A public intervention is required to
counter the threats and address the weaknesses hindering the development of
this industrial sector in Europe (cf. SWOT analysis in Annex 1). Public support
to collaborative research and innovation involving industry and academia will
assist to:

·
Maintain European public research teams at the
leading edge in electronic components and systems and ensure the fast and broad
industrial exploitation of technology leadership across Europe.

·
Share the costs of risk-taking with the
electronic components and systems industry in progressing the technology and
its wider use given the huge spill-over on growth and jobs across the economy
and the impact on addressing the societal challenges ahead.

·
Join forces. Member States have their own
priorities in promoting their industry but the level of support needed for this
industry is beyond their individual resources. Fragmentation leads to
duplication in R&D efforts. Furthermore only a few world leading clusters
with significant industrial activity in electronic components and embedded
systems exist in Europe. Hence 'EU players need to join forces. Better
cooperation based on collaborative working and sharing between large OEMs
companies and technology providers accelerate the product innovation on both
sides … by coordinating business focus, research projects clusters provide a
regional support network for SMEs through cooperation between academia and
large OEMs industry.' [15]

·
Reinforce the existing European clusters in
electronic components and the actively support of the creation of new clusters
is needed to place Europe on a comparable footing to other players worldwide
[16]. There is a need for action at the European level in order to pool resources
and bring actors together, to provide the right level of scope and significant means
to strengthen the industry. This support needs to provide a sustainable and
adequate solution for Europe to face international competition.

·
Structure and coordinate research and innovation,
to ensure that also in the future there will be a manufacturing base in Europe and that European actors, especially users, have access to the latest technology
developments and infrastructures. To reach this goal, it is critical to
effectively leverage public funding at European and national levels.

2.9.        The
right to act

This European initiative is proposed in the
context of the implementation of Horizon 2020, in particular the Commission's
proposal [17] states that:

'Joint Undertakings established in FP7
under Article 187 of the Treaty, for which further support may be provided under
the above conditions[6]
are: the Innovative Medicines Initiative (IMI), Clean Sky, Single European Sky
ATM Research (SESAR), Fuel Cells and Hydrogen (FCH), and Embedded computing
systems (ARTEMIS) and Nanoelectronics (ENIAC). The latter two may be combined
into a single initiative.'

2.10.      Subsidiarity

The current ARTEMIS and ENIAC JUs provided
a major opportunity to cooperate across Europe, create critical mass and
leverage investments. Both interim evaluations [11, 12] strongly recommended
continuing a similar initiative under Horizon 2020 considering that no single
organisation or Member State could possibly address all the challenges of this industry.
Therefore, a coordinated action at European level is deemed to be the most appropriate
approach.

The budgetary impact and EU contribution of
this initiative are part of the global Horizon 2020 proposal and budget.

2.11.      Baseline
scenario

The baseline scenario is to implement the
JTI on electronic components and systems by renewing the current ARTEMIS and
ENIAC JU initiatives with the necessary adaptations to comply with the context
of Horizon 2020. The two JUs could be set-up as 'PPP' bodies using a simplified
financial regulation based on Article 209 FR. The necessary adaptations are
notably concerning the rules for participation for Horizon 2020, e.g. the flat
rate financing of participants,

As demonstrated through the various
stakeholder consultations, there is a positive opinion in pursuing with public
support to the sector, and industry is committed to invest significantly in Europe [18]. The renewal of the current initiatives would continue support for advanced
electronic components and systems for the European industry and improve its
competitiveness.

The baseline scenario is based on a status
quo where no specific improvements beyond the above necessary adaptations are
made.

In this baseline scenario a European
strategy for micro- and nanoelectronics components and systems would rely on
two separate initiatives that each have their own established dynamics and
building on existing constituencies.

3.           Objectives

3.1.        General
Objectives

The present initiative intends to go beyond
the objectives of the current ENIAC and ARTEMIS JUs. The overall objectives of
the present initiative are aligned with the European strategy on electronic
components and systems, as recommended by the two interim evaluations (see Table 1). They translate in the following
general objectives of the Joint Undertaking:

·
to contribute to the development of a strong and
globally competitive electronics components and systems industry in the Union;

·
to ensure the availability of electronic
components and systems for key markets and for addressing societal challenges,
aiming at keeping Europe at the forefront of technology development, bridging
the gap between research and exploitation, strengthening innovation
capabilities and creating economic and employment growth in the Union;

·
to align strategies with Member States to
attract private investment and contribute to sound public finances by avoiding
unnecessary duplication and fragmentation of efforts, and easing participation
for actors involved in research and innovation;

·
to maintain and grow semiconductor and smart
system manufacturing capability in Europe, including leadership in
manufacturing equipment and materials processing;

·
to secure a commanding position in design and
systems engineering including embedded technologies;

·
to provide access for all stakeholders to a
world-class infrastructure for the design and manufacture of electronic
components and embedded/cyber-physical and smart systems;

·
to build a dynamic ecosystem involving
innovative SMEs, strengthening existing clusters and nurturing the creation of
new clusters in promising new areas.

3.2.        Specific
Objectives

Specific objectives of the initiative aim
at improving the European landscape in the electronic components and systems
sector in order to remove roadblocks and to achieve the overarching objectives.
They are:

·
to structure and perform excellent research and
innovation in the area ensuring optimal articulation between EU, national and
regional investment programmes and industrial priorities;

·
to mobilise and pool, when needed, public
resources at regional, national and EU levels in support of electronic
components and systems in Europe, creating critical mass and attracting private
funding in the field;

·
to facilitate multi-disciplinary research and innovation
actions along the full innovation chain, covering Technology Readiness Levels 2
to 8, including manufacturing pilot lines and large scale application
experiments, thereby reducing time to market and closing the gap between
research and industrial exploitation;

·
to bring together the actors in value chains,
including users and SMEs, to address the inherent complexity in the design and
manufacturing of electronic components and systems;

·
to strengthen the ecosystem from component
design to semiconductor manufacturing to embedded systems development to end
users, from equipment and material suppliers to semiconductor manufacturers to
systems engineering, from universities to RTOs to industry including SMEs; and

·
to create and grow market opportunities for
electronic components and systems in areas such as but not limited to
automotive, transport, health, energy, security, telecommunications and digital
media.

Going beyond the objectives of the current
JUs, the initiative enlarges the scope of actions downstream in the innovation
chains. It notably includes actions supporting focused platforms which will be
widely accessible to further innovative developments, beyond the initial
objectives of the current JUs. This will reinforce the leveraging effect of the
initiative. The following table indicates the drivers underlying the proposed
specific objectives and how these relate to the current JUs' objectives.

Table 2 - Links between the current JUs'
objectives, recommendations from the two interim evaluations and the proposed
JU specific objectives

New JU's objectives || Recommendations || ENIAC and ARTEMIS objectives

Structure and perform excellent research and innovation in the area ensuring optimal articulation between EU, national and regional investment programmes and industrial priorities || An integrated European strategy · Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy · ARTEMIS & ENIAC should continue their initiatives to be more closely aligned with ITEA2 and CATRENE, respectively, retaining some flexibility over the assignment of the most appropriate funding stream Allow for a more efficient implementation · Future JTIs in these domains to continue the tripartite JTI model Improved governance and strategic planning · Focus the JU Governing Board on strategic issues and reduce its administrative burden in order to attract participation from high-level industry representatives || Define and implement a research agenda in their fields Achieve synergy and coordination of European R&D efforts

Mobilise and pool, when needed, public resources at regional, national and EU levels in support of electronic components and systems in Europe, creating critical mass and attracting private funding in the field || Allow for a more efficient implementation · Future JTIs in these domains to continue the tripartite JTI model Strengthened commitment and alignment with priorities of Member States · Member States should commit to a multi-annual funding system · Give early annual indication of support for specific topics Harmonisation of conditions of participation · Member State participation rules, funding rates and procedures should be harmonised wherever possible. · Regulations should allow JTIs to accept funding from other sources · Regulations should allow the EU to make additional financial contributions for strategic purposes, projects which are mission-critical || Promote a public-private partnership aiming at mobilising and pooling public and private resources to increase the overall R&D investment in their fields

Facilitate multi-disciplinary research and innovation actions along the full innovation chain, covering Technology Readiness Levels 2 to 8, including manufacturing pilot lines and large scale application experiments, thereby reducing time to market and closing the gap between research and industrial exploitation || Allow for a more efficient implementation · Regulations should allow JTIs to support innovation-related activities other than R&D · The ENIAC & ARTEMIS JTIs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into one legal entity Improved governance and strategic planning · Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects · Specific support mechanisms for enhancing the project management processes in JTI projects should be developed and implemented. Management costs should be 100% funded by the EC for all JTI projects Streamlined operations including better monitoring and evaluation · ENIAC should monitor more closely and rigorously the actual and planned exploitation of project results, and the measures put in place by project partners to achieve such planned exploitation A detailed deployment and commercialisation strategy for ARTEMIS project results should be defined || Support activities required for the implementation of the research agenda notably by awarding funding to participants in selected projects following competitive calls for proposals

Bring together the actors in value chains, including users and SMEs, to address the inherent complexity in the design and manufacturing of electronic components and systems || An integrated European strategy · Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy Improved governance and strategic planning · Engage better with the JTI constituencies so as to promote and facilitate participation in project proposals, especially by SMEs || Promote the involvement of SMEs in its activities

Strengthen the ecosystem from component design to semiconductor manufacturing to embedded systems development to end users, from equipment and material suppliers to semiconductor manufacturers to systems engineering, from universities to RTOs to industry including SMEs || An integrated European strategy · Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy Allow for a more efficient implementation · The ENIAC & ARTEMIS JTIs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into one legal entity Improved governance and strategic planning · Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects || Promote a public-private partnership aiming at mobilising and pooling public and private resources to increase the overall R&D investment in their fields

Create and grow market opportunities for electronic components and systems in areas such as but not limited to automotive, transport, health, energy, security, telecommunications and digital media || Streamlined operations including better monitoring and evaluation · ENIAC should monitor more closely and rigorously the actual and planned exploitation of project results, and the measures put in place by project partners to achieve such planned exploitation A detailed deployment and commercialisation strategy for ARTEMIS project results should be defined || Define and implement a research agenda in their fields

3.3.        Operational
Objectives

Operational objectives include:

·
to elaborate and keep an up-to-date
industry-driven Strategic Research and Innovation Agenda (SRIA) for the
European electronic components and systems industry;

·
to implement the SRIA efficiently by initiating
calls for proposals, evaluating proposals, awarding funding and monitoring
projects including large scale pilot lines, technology platforms and
application demonstrators selected through open, transparent and effective
procedures, within the limits of available funds;

·
to create synergies through closer and more
strategic cooperation;

·
to assist the exploitation of R&D&I
results, supporting the development and growth of innovative SMEs in the
sector;

·
to ease the participation of R&D actors in
projects with a truly European dimension, by ensuring simple and efficient
rules and procedures;

·
to provide access to state-of-the-art design and
manufacturing infrastructures for electronic components and systems;

·
to develop closer cooperation and ensure
coordination/complementarity of European (in particular Horizon 2020), national
and trans-national activities, bodies and stakeholders;

·
to foster a comprehensive and fertile innovation
environment in Europe; and

·
to maintain a continuous stream of highly
skilled graduates and trainees in the field, responding to growing industrial
needs.

The following table indicates the drivers underlying
the proposed operational objectives and how they relate to the current JUs'
objectives.

Table 3 - Links between the current JUs'
objectives, recommendations from the two interim evaluations and the proposed
JU operational objectives

New JU's objectives || Recommendations || ENIAC and ARTEMIS objectives

Elaborate and keep an up-to-date industry-driven Strategic Research and Innovation Agenda (SRIA) for the European electronic components and systems industry || Allow for a more efficient implementation · The ENIAC & ARTEMIS JTIs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into one legal entity Improved governance and strategic planning · AENEAS, should play a more active role in the definition of the overall objectives and strategy of the ENIAC JTI and keep up to date the Strategic Research Agenda || Define and implement a research agenda in their fields

Implement the SRIA efficiently by initiating calls for proposals, evaluating proposals, awarding funding and monitoring projects including large scale pilot lines, technology platforms and application demonstrators selected through open, transparent and effective procedures, within the limits of available funds || Allow for a more efficient implementation · Regulations should allow JTIs to support innovation-related activities other than R&D Improved governance and strategic planning · Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects · Specific support mechanisms for enhancing the project management processes in JTI projects should be developed and implemented. Management costs should be 100% funded by the EC for all JTI projects Streamlined operations including better monitoring and evaluation · Lead the establishment of processes to monitor progress toward JTI objectives · Appropriate metrics and data gathering for measuring the impact and success of projects should be developed and used to support assessment of the benefits of these JTIs || Support activities required for the implementation of the research agenda notably by awarding funding to participants in selected projects following competitive calls for proposals

Create synergies through closer and more strategic cooperation || An integrated European strategy · Place greater emphasis on strategic, European aims in proposal evaluation and selection processes            Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy Allow for a more efficient implementation · The ENIAC & ARTEMIS JTIs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into one legal entity Improved governance and strategic planning · Focus the JU Governing Board on strategic issues and reduce its administrative burden in order to attract participation from high-level industry representatives || Achieve synergy and coordination of European R&D efforts

Assist the exploitation of R&D&I results, supporting the development and growth of innovative SMEs in the sector || Improved governance and strategic planning · Engage better with the JTI constituencies so as to promote and facilitate participation in project proposals, especially by SMEs · Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects Streamlines operations including better monitoring and evaluation · ENIAC should monitor more closely and rigorously the actual and planned exploitation of project results, and the measures put in place by project partners to achieve such planned exploitation            A detailed deployment and commercialisation strategy for ARTEMIS project results should be defined. || Promote the involvement of SMEs in its activities

Ease the participation of R&D actors in projects with a truly European dimension, by ensuring simple and efficient rules and procedures || Allow for a more efficient implementation · Construct/draft the new Council Regulations, as a PPP with reduced, alternative Financial Regulations and Staff Regulations Strengthened commitment and alignment with priorities of Member States · Member State participation rules, funding rates and procedures should be harmonised wherever possible Streamlined operations including better monitoring and evaluation · Establish processes to give early feedback to proposers · JTI projects should be subject to only one joint JTI and MS project review and reporting process ||

Provide access to state-of-the-art design and manufacturing infrastructures for electronic components and systems || Allow for a more efficient implementation · Regulations should allow JTIs to support innovation-related activities other than R&D Harmonisation of conditions of participation · The proportion of funding for projects targeting generic applications and services (Applications projects) should be increased ||

Develop closer cooperation and ensure coordination/complementarity of European (in particular Horizon 2020), national and trans-national activities, bodies and stakeholders || An integrated European strategy · ARTEMIS & ENIAC should continue their initiatives to be more closely aligned with ITEA2 and CATRENE, respectively, retaining some flexibility over the assignment of the most appropriate funding stream · Allow for a more efficient implementation · Future JTIs in these domains to continue the tripartite JTI model Strengthened commitment and alignment with priorities of Member States · Give early annual indication of support for specific topics Improved governance and strategic planning · Focus the JU Governing Board on strategic issues and reduce its administrative burden in order to attract participation from high-level industry representatives · Engage better with the JTI constituencies so as to promote and facilitate participation in project proposals, especially by SMEs || Promote a public-private partnership aiming at mobilising and pooling public and private resources to increase the overall R&D investment in their fields

Foster a comprehensive and fertile innovation environment in Europe || Allow for a more efficient implementation · Regulations should allow JTIs to support innovation-related activities other than R&D Improved governance and strategic planning · Lead the preparation of action plans for achievement of innovation ecosystem aims, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects An integrated European strategy · A mid- to long-term overarching EU research, development and innovation strategy in Electronic Components and Systems (ECS) should be clearly defined and used as a key 'driver' for funding decisions · Improve the match of the project portfolio to strategic European aims and ensure optimum coverage of key areas defined in the overarching EU ECS strategy and the work plans derived from such a strategy ||

Maintain a continuous stream of highly skilled graduates and trainees in the field, responding to growing industrial needs || ||

3.4.        How
do objectives relate to the problem statement

In Figure 16, the objectives are mapped
onto the problem statements and their drivers.

It shows that actions have been identified
in order to address each major problem area. While it is recognized that the
scope of a JTI can only partially respond to the overall economic challenges
with which the electronic components and systems sector is faced, there is
significant room for addressing main market failures in Europe such as
under-investments and fragmentation of the strategies.

Combined with an efficient implementation,
the targets set for the new initiative will provide better conditions for a
more competitive European industry by fostering innovation in essential fields
of the European economy.

Figure 16 - Objectives matching the problem drivers

4.           Policy
Options

4.1.        Options

Article 19.3 of Horizon 2020 Framework
Programme [1] describes the criteria to set up public-private partnerships. Public-private
partnerships can be implemented either through a institutional or through a
contractual agreement. An institutional PPP shall only be implemented where the
scope of the objectives pursued and the scale of the resources required justify
it.

Public-private partnerships shall be
identified in an open and transparent way based on all of the following
criteria:

(a)
the added value of action at Union level;

(b)
the scale of impact on industrial
competitiveness, sustainable growth and socio-economic issues;

(c)
the long-term commitment from all partners based
on a shared vision and clearly defined objectives;

(d)
the scale of the resources involved and the
ability to leverage additional investments in research and innovation; and

(e)
a clear definition of roles for each of the
partners and agreed key performance indicators over the period chosen.

A public-private partnership is an adequate
tool to address the electronic components and systems sector.

In this context five main policy options
are identified for implementing the JTI on electronic components and systems:

·
Rely on the existing ENIAC and ARTEMIS initiatives
by renewing and adapting their mandate in the new context of Horizon 2020
(baseline scenario – see Section 2.11);

·
Undertake the planned activities without a
dedicated PPP using the standard practices foreseen for collaborative projects
under Horizon 2020;

·
Launch a single new PPP replacing the existing
ENIAC and ARTEMIS, which could take the form of:

·
A contractual PPP (without a dedicated legal
entity);

·
A bipartite institutional PPP (a dedicated legal
entity without Member State participation); or

·
A tripartite institutional PPP (a dedicated
legal entity with Member State participation).

4.1.1.     Option
(a) Baseline - Business-as-usual: continue within Horizon 2020 with renewed
ENIAC and ARTEMIS JUs

Considering the continued support of the
Member States this baseline option capitalises on the experience gained in the
ENIAC and ARTEMIS JUs and renews their present scope and set-up. Member States
would have the option to renew or terminate their membership. The existing
Industry Associations constituting the private part of the PPPs would continue
to be involved.

This option requires the adoption of new
Council Regulations to provide the legal basis to implement both ENIAC and
ARTEMIS JUs' renewed objectives and new rules under Horizon 2020. This would provide
an opportunity to improve the governance structures and simplify their modus
operandi.

4.1.2.     Option
(b) Zero Option: use of the collaborative research projects under the EU
Framework Programme Horizon 2020

This option allows the current JUs to accomplish
their mandates by 2017, i.e. within the existing JU's no new activities after
2013 and a winding up in 2017. All running projects launched from 2008 to 2013
will continue to be supported by the current JUs. In this option all future
public support at the EU level for electronic components and systems would
happen within Horizon 2020 and no dedicated PPP body would be set up.

This option does not necessitate a new
legal act. The R&D&I activities would be implemented through the
standard EU funding programmes.

4.1.3.     Adapting the scope of the new JTI

The Commission indicated in its report on
the first interim evaluation of the JTIs [19] that there is a need for pooling
resources in a joint JU in covering electronic components and systems. It
stated that 'the Commission does not rule out that activities in areas
addressed by ARTEMIS and ENIAC might be dealt with by a single JTI in the
future. This might even cover a larger part of the value chain, addressing the
burning issue of the trade-off between hardware and software and balancing
technology-push and application-pull priorities. In addition, this would help
increase the efficiency of the operational set-up'.

'Experience has shown that it is very
difficult to exclude topics from one or other programme when exploring detailed
options beyond high-level principles. Indeed, a large number of research
subjects are addressed by both programmes (in the application and technology
fields) '.

Therefore, the following options are built
on the strategic need to adapt the scope of the new JTI to encompass the full
value chains for the electronic components and systems.

4.1.4.     Option
(c) Implement a contractual Public-Private Partnership

This option considers the setting up of a
contractual PPP according to Article 19.2(b) of Horizon 2020.

As in the zero option, no dedicated legal
act is needed and there is no specific involvement of Member States beyond the
standard governance of Horizon 2020. With this option, there would be an SRA
proposed by industry and a budget earmarked for the area. The European
Commission services or an executive agency would manage the calls for proposals
and the monitoring of projects. The work programmes would be elaborated by
industry and approved by the Commission. There would be a contractual arrangement
signed by the European Commission and relevant private partners.

4.1.5.     Options
(d) and (e) Implement a new institutional Public-Private Partnership

The institutional PPP is based on Article
19.2(a) of Horizon 2020. As in option (a), the JTI has to be implemented
through a dedicated legal act based on Article 187 TFEU. In this case a single
new Joint Undertaking with a budget ceiling would be established.

There are two ways to consider a new
institutional PPP: with or without Member States participation.

Option (d) Implement a bipartite
institutional Public-Private Partnership

A bipartite PPP involving private
stakeholders and the EU (through the Commission) is a concept put forward by
the European Commission for implementing long-term complex initiatives in other
fields[7].
The operations are run as in the current initiatives but with EU contributions only.
The Member States would not be members of the JU but could still be involved
e.g. through an advisory board. As the Commission would be the only public
funding body, the governance could be simplified, and only include a Governing
Board, where private stakeholders and the European Commission are represented, the
Executive Director, and some advisory committee(s) including a scientific
committee and a Member States representatives group.

Option (e) Implement a tripartite
institutional Public-Private Partnership

The tripartite PPP involving private
stakeholders, Member States (on a voluntary basis) and the EU (through the
Commission) capitalize on the experience of the existing ARTEMIS and ENIAC JUs.
A new JU could take over all rights and obligations of the current ARTEMIS and
ENIAC JUs to avoid duplicating legal structures. It would at the same time
address the difficulties experienced with the current JUs by simplifying its
operational model. As an example, the JU could be the
one-stop-shop for contracting and payments of both EU and national
contributions.

As for the two JUs in option (a) the
governance structure of this JU would include a Governing Board in which the
Commission, Member States and private stakeholders participate, a Public
Authority Board, involving the Commission and the Member States, and the
Executive Director.

Overall, except for option (b), the
proposed options address the European need for better partnering in research
and innovation [20]. For options (a), (c), (d) and (e), the Union budget
ceiling would be communicated upfront.

4.2.        Discarded
options

4.2.1.     No
action at all

This option would mean stopping all public
support at the European level for research and innovation in electronic
components and systems. The option is discarded because it is contrary to the
provisions of Horizon 2020 in which research and innovation in electronic
components and systems is part of the specific objective "Leadership in
enabling and industrial technologies" in the priority on industrial
leadership.

4.2.2.     Early
winding-up

This option would mean that the two current
JUs would be stopped by an early winding-up. Such option would be required
should the evaluations of their achievements over the 5 years of their
existence be negative. This is not the case. As a result, there is no need to
terminate the JUs before their normal end of life in 2017.

4.3.        Proposed
budget

4.3.1.     Operational
budget

The table in Figure 17 provides a budget simulation for
each option. In the simulation the following assumptions are made:

·
In options (a) and (e) the contribution of the
Member States is equal to the EU contribution. The contribution of industry
would be the double of the total public funding as the focus of the tripartite
model is on funding projects at a higher TRLs. The same applies for option (d)
except that for this option there is no contribution from the Member States.

·
In options (b) and (c) based on the funding
rules proposed under Horizon 2020 the co-funding by industry is estimated at
60% of the actual costs.

·
The EU contribution for options (c), (d) and (e)
is slightly increased compared to options (a) and (b) to account for the
extended scope. The annual EU funding for options (a) and (b) is based on the
extrapolation of the spending in the current ARTEMIS and ENIAC JU.

The table shows that the tripartite model
of options (a) and (e) offers the highest leverage factor for the EU
contribution. Moreover, the options (a), (d) and (e) offer an increased
'security' for the partners as the budget ceiling is specified in a dedicated
legal act. This is not the case for options (b) and (c).

Figure 17 - Operational budget

Option (e) would achieve an overall
investment programme of some €8 billion by 2020. This would cover a significant
contribution to the overall investment announced by industry over the same
period for their entire eco-system [18]. It represents therefore a significant
incentive.

4.3.2.     Administrative
budget

The table in Figure 18 provides a simulation for the
administrative budget.

Options (d) and (e) are the most effective
due to the economies of scale generated by the combination of two JUs into one
single entity. Options (a), (d) and (e) are based on a 50/50 contribution
industry/EC to the running costs of the JUs.

Figure 18 - Administrative budget

In the case of options (a), (d) and (e),
the resources required in the Commission for the actual monitoring of the JUs
are added to the budget while in options (b) and (c) the standard
administrative costs of the Framework Programme have been used. The latter
would be lower in the case of an implementation through an Executive Agency.

The ratio of the administrative cost of the
JU per million euro of operational expenditure for the preferred option (e) is
in the same range as the one for the ERC Executive Agency [21]. It represents
an overhead of only 1.3%[8].

5.           Analysis
of the Impact

5.1.        General
impact

When assessing the global impact, it is
necessary to consider economic, societal and environmental impact.

The economic impact covers:

·
Competitiveness and investment aspects – the
leverage effect of the initiative on the private and public funds and the scale
of investment and critical mass. The initiative should impact the potential for
cooperation along the innovation and value chains and the bridging from
technology to innovation;

·
Research and innovation – the synergy with
industrial and national priorities, the extent to which the initiative will
foster excellence, facilitate progress towards a European Research Area by
addressing fragmentation and reducing duplication of efforts;

·
Stakeholders – involving a broad range of
stakeholders: industry – technology providers and users and including SME's,
RTO's and universities, EU, Member States and regions and the citizen/consumer
who is to benefit from the initiative;

·
Leverage effect – the enabling characteristics of
electronic components and systems induce an intrinsic leverage effect
illustrated by enhanced growth and employment by companies investing and
participating in existing public-private partnerships.

The societal impact examines:

·
Employment – linked to the economic impact. The
industrial sectors addressed by the initiative are a major direct employer of
highly skilled and technical people. In addition a whole supply industry
depends on it for employment as well as the economy in general for innovation
and productivity;

·
Potential to address societal challenges in
domains relevant for the European citizens (e.g. transport, health, energy) –
the development and deployment of electronic components and systems is critical
for ensuring access to technologies indispensable for those societal drivers.

The environmental impact mainly relates to
energy efficiency and waste management.

5.1.1.     Economic
impact

5.1.1.1.  Competitiveness
and investment

All actors involved in the sector of
electronic components and systems recognize that there is a significant size
effect. Below some market size (dependent on the sub-segment addressed),
companies become either isolated or subcritical at world level. What is true for
the market is also true along the innovation chain. The capability to invest in
innovative research and development highly depends on the market position of
the companies. Therefore, the leverage effect of the European initiative on
private and public investments is a key contributor to creating critical mass,
thereby impacting the competitiveness of all actors involved. 'In an
industry where technology and innovation play a key role, supporting research
and development, international cooperation and harmonisation, and the position
of SMEs is a crucial factor of growth' [22]

It is clear that no Member State hosts all companies necessary to cover the whole chain of an application industry that
heavily relies on electronic components and systems. By its collaborative
nature, the initiative allows the creation of cross-European consortia in order
to bring out the best of the European ecosystem and reduce fragmentation.

Option (a) provides for this in two
subsectors of components and systems but does not exploit potential synergies which
are possible in options (c) to (e). This synergy allows for more innovative electronic
components and systems in the market.

5.1.1.2.  Research
and innovation

The primary target of the R&D&I initiative
in the electronic components and systems is based on an industrial agenda. In
view of the fast growing complexity and costs of the technology, cooperation is
the only way forward to avoid unnecessary duplication, improve efficiency and
reduce time-to-market for new innovative or improved products. The initiative would
provide a unique structure to allow stakeholders to cooperate and to facilitate
multi-disciplinary integration. The intention is that the initiative would
cover higher Technology Readiness Levels allowing cooperation closer to the
market innovation.

This will be more difficult to achieve
through option (b), (c) and (d) as limited resources would be available.
Moreover the more 'one size fits all' option (b) may not be well suited to
allow for an optimal implementation of large scale pilots and demonstrators.

In this respect, the shared governance with
industry and Member States is critical for an efficient and timely
implementation of the industry-driven agenda. By sharing strategies on key
aspects of R&D&I in the sector, the European Commission, the Member States (option (a) and (e)) and the industry will be able to improve the efficiency
in aligning on critical and strategic aspects of the technological challenges
of the sector.

5.1.1.3.  Stakeholders

As the public consultation showed large
companies are mainly interested in large scale European projects. These
projects are instrumental to build scenarios, test options and in general allow
cooperation with actors along value chains. European RTOs, linked with higher
education research labs are essential contributors to early exploration and
later validation of new technologies. SMEs are a major contributor to the
electronic components and systems sector as they provide technology and
services along the value chain including e.g. design, prototyping and services for
small volume production. Moreover they offer exploitation channels for
integrating new technologies in innovative products and services. The
participation of SMEs strengthens the European ecosystem from both the user and
supply ends. SMEs will get access to technology and improve their innovation
capability whilst allowing cost and risk sharing.

As hosts of industrial clusters in the
electronic components and systems, regions will benefit from the increase of
R&D&I activities. It is further envisaged that regions will make use of
Smart Specialisation [23] to complement the initiative and build on existing industry
clusters or equivalent concentrations. Such synergy will further pool resources.

Options (a) and (e) in which Member States are
members offer a better possibility to coordinate national policies and allow
for national stakeholders to contribute expertise in a larger European perspective.

At the end of the value chain consumers are
the purchasers of the products or the users of final services. Improved, safer
and more user-friendly products and services will result from the projects. A
specific characteristic of electronic based products is that the final cost
mostly remains constant while functionality improves from one generation to the
next.

5.1.1.4.  Estimated
leverage effect

In the field of industrial systems where Europe is the strongest, the electronic components and systems do not provide end products
on the market but rather building blocks of machinery, equipment and systems.
Therefore it is difficult to estimate the leverage effect of the research and
innovation actions funded in the frame of the JTI is a difficult exercise.
Nevertheless as an enabling technology, this sector provides a multiplying
effect in the economy through the uptake of advanced and innovative components
and systems in all economic sectors. As argued in the KET High-Level Group
report [3], 'the
macroeconomic importance of KETs is that they can open up entirely new markets
or underpin and enhance existing markets through accelerating technological
progress with trickle-down effects on productivity and concurrent leaps in
efficiency levels. In addition to feeding numerous full value chains, products
based on KETs often serve as inputs of great value added that are integrated
into more complex products. It is these subsequent applications that drive
major economic growth and competitiveness.' This illustrates the intrinsic
leverage effect of this category of technologies. The leverage effect is not
only on further investments by the companies within the sector but more
significantly by the companies which take advantage of the huge benefits and
competitive advantages that electronic components and systems provide to their
business.

The above statement is illustrated by the following
concrete example. The Eureka cluster Euripides2 acts in the field of smart and
embedded systems, with activities very close to the JTIs (see table 1).
Moreover the participants are largely similar with the ones participating in
the current JTIs [22]. Their recent Vision, Mission, Strategy paper provides an
estimate of the leverage effect of the public funding by indicating that 'studies
of collaborative EUREKA projects clearly indicate that on the whole yearly
sales growth is around 24% higher for EUREKA participating firms, and yearly
employment growth is around 21% higher, compared to firms that had not participated
in a EUREKA project'. Furthermore, 'During the first two years
after the project, participant’s turnover grows twice as fast as non-participants,
and after 4-5 years, participants outperform similar non-participants by about
one third in terms of turnover growth. In addition, growth in exports for EUREKA participants is more than twice that of similar non-participants'.

5.1.2.     Societal
impact

5.1.2.1.  Employment

The initiative fosters research and
innovation in a very high-tech sector. It will directly generate highly
qualified jobs. With around €700 Million of investment in R&D&I per
year, it will employ more than 7.000 researchers and engineers but its impact
on employment is much bigger.

The initiative tackles the 'valley of
death' from research to market and is expected to create jobs across the
electronic value chain including in user industries. A large number of indirect
jobs are expected to be created. Studies indicate that for every job in the
electronics sector at least 4 indirect jobs are created [3].

In a recent report the electronics industry
estimates that some additional 250.000 direct and induced jobs should be
created in Europe by 2020 [18] if a sufficiently funded, focused and
coordinated European effort across the value and innovation chains is sustained.
This will be through the growth of design and manufacturing in Europe's strongholds in vertical markets but also in core markets such as
telecommunications and consumer electronics.

The integrated options (c) to (e) allow the
creation of added value through cross-cutting activities between the different
technological domains. This most likely will have a more positive effect on the
employment potential compared to (a) and (b). Further to that, option (e) will
probably have a much deeper impact on the value chains because of the size of
the investment and the alignment with national priorities and hence can be
logically expected to have a larger impact on employment.

5.1.2.2.  Addressing
societal challenges

The initiative will provide a large
contribution to and solutions for societal challenges including on health,
demographic change and wellbeing; secure, clean and efficient energy; smart,
green and integrated transport; climate action, resource efficiency and raw
materials; and inclusive, innovative and secure societies as set out in Horizon
2020. Electronic components and systems are general purpose enabling technologies
that improve our modern lifestyle, reduce greenhouse gas emissions e.g. by better
control of energy consumption (smart grid) and greener cars, contribute to the
safety of vehicles, democratise communications and improve and reduce costs of healthcare.

There are areas where access to electronic
component and systems technology is particularly important, in particular security,
safety and privacy of the digital infrastructures. Similarly, safety-critical
systems (e.g. in airplanes or nuclear plants or smart grids) require first hand
access to enabling technologies.

As embedded in the current JUs' Strategic
Research Agendas, tackling societal challenges will be addressed by continuity
in option (a). But option (d) and (e) will further reduce duplication, increase
synergy and bridge laboratory research to demonstration between the components
and systems to provide effective solutions to the market.

5.1.3.     Environmental
impact

5.1.3.1.  Energy
efficiency

The omni-presence of the new 'mobile'
society forces the electronics industry to focus itself on developing
low-energy consumption devices. This has spill-overs in other domains. Future
products and services based on electronics will be far more efficient in energy
consumption and energy management. In addition, the electrification of the
transport systems and e.g. smart cities will heavily rely on efficient power
electronics and electronics based integrated control systems.

Compared to the separate JUs in option (a),
options (d) and (e) will better facilitate Europe's take up of such energy
efficient solutions.

5.1.3.2.  Recycling
and materials

It is well known that end-of-life products,
particularly electronic components contain many different materials, especially
inorganic materials including non-environmentally friendly metals. As these are
integral to the components and encapsulated throughout their lifetime, there is
limited risk of these materials being released during their lifetime.
Nonetheless, at the end of their life, components need to be properly handled
to avoid detrimental pollution. Equally and more important recycling of precious
metals is needed [24].

The initiative will not change the present
landscape.

5.2.        Impact
of options

5.2.1.     Impact
of bi- or tripartite initiative

Both current initiatives in nanoelectronics
and embedded systems are tripartite, their main characteristics being the
combination of several funding sources. Member States managed the national grant
agreements and payments; the funding of partners was based on national
eligibility criteria. In practical terms, this meant that partners in projects
had two contracts: one with the JU and one with the national authority. This
increases administrative complexity and leads to additional overhead. As a
result in the public consultation a slight preference was given for a bipartite
initiative.

Options (a) and (e) are tripartite, options
(c) and (d) are bipartite and option (b) could be termed a single-party model
in which the Commission implements.

In the bipartite model, the leverage effect
in terms of direct public funding would disappear. In these options, the Member
States would not contribute directly to the European projects and the impact
will thus be reduced with major consequences on the number of large scale
demonstrators or pilot lines that could be supported. This will be a major
drawback given the necessity and the readiness of industry to invest large
scale projects including pilot lines.

Tripartite options (a) and (e) allow a
pooling of several sources of financing in a coordinated way. They will allow
for a significant part of the budget to be dedicated to support pilot lines and
large scale demonstration platforms and achieve critical mass.

Option (b) will be a step backwards as it
implies a reduction of the importance of an industrially driven Strategic
Research and Innovation Agenda.

5.2.2.     Impact
of joining forces

It is important to compare option (a) and
(e) in their impacts as they are based on the same tripartite model but differ
in the implementation by having either 2 structures (option (a)) or one single
structure (option (e)). Option (a) will bring a renewed set of two initiatives
with two separate SRIAs. It may not allow to efficiently tackling the whole
technology and value chains from components to systems. Option (e), with one
structure and a common scope for action, would allow better coordination and
cooperation between the various stakeholders and enable synergies in strategic
aspects of the current SRIAs in areas such as efficient co-design of
hardware/software, standardised operating systems or delineation of various
functions into one or more components.

As there are many similarities among the
operational management of the two current initiatives, joining forces in one JU
is a sound way of achieving economies of scales in e.g. managing calls and
monitoring all operational aspects, including financial reporting and auditing.

5.2.3.     Specific
impact on the various stakeholders

a/ Large
companies

It is expected that tripartite options (a)
and (e) will allow large companies to better achieve their goals through significant
projects in accordance with national priorities. Bipartite options (b) to (d)
may not provide sufficient financial resources. Organisations would face
uncertainties on major projects as they will have to apply for several sources
of public funding in an un-coordinated way. As a result essential parts of the
projects may not be supported.

b/ SMEs

SMEs tend to address specific technologies
rather than more general technology areas. Therefore, at first sight, option
(a) appears the most appropriate for SMEs as it provides more focus. Option (b)
lacks direct national involvement and as result may reduce SME participation (SMEs
participation is around 20% in the Framework Programme whilst it is around 35-40%
for the current JTIs). Options (c) to (e) are administratively better for SMEs
as there is single contracting.

In option (e), SMEs will benefit from
access to demonstration platforms. The "closer to market" emphasis will
result in a faster return on investment, further counterbalancing the
administrative burden. The wider technology scope may however not easily fit
the specialist skills of SMEs. However, the high rate of SME participation in
the current JTI's (option (a)) suggests that the benefits significantly
outweigh the downside aspects in the case of option (e).

c/ Research organisations

The current participation of all major RTOs
in the existing JU's is high. More emphasis on innovation and supporting
projects at higher TRLs will allow RTOs to 'accompany' industrial partners to get
closer to market innovation. Options (a) and (e) are likely to be preferred
with a slight preference for option (e) as this will enhance visibility.

The involvement of other academic
stakeholders is equally important as they cover specific technologies. It is
expected that the implementation through either of the options will not have a
significant impact on the participation of these actors.

d/ Industrial
associations (European Technology Platforms, ETPs)

As industry representatives, the ETPs are
directly concerned with the initiative. Their role is to coordinate the
definition of an industry-driven common strategy in R&D&I. The current
initiatives are a better way to bring forward their SRAs.

In this context, it appears that option (a)
is the favoured option (as confirmed by the contributions of AENEAS and ARTEMIS
ETPs to the public consultation). Option (b) would put the ETPs in the role of 'consulted
organisations' with a more limited impact on the definition of work programmes.

The value of options (c) to (e) will be in
coordination beyond actual constituencies to address issues such as complexity,
fragmentation or exchange of information on key problems manner as well as in defining
and implementing of a joint agenda.

On a practical level the increase of
efficiency of the JU in option (e) will reduce the private financial
contribution to the administrative costs.

e/ Member
States

Member States contribute to the current
initiatives by funding their industry and research organisations.

Options (b) to (d) represents a major
change compared to the current situation and it remains to be seen whether
without the additional contribution of the Member States a significant impact in
the electronic components and systems sector can be achieved.

Option (a) provides Members States with the
same frame as for the current initiatives. Option (e) allows for alignment, a
more coherent and strategic vision on the whole sector and a
pooling/combination of resources.

f/ European
Commission

Leveraging sources of public funding, EU, national
and regional, to mobilise private funding for R&D&I and the progress
towards the European Research Area are main goals. Obviously option (a) will
not allow the same leverage effect on R&D&I compared to option (e).
Options (b) to (d) may lead to a decrease of the support to the sector.

On the EU side all options will make use of
the same source of funds, i.e. the budget available under the LEIT part of
Horizon 2020

6.           Preferred
policy option

6.1.        Comparing
the options

Three interconnected levels of comparing
options are presented. First the table in Figure 19 compares the merits of the options
(b) to (e) against the baseline scenario (option (a)) with respect to
fulfilling the objectives identified in section 3. The objectives in the table
are grouped according to their contribution to one of the criteria of
effectiveness, efficiency or coherence. This addresses the evolved
technological and economic context faced at this point in time and ensures the
objectives are consistent with the new landscape.

|| Objectives || Option (b) || Option (c) || Option (d) || Option (e)

Effectiveness || 1.1 Boost competitiveness || - || + || + || +

1.2 Cover innovation & value chain || - || + || + || +

1.3 Solve societal challenges and create new markets || - || - || = || +

3.1 Maintain and grow manufacturing in EU || - || - || - || +

3.2 Leadership in E&M || - || - || - || =

4.1 Availability of electronic components || - || - || = || +

4.2Leadership in system engineering || - || = || + || +

Efficiency || 2.1 Structure and perform excellent multi-disciplinary research || = || = || + || +

2.3 Mobilise and pool resources || - || - || - || +

5.2 Efficient implementation of programme || + || = || + || +

5.3 Synergies for exploitation of results and fostering SME growth || - || - || + || +

5.4 Ease participation in projects with strong European dimension || + || + || + || =

5.6 Cooperation and coordination of stakeholders || - || = || + || +

Coherence || 2.2 Align strategies || - || = || = || +

3.3 Support high TRLs || - || - || - || +

5.1 Set strategic research and innovation agenda || - || = || + || +

5.5 Access to design and manufacturing infrastructure || - || = || + || +

5.7 Maintain human skills || = || = || = || =

Figure 19 - Comparing the options

On a second level, with respect to the
criteria listed in the proposal for Horizon 2020 [1] to identify PPPs (see
section 4.1), the comparison above demonstrates that:

·
Options (a) and (e) offer most added-value of
action at Union level (coherence);

·
Option (e) has the strongest scale of impact
on industrial competitiveness, sustainable growth and socio-economic issues
(effectiveness);

·
Options (a) and (e) show the strongest long-term
commitment from all partners on a shared vision and clearly defined objectives
(effectiveness and coherence);

·
Option (e) is the strongest in the scale of
resources involved and the ability to leverage additional investments in
research and innovation (efficiency);

·
Options (c), (d) and (e) allow for a clear
definition of roles for each of the partners (efficiency and coherence).

The
third level concerns the options in view of the improvements identified in the
interim evaluations.

|| Option (b) || Option (c) || Option (d) || Option (e)

An integrated European Strategy || - || - || + || +

Allow for a more efficient implementation || - || = || = || +

Improved governance and strategic planning || - || - || + || +

Strengthened commitment and alignment with priorities of Member States || - || - || - || =

Harmonisation of conditions of participation || = || + || + || =

Streamlined operations including better monitoring and evaluation || = || = || + || +

As a complementary comparison, the
following table indicates how the proposed objectives can be addressed by the
different options, i.e. how the different options can fulfil the
recommendations underlying the proposed specific and operational objectives (Table 2 and Table 3)

Table
4 - Comparing the potential of
the options to addressed the identified issues

Objectives || Option (b) || Option (c) || Option (d) || Option (e)

Specific objectives

Structure and perform excellent research and innovation while improving articulation with national and regional efforts || - || = || = || +

Mobilise and pool resources || - || - || - || +

Support high TRLs || - || - || = || +

Constituencies involvement and complexity tackling || - || = || + || +

Strengthen the ecosystem || - || = || + || +

Leadership in system engineering || - || - || - || +

Operational objectives

Set strategic research and innovation agenda || - || - || + || +

Efficient implementation of programme || - || = || = || +

Synergies for strategic cooperation || = || = || + || +

Exploitation of results and SME growth || - || - || = || +

Ease participation in projects with strong European dimension || = || = || + || +

Access to design and manufacturing infrastructure || - || - || - || +

Cooperation and coordination of stakeholders || - || = || + || +

Comprehensive and fertile innovation environment || = || = || + || +

Maintain human skills || = || = || = || =

In conclusion, the preferred option to achieve critical mass and high Return-on-Investment is (e) "Implement a tripartite
institutional Public-Private Partnership",
i.e. a partnership based on a roadmap for R&D&I with an extended scope
from components to systems, a pooling of resources to support a significant
number of large-scale actions crossing the valley of death, and the aligning of
strategies and funding (regional, national and EU level).

This is also the conclusion of the study on
the future impact of ARTEMIS and ENIAC [4] carried by independent organisations
TNO and eutema. In the study four scenarios are considered: no JTI
(corresponding to option (b) above), renewal of current JTIs (option (a) above)
and a new integrated (either fully or partially) JTI (option (e) above). The
degree of integration (full or partial) reflects the views expressed by many
stakeholders that a new integrated JTI should offer room for a clear
distinction of activities in the respective fields of nanoelectronics, smart
systems and embedded systems. This has no direct consequence on the overall
model of option (e).

In comparing those scenarios on the basis
of their impact on (1) industry value chain, (2) strategic research agendas,
(3) innovation and (4) governance and funding, they concluded that the scenario
of a partially integrated JTI is the most favourable as shown in Figure 20.

Figure 20 - Comparing impacts

6.2.        Implementation
and governance

Option (e) is to be implemented by setting
up a new legal entity under Article 187 TFEU. It would take the form of a 'PPP
body' using Article 209 of the Financial Rules [25], charged with indirect
management according to Article 58.1(c)(iv). This approach would satisfy most
of the demands from the private partners (more flexibility, less administrative
overhead) as also expressed in the 'Ideal House' Group report [13].

The positioning of the new JTI reflecting
its complementary character with the more advanced activities that would be
covered by the 'standard' Horizon 2020 instruments is represented in Figure 21. The main drivers for the proposed
delineation are the level of investment on the one hand and the industrial
focus on the other hand. While the support of high TRLs clearly requires a
pooling of resources, flexibility to support lower TRLs projects through either
EU-only funding (i.e. implementing a limited bipartite within the JTI) or
through national funding without EU contribution (implementing an
inter-governmental mechanism within the JTI) should be considered.

Figure 21 - Positioning of new JTI

Based on the observations drawn from the
current JUs (as listed in section 2.5), a streamlined governance structure as
illustrated in Figure 22 is
envisaged.

Figure 22 - JU governance structure

Compared to the current JUs, the proposed governance
structure would ensure that the Governing Board focuses on the strategic
aspects. An effective supervision of the operational aspects may be delegated
to a Supporting Committee. The Supporting Committee could oversee 'standard' operational
aspects and report to the Governing Board. It should be a light sub-structure
with a minimal number of representatives from each of the members of the JU
(public authorities, industry and the Commission).

The Public Authorities Board decides on
budgets, calls for proposals and the funding of projects. The public members
(Commission and Member States) participate in this board.

A Private Member Board ensures the
definition and update of the SRIA, the multiannual strategic plan and annual
work plan.

The three boards would operate under
flexible conditions as they see fit, especially in view of the transition from
the current JUs.

The Executive Director ensures the daily
operations of the JU as well as the execution of the programme.

The operating principles of the new JU will
aim at:

·
simplification, by having single contracting;
and

·
a balanced sharing of public support of projects
between Member States and the EU.

A limited set of derogations to the
standard Rules for Participation established by Horizon 2020 might be required
in order to cope with the above principles and take account of the financial participation
of Member States on the one hand and considering the nature of an
industrially-driven PPP on the other hand where the private members are
expected to contribute significantly more than in the standard Framework
Programme.

7.           Evaluation
and monitoring

Three levels of evaluation and monitoring
will be organised. The top-level monitoring will fall upon the Governing Board
of the JU, in which the Commission will be represented according to its share
of the overall budget. The Executive Management will monitor the operations of
the JU internally and will present an Annual Activity Report to the Governing
Board along the lines of the Annual Work Plan. This will also be submitted to
the EU budgetary authority in the context of the discharge procedure for the
use of EU funds by the JU.

The Commission will present to the Council
an Annual Implementation Report, including a report on the state of progress of
the JU and on its financial position.

7.1.        Mid-term
and final evaluations

At the initiative level, the Commission
will carry out mid-term and final evaluations of the JU with the assistance of
independent experts based on desk research, interviews and data mining. These
evaluations will look at the progress towards achieving the strategic
objectives, the efficiency/effectiveness of the implementation and the
commitment of the private members in and beyond projects. The Commission will
communicate the conclusions of the evaluation to the Council and the European
Parliament.

7.2.        Monitoring
the JTI progress

At the level of projects, a mechanism will
be put in place to measure the progress and the quality of each project. In
addition, the use and dissemination of results will be monitored during and
after the project lifetime, in accordance with the recommendations of the 2nd
interim evaluation panel (see table 1).

The progress towards the set of objectives
of the JTI as identified in section 3 will be annually monitored against a set
of Key Performance Indicators (KPI) as indicated in the following table. It is
expected that the collection of information/data necessary for the monitoring
will not lead to significant administrative costs as most of the data will have
been collected through regular reporting, at project level and/or annually.

Objectives || KPI || Metrics (measured over period 2014-2024)

2.1 Structure and perform excellent multi-disciplinary research || Innovative and State-of-the-Art projects || Ø Quality of results as e.g. measured in number of peer reviewed publications Ø Innovative R&D&I, at least 2 patents per 10 M€ funding Ø Number and impact of breakthrough technologies

2.2 Align strategies || SRIA with priorities || Ø Commitment from all JU members Ø Focus of SRIA commensurate with the available budget

2.3 Mobilise and pool resources || Budget execution || Ø Financial commitments by all JU members Ø Contribution towards the 3% target for R&D&I

3.1 Maintain and grow manufacturing in EU || Create jobs in electronics industries Increase manufacturing plants in Europe || Ø Number of direct and induced jobs in Europe – progress towards creation of 250.000 induced jobs Ø Number of state-of-the-art fabs in Europe as measured by technology node and wafer size

3.2 Leadership in E&M || Strategic cooperation on E&M issues || Ø Ranking and market share/volume of European E&M suppliers

3.3 Support high TRLs || Scale and impact of projects || Ø Number of new/upgraded pilot lines in Europe – at least 3 per year Ø Number of demonstrators of integrated solutions – at least 3 per year Ø Access and use by actors not directly implementing the pilot lines/demonstrators

4.1 Availability of electronic components || Take-up of new technologies by European application sectors || Ø European market share/volume for new solutions

4.2 Leadership in system engineering || Strategic cooperation on embedded and smart systems issues || Ø Ranking and market share/volume of European electronic systems suppliers

7.3.        Monitoring
the JU operations progress

The monitoring of the financial management
of the JU is carried out annually by the European Court of Auditors. The
operational capability of the JU will also be assessed by KPIs on an annual
basis, reported by the Executive Director, in line with the following table.

Objectives || KPI || Metrics (measured over period 2014-2024)

5.1 Set strategic research and innovation agenda || SRIA || Ø Adoption of SRIA by all key players Ø Clarity and focus as perceived by the stakeholders

5.2 Efficient implementation of programme || JU operations || Ø Time to grants (from call closing to grant signature) < 270 days Ø Time to payment < 90 days Ø Dissemination activities Ø Project results

5.3 Synergies for exploitation of results and fostering SME growth || Industrial up-take of project results || Ø Number of spin-offs Ø SME growth in terms of turnover and employment

5.4 Ease participation in projects with strong European dimension || Simplified rules for participation || Ø Industrial and SME participation rate – the latter ≥ 30% Ø Reduction of administrative overhead

5.5 Access to design and manufacturing infrastructure || Availability and open access to State-of-the-Art infrastructure s || Ø Access and use by SME's, including system integrators

5.6 Cooperation and coordination of stakeholders || Partnerships || Ø Composition of consortia – emergence of strategic alliances

5.7 Maintain human skills || Expertise available in Europe || Ø Availability of curricula/courses and effective take-up of professional training in line with industrial needs

In addition, a qualitative monitoring will
be carried out on other important aspects such as:

·
Openness and transparency of procedures;

·
Coordination between JTI, other EU initiatives,
and national and regional actions;

·
Avoidance of conflict of interest;

·
Financial auditing;

·
Monitoring of good governance.

Annex 1 –
Context of the initiative

A.1 The general context of ICT

ICT in this document refers to all
technologies, products and services in the value chain from the equipment and
materials needed to produce electronic components and systems, through to their
design and manufacturing, to their integration in applications, including
software and system engineering.

Figure
23 - ICT, a strategic
"enabling" industry

A.1.1. ICT – an essential economic
sector

The revenue of the ICT sector corresponds
to some 10% of total worldwide GDP (2010 figures) [26]. In 2008, the EU ICT
sector alone produced a value representing EUR 574 billion. This represented
4.7% of the total Europe Union GDP, of which 1% is in manufacturing and 3.7%
are in services. It employed in total some 8.3 million people [27].

ICT contributes directly and indirectly to
labour productivity, innovation and competitiveness [28]. It underpins most if
not all sectors of the economy and is a main contributor to the economic growth
[29]. It is well established that there is a 'pervasive impact of
ICT-enabled hi-tech products on European industry performance and the EU
economy. ICT, complementing the diversity of European industrial activities,
play a growing and essential role as key enabling technologies. This
complementarity enhances existing goods and services, giving those companies
that embed ICT in their products and services the opportunity to develop (or
maintain) the competitive edge on a global scale.' [27]

The ICT sector leads other economic sectors
in terms of R&D expenditure. In 2007, worldwide, it accounted for [29]:

·
25% of total business expenditure in R&D
(BERD);

·
17% of gross expenditure in R&D (GERD); and

·
Employed 32.4% of all business sector
researchers.

A.1.2. Deficit of ICT sector innovation

Although the EU and the US have roughly the same GDP, the US levels of both business and public ICT R&D funding are the
double of those in the EU [29]. In 2007, the US level of ICT BERD/ICT GDP was
0.72% while it was 0.30% for the EU indicating that there is a comparative
under-investment in ICT R&D in Europe. The reasons are several fold: 'These
factors include the competitive battle for the ICT industry among advanced
economies, the innovative tensions affecting the industry ecosystem, the
emergence of new large ICT markets and ICT knowledge flows, and the progressive
transformation of the ICT industry from an engine of direct growth into a
competitive asset as a key enabling technology for other sectors of the EU
economy.' [27]

As a result there is an innovation deficit
when compared to competitor countries like the USA, Japan, South Korea or China. While, due to differences in patenting systems, it is difficult to make
comparisons with Asia, the comparison with the USA is striking. Europe applies
for roughly half the number of ICT patents when compared to the USA. This is in contrast to other sectors in which Europe does better than the US [30]. The EU is creating less value in ICT than the USA.

A.2 Electronic components and systems -
a general purpose technology

Most, if not all, advanced products rely on
electronic components and systems. The quality and capability of products most
often depend on their electronic core. The 'electronics inside' allow for
differentiation of products and services and determines the competitive
position of its suppliers. Increasingly, the physical world (sensors,
actuators, computer chips) meets the cyber world (computing in the cloud). In
these emerging cyber-physical systems (CPS) a huge number of devices exchange
data with one another, access web services and interact with people in
increasing complex ways putting forward significant technology challenges.
Electronic components and systems are a driver of innovation and growth in many
key sectors of European industry including automotive, aerospace, health,
manufacturing, telecommunications and consumer electronics [31, 32, 33].

Furthermore electronic components and
systems are essential in tackling societal challenges from the reduction of
greenhouse gases emission, to the optimisation of the use of transportation
networks, to the facilitation of smart grids and personalised affordable health
care.

The present initiative focusses on
electronic components and systems and covers (i) micro- and nanoelectronics,
i.e. data processing components, (ii) embedded systems and (iii) smart systems.
These subfields are defined as follows:

·
Data processing components are semiconductor
components necessary for all data processing functions. They are found in all
types of computers (microprocessors, microcontrollers, solid-state memories…);

·
Embedded systems encompass all computer based
systems which are not dedicated to data processing only, i.e. all systems performing
electronic functions embedded in larger systems; and

·
Smart systems include all other types of
semiconductor components and systems built on them. They cover a wide variety
of components including microsystems, power electronics, and e.g. radio-frequency
components. Most of the smart systems embed data processing functions are
connected to data processing components. The related components provide
functionality to systems beyond computation and data processing.

The three subfields are complementary (see Figure 8) but present specific problem sets:

·
Data processing components are very capital
intensive;

·
The design, engineering, verification and
validation of embedded systems are software and human resource intensive; and

·
Smart systems are often specifically designed
for each application.

The revenues of the 3 subfields are
summarised in the following figures.

·
The revenues of the electronic components
industry was 313 B€ worldwide in 2011. Its average annual growth rate is 5
to 6% [34, 26];

·
Revenues of the electronic systems industry have
been estimated at 852 B€ in 2010. Its annual growth rate is estimated at 12%
for the next decade [15]; and

·
The revenues of the diversified components used
in smart systems is estimated at some 10 B€ worldwide in 2011. Its estimated
annual growth rate is 13% for the next decade [26].

The electronic components and systems
sector thus represents a significant part of the total GDP and is growing
faster than the overall economy.

A.3 Technological and economic trends in
nanoelectronics

A.3.1. Technology roadmap

The International Technology Roadmap for
Semiconductors (ITRS) is the worldwide guideline for the development of the
next generations of data processing components (i.e. microprocessors and
memories) [35]. Based on the so-called Moore's law (doubling of computing
component density every 18 months), it identifies the technical roadblocks
and serves as catalyst to create a consensus on how to solve them.

The last decade saw the introduction of
many new technologies necessary for the continuous increase of the density of
the computing components. As the critical dimension of the fundamental unit of
the components is reaching below 20 nanometres, the costs associated with
the R&D and manufacturing of these component are becoming very high: it is
estimated that more than 1 B€ is necessary for the R&D to develop each
next generation of components and that a manufacturing plant will cost in the
order of 10 B€ [36]. Simultaneously a transition to larger wafer sizes for
the production of components is happening, form the current 300 mm to
450 mm [37]. This will keep the price of individual integrated circuits
constant but will be accompanied by huge capital spending by the manufacturing
companies over the next decade. As a consequence the number of companies that
can keep up with new technology developments is decreasing as the market share
threshold to afford the next technology generation is increasing faster than
the market size. It is estimated that a 20% annual increase of investment is
needed to develop the most advanced components whilst the market increase of the
order of 6% [38].

A.3.2. Business models

The industrial landscape changed significantly
in the last 10 years. Historically the mainstream manufacturing companies,
so-called Integrated Device Manufacturers (IDMs), designed and manufactured their
components in-house. This business model was the consequence of the need to
master the manufacturing technology to ensure the quality of the components.
Until quite recently no company was willing to entrust another one to
manufacture its components. Nevertheless for some specific niche markets,
fabless companies (design companies without manufacturing capacity) emerged and
an offer of "foundry" (manufacturing company without in-house design
capability) started to grow rapidly.

The major fabless companies (not ranked in
2002 in the 25 largest companies of the sector) currently hold overall more
than a 10% market share (growing from 1 to 6 ranked companies from 2003 to now).
The total market share of fabless companies is currently estimated at 25% [39].
In parallel with the emergence of the fabless companies, foundry companies
(manufacturing companies without design) grew accordingly from 5.3% in 2005 to
8.1% in 2012. In the last 15 years the market share of only one IDM (Samsung)
steadily grew from 4% to 9.3%. With the exception of Intel and Samsung the
market share of the other companies was below 4.5%. The 15% loss of market
share of the 18 largest IDMs (without Intel and Samsung) can be attributed to
the 15% gain by fabless companies (10%) and Samsung (5%) in the same period as
illustrated in the Figure 24.

Figure 24 - Market share of semiconductor companies

The market share increase of Samsung is
attributable to a full dedication to the mobile device strategy in a vertically
integrated model. For the other companies losing market share may lead to a
situation where a form of consolidation is inevitable. In particular major
Japanese IDMs either merged (Renesas having taken the legacy of Hitachi, Mitsubishi
and NEC semiconductor businesses), were acquired by competitors (Elpida was
recently sold to Micron) or spun off and were dismantled (Fujitsu
Semiconductors).

Europe is facing
the problems identified above, notably the fast increase of R&D/manufacturing
plant costs and increased complexity. In Europe there is currently not
sufficient investment and limited access to volume markets. This is illustrated
e.g. by the small number of advanced 300 mm wafer manufacturing plants in Europe [40].

Figure
25 - Installed monthly capacity
for each wafer size by geographic region (July 2011)

2 of the 3 European IDMs reduced their
investment in R&D in the past decade. One European IDM is maintaining its
R&D investment but its investment in manufacturing sites is relatively
limited. This may lead to a Europe that is unable to manufacture advanced data
processing components and that is becoming too much dependent on foreign company
suppliers.

Figure
26 - Market share of European
IDMs

This could be compensated by a European
position in fabless business model. But as outlined in [9], 'in Europe, the
ratio of fabless to semiconductor companies is 75% whereas it is 85% in US and
75% in Asia. If ratios are equivalent, there is a major discrepancy considering
absolute figures which are not in favour of Europe. Indeed, Europe lacks fabless
companies (150) compared to the US (600) and Asia (500). Moreover, no European
fabless company is in the worldwide top 10 (8 US companies out of 10).'

Figure
27 - Semiconductor/Fabless
companies breakdown by region

The new "fabless/foundry" model
will most likely not replace the IDM model as there are many cases/markets
where the model is not profitable or suitable, e.g. in cases in which the user
industry demands for product line maintenance for decades, such as in
automotive or other industrial applications.

The complexity of the business models and the
fabless/foundry model in particular is further put in perspective by referring
to some recent announcements. Many IDMs divested away from capital intensive
components manufacturing and now focus on the faster growing area of design.
This led to offshore manufacturing in Asia. Counter to this recent
announcements and merger and acquisitions (e.g. Google buying Motorola for
mobile devices patents, Qualcomm envisioning to acquire manufacturing
capability, Amazon intending to purchase part of Texas Instruments components
activities) 'content' companies (especially in the US) show a growing interest
in acquiring manufacturing capability.

A.3.3. Missing mass-volume markets

Europe is missing
companies developing advanced consumer products [9]. 'Europe exhibits
low performances on Data Processing and Consumers applications. These results
on high volumes markets are correlated with the decline of European OEMs in
these applications. The Communications sector is at the frontier, relying on
the large Nokia and Sony Ericsson market positions.' [9] The situation
however is changing fast.

This situation is reflected further in the
fact that the fabless companies worldwide mostly target consumer electronics,
telecommunications and computers as their main market segments (see Figure 28) [41].

Figure 28 - Customer market segments of fabless
companies

A.4 Europe's leading position in part of
the electronic components and systems value chain

Europe is host to
world class research and innovation and it developed a leading position in a
number of high growth markets. European research institutes (e.g. Fraunhofer,
LETI, imec in micro- and nanoelectronics, and Tecnalia, Politecnico di Torino
or VTT in embedded systems and software) are world class and internationally
recognised. Furthermore European university laboratories are part of large
networks of excellence. This constitutes an essential asset that needs to be
nurtured and enhanced as the industry clearly acknowledges [6].

'Europe is well positioned on
high growth market (Automotive, IMS). These still small but emergent markets
are driven by worldwide champions like Bosch, Valeo, ABB, Siemens or Philips
Healthcare, relying on high performance technologies developed upstream in the
value chain. This reflects the importance of European OEM champions as drivers
of the supply chain in emergent markets.' [9]

A.4.1. Strengths but incomplete value
chain in nanoelectronics

European strengths are very broad and
diverse. To illustrate the Grenoble cluster, around STMicroelectronics and
Soitec, developed an FDSOI technology[9]
that allows for the design and manufacture of energy efficient nanoelectronics
components at a less demanding complexity (strong reuse of existing processes
and design tools). This technology is a strong contender in the field of mobile
devices and holds the promise in many application sectors to further bring
added functionality.

Remarkably, Europe has some of the most
important equipment and material suppliers (e.g. ASML for EUV Lithography, the
key and most risky equipment for further miniaturisation, SOITEC for substrate
material, a key ingredient for new transistors or AIXTRON for manufacturing
equipment).

In order to cope with escalating R&D
costs in nanoelectronics, European companies cooperate in partnerships at
international level. Illustrative examples are the partnering of
STMicroelectronics with the IBM cluster in Albany, USA, or the investments of
the 3 largest semiconductor companies in ASML.

Important efforts have been conducted at
regional level notably in the last 15 years to build industrial and technology
clusters in (nano) electronics[10].
In line with experiences gained around the world, the most successful clusters
are often the result of sustained strategies based on a combination of policies
including investment in R&D and in infrastructure. Furthermore the
availability of skills and knowledge is an essential factor for deciding on
investment by the private sector in this field.

Further, in the fabless world ARM based in
the UK licences integrated circuit design, especially in the microprocessor
segment. More than 70% of microprocessors in the world are currently designed
by ARM, especially for mobile devices. The company increasingly expands its
activities including into microprocessors for servers.

Europe will benefit
from strengthening these assets. Europe has many strengths, especially in the business-to-business
markets and in the automotive, avionics and rail sectors.

A.4.2. Embedded systems: clear strengths
despite fragmentation

Embedded systems are electronic products,
equipment or complex systems containing computing devices and/or functional
components and special software. Embedded systems are not externally visible
and are normally inaccessible to the user. They bring intelligence to devices,
objects and processes. Embedded systems are not solely dedicated to computing
but are typically an entire part of a more complex product. As a single
component is 'blind' to the outside world it needs to be connected to sensors
('eyes', 'ears') and actuators ('arms') in order to constitute a smart embedded
system. This heterogeneity adds to the system complexity. In order to cope with
this complexity progress on standardisation, open technology reference platforms
and/or technological convergence are essential.

Complex systems across the embedded and the
internet worlds will increasingly share common ICT resources and evolve to
cyber-physical systems and 'smart spaces'. These will have to comply with
stringent safety, dependability and time-constraints. Cyber-physical systems
are powered by a computing continuum spanning embedded and mobile computing to
warehouse-scale and high performance computing. Whereas data and network
security was less critical in traditional embedded systems, connectivity to the
outside world will have the consequence that security will become crucial. In
terms of private R&D investment by sector using electronic systems, Europe is strong in all sectors except consumer electronics [15].

In the field of embedded systems, 'Europe
benefits from strong OEMs base on Automotive and Aerospace & Defense
sectors but also from smaller markets such as Electricity/Gas/Water utilities,
and Energy Equipment. Stakeholder interviews inputs indicate that OEMs drive
the innovation and technology development. In emergent software applications
close collaboration between OEMs and Software vendor companies is considered
critical for developing first products. In this context OEMs create a strong
internal market for the SMEs. This is particularly important for small software
companies which have mainly local operations and few international capabilities'
[15].

However, there are no dominant players in
embedded systems opposite to what is observed with the component suppliers. The
main reason for a balance among suppliers is because proprietary architectures
and peripherals allow microcontroller (MCU) and digital signal processor (DSP)
companies to differentiate themselves and because of the huge legacy investments
in programming [15]. The
fragmented market in Europe is strongly felt in the field of embedded systems. 'The
supply side of the ESD software market is very fragmented. IDC estimates that
there are about 430 European ESD software vendors but there are no more than 20
companies with turnover over 10 M€ which account to nearly the three
quarters of the market. Dassault Systèmes and Siemens PLM are the two largest
companies.' At the same time 'Almost 95% of European ESD software
vendors account just for 27% of the market. The activity of these small sized
companies (turnover below 10 M€) relies mostly on local operations.' [15]

A.4.3. Smart systems: world leader in
components

Smart systems rely on functional components
for sensing and interacting with the environment. They encompass a large set of
diverse components that provide e.g. the radio frequency (RF) functions for all
sorts of wireless communications, a wide range of sensing capabilities, for
airbags or the mobile phone camera, or the handling of high voltages and
currents for smart grids or green energy. All these components are developed
along some form of technology roadmaps specific for each application area. This
applies particularly to the microsystems (integrated microelectronics and
micromechanical systems).

This brings inherent entry barriers to the
field of (non-logic) functional components. Though these components are less
R&D intensive they rely more on proprietary processes and design. This and
the European strength in systems engineering helped Europe in developing and
holding a strong position (European players are indicated by a red arrow in Figure 29).

Figure 29 - MEMS companies ranking

Figure
30 - MEMS market forecast
evolution

While in the past markets tended to grow
slowly, now the annual growth rate almost doubles the growth for computing
components (roughly 13%, see Figure 29) [26]. This is attracting more and new actors. The market for functional
components is equally consumer driven.

The strong position of the EU industry in
automotive smart systems is an asset to build on. Four European IDMs
(STMicroelectronics, NXP, Infineon or Bosch) are in the top 10 global
suppliers. Other areas such as health and energy are or will become equally
important.

A.5 Outlook

Electronic components and systems are the
most R&D intensive part of the ICT. It is facing huge challenges related on
the one hand to the substantial size of the needed R&D and on the other
hand to the increasing complexity requiring multi-disciplinary technology
development throughout the value chain.

The increase of systems design complexity
results from several factors, including the proliferation of devices, the quantity
of data, the diversity and richness of functions and services, interoperability
and networking [15]. It is
expected that the number of processing units will reach 100 per person by 2020
and most of them will be connected to some form of network to collect data from
their environment and contribute to the ambient intelligence. 'The
cumulative impacts of computing power available, new software technologies and
the Internet allowed exponential growth functions and services provided by the
systems and interoperability capabilities between systems. These two aspects –
diversity and richness of functions and services on one hand, interoperability
and networking on the other – now lead to levels of complexity never achieved
previously.' [15]

At the same time, the dividing line between
electronic components and embedded systems is continuously evolving as more
functionality is integrated at the component level. As the number of functions
integrated in components increases their design is becoming more complex.
Beyond and building on this component complexity there is an increase of the
complexity of embedded system as well and the need for increased flexibility in
the system design. The industry is building on this diversity and richness of
functions and services to differentiate and compete in supplying systems with
increased capability. New approaches for managing the complexity of design are
needed especially in networked architectures.

In some application sectors the competitive
use of electronic components in Europe needs to be further developed. This is
particularly the case in advanced products for consumer markets.

Europe is under
threat of losing the strategic capability to produce electronic components [9].
The close relationship between the electronic
component industry and the industrial fabric as well as the proximity with
systems integrators is of paramount importance for Europe. The strategic
importance of electronic systems in specific sectors such as automotive,
aerospace, health or energy is significant. Electronic systems provide a large
part of the added value in these sectors and are indispensable to maintain
competitiveness. The table below presents an integrated summary of several
SWOTs [4].

Strengths - Excellent R&D capabilities/capacities in industry, institutes and academia - Leadership in More-than-Moore technologies and applications - World leading technology and industrial clusters in the field - Market leaders in equipment and materials - Traditional strong position in electronic systems with high degree of specialisation in many fields - Leading position in important market segments and applications – e.g. automotive, healthcare imaging, industrial automation, security and communications - Sizable ICT home market in key application domains - Highly skilled employees with professional experience || Weaknesses - Insufficient alignment of Member States on a European ICT industrial strategy - Very limited role in large consumer product markets: desk/laptop/tablet/tv/smartphone - Limited and fragmented strategic deployment of ICT system solutions for societal challenges - No overall focus on high-tech products in the (decreasing) European manufacturing industry - Inadequate culture for commercialisation of inventions and R&D results - 40 % less patent applications than USA or Japan - Shortage of well-educated new talents, lack of systems thinking in education

Opportunities - Growing markets for components and systems - Growing need for customised solutions and tighter user-supplier interactions - Growing complexity and prevalence of electronic systems in areas where Europe has strong industry (e.g. energy, transport, healthcare) - The need to address societal challenges, which creates new market opportunities - Increased procurement of innovative products and services in areas of public interest - Industrial exploitation of new materials and corresponding equipment - Expansion of PPPs and strong eco-systems will increase the attractiveness of Europe as location for manufacturing and R&D || Threats - Fragmented regulatory frameworks preventing economy-of-scale exploitation - Uneven global level playing field - Weaknesses in European innovation ecosystem development - Lack of competitiveness with respect to production cost – labour, energy - Loss of major parts of technology and production expertise and as a consequence, risk of degradation in leading-edge R&D&I - Loss of major parts of proprietary intellectual property - Dependence on non-European operating systems for mobile and embedded applications - Dominance of non-EU actors from the Internet world swapping over to the world of embedded/cyber physical systems

Annex 2 –
Recommendations from the two interim evaluations

First interim evaluation recommendations
[11]

No. || Summary of recommendation || Time-frame

1 || Future JTIs in these domains to continue the tripartite JTI model || Next generation JTIs

Recommendations for Member States

2 || Make multi-annual budgetary commitments || Now

3 || Comply with the JTI Council Regulations || Now

4 || Undertake benchmarking & alignment study on national practices || Now

5 || Give early annual indication of support for specific topics || Now

Recommendations for Industrial Associations

6 || Lead the establishment of processes to monitor progress toward JTI objectives || Now

7 || Lead the preparation of action plans for achievement of innovation ecosystem aims || Now

8 || Engage better with the JTI constituencies || Now

Recommendations for the European Commission

9 || Lead the drafting of new Council Regulations with alternative Financial Regulations and Staff Regulations || Next generation JTIs

10 || Regulations should allow JTIs to support innovation-related activities other than R&D || Next generation JTIs

11 || Regulations should allow JTIs to accept funding from other sources || Next generation JTIs

12 || Regulations should allow the EU to make additional financial contributions for strategic purposes || Next generation JTIs

13 || Regulations should allow the Joint Undertakings to claim some of their operational costs from non-members || Next generation JTIs

14 || The Commission should establish data gathering to support assessment of the benefits of these JTIs || Now

Recommendations for the Joint Undertakings

15 || Establish a mechanism for recovering some of their operation costs from non-member beneficiaries of the JTIs || Next generation JTIs

16 || Place greater emphasis on strategic, European aims in proposal evaluation & selection processes || Now

17 || Establish processes to give early feedback to proposers || Now

Recommendation for JTI - EUREKA co-ordination

18 || ARTEMIS & ENIAC should continue their initiatives to differentiate from and coordinate with ITEA2 and CATRENE, respectively || Now

Second interim evaluation
recommendations [12]

Rec. || Summary of Recommendation || Relevant Constituency || Time-frame

1 || E/ The ENIAC SRA, MASP, AWPs and Grand Challenges need to reflect more strongly a coherent European perspective, linking to an overarching European ECS  research, development and innovation strategy, as proposed in Rec. 17 of this report. || ENIAC Industrial Association and the JU || Next Generation JTIs

A/ The ARTEMIS SRA and work programmes need to reflect more strongly a coherent European perspective, linking to an overarching European ECS research, development and innovation strategy, as proposed in Rec. 17 of this report. || ARTEMIS Industrial Association and the JU || Now/ Next Generation JTIs

2 || E/ The ENIAC Industrial Association, AENEAS, should play a more active role in the definition of the overall objectives and strategy of the ENIAC JTI and should engage more actively with stakeholders so as to promote and facilitate participation in project proposals, especially by SMEs, and to develop and keep up to date the Strategic Research Agenda || ENIAC Industrial Association || Now/ Next Generation JTIs

A/ The ARTEMIS Industrial Association (ARTEMIS-IA) should re-double its efforts to synergise the European embedded system community || ARTEMIS Industrial Association || Now Next Generation JTIs /

3 || E/ ENIAC project reviews, including a final post-project review that should be held, the panel concludes, between 6 and 12 months after the end of a project, should monitor more closely and rigorously the actual and planned exploitation of project results, and the measures put in place by project partners to achieve such planned exploitation. || ENIAC JU || Now

A/ A detailed deployment and commercialisation strategy for ARTEMIS project results should be defined. || ARTEMIS  JU || Now

4 || Projects should build appropriately upon previously developed ARTEMIS technology, making reference to what has been funded before with the intent of demonstrating novelty as well as re-use of results obtained in previous projects.  || ARTEMIS  JU || Now/ Next Generation JTIs

5 || The proportion of funding for projects targeting generic applications and services (Applications projects) should be increased. || ARTEMIS  JU and Industrial Association || Now/ Next Generation JTIs

6 || The ENIAC & ARTEMIS JTIs, along with the European Technology Platform (ETP) on Smart Systems Integration (EPoSS), should be integrated into a single organisation (one legal entity - an ECS JTI).  || EC and future JTIs || Next Generation JTIs

7 || ENIAC and CATRENE calls for, and selection of, proposals should be more closely aligned (e.g. by the use of common and/or complementary calls), with the relevant funding awarding bodies retaining some flexibility over the assignment of the most appropriate funding stream. || ENIAC JU || Now/ Next Generation JTIs

8 || Construct the proposed integrated ECS JTI (of Rec. 6), or indeed any future JTI, as a PPP with reduced legal requirements. || EC || Next Generation JTIs

9 || Focus the JU Governing Board on strategic issues and reduce its administrative burden in order to attract participation from high-level industry representatives. || JUs || Now/ Next Generation JTIs

10 || Member State participation rules, funding rates and procedures should be harmonised wherever possible. || Member States || Now

11 || a/ The JU should explore and develop appropriate mechanisms to create an ‘early warning system’ to identify mis-matches in funding of member states. || JUs || Now

b/ In order to bridge financing gaps, intermediate funding should be allowed for projects which are mission-critical. || JUs and EC || Now/ Next Generation JTIs

12 || Member States should commit to a multi-annual funding system. || Member States || Now/ Next Generation JTIs

13 || Take steps (e.g. modification of evaluation criteria) during the proposal evaluation and selection process to improve the match of the project portfolio to strategic European aims and to ensure optimum coverage of key areas defined in the overarching EU ECS strategy (proposed in Rec. 17) and the work plans derived from such a strategy. || JUs || Next Generation JTIs

14 || Specific support mechanisms for enhancing the project management processes in JTI projects should be developed and implemented. Management costs should be 100% funded by the EC for all JTI projects. || JUs and EC || Now/ Next Generation JTIs

15 || JTI projects should be subject to only one joint JTI and MS project review and reporting process. || JUs and Member States || Now

16 || Appropriate metrics for measuring the impact and success of projects should be developed and used for both current and future JTIs.  || JUs || Now

17 || A mid- to long-term overarching EU research, development and innovation strategy in Electronic Components and Systems (ECS) should be clearly defined and used as a key 'driver' for funding decisions. || EC || Now

Annex 3 – Profiles
of the ENIAC and ARTEMIS JUs and EPoSS ETP

Both JUs were set up for 10 years
(2008-2017) with a financial contribution from the Seventh Framework Programme
over the period 2008-2013. The present information gives an overview of the
activities of the JUs during their first four years 2008-2011 for which full
data are available. In 2012, the JUs extended their scope of work to include
manufacturing pilot lines for ENIAC (as a result of the recommendations from
the High-Level Group on Key Enabling Technologies [3]) and innovation pilot
projects for ARTEMIS, both of which had a significant impact on their budget
execution.

ENIAC Joint Undertaking

The focus of ENIAC is the semiconductor
industry. The Multi-Annual Strategic plan [42] identifies 8 domains and 25
grand challenges (GC's) setting the scope of the programme. An overview of
these is provided in the following table.

C# || Chapter || Grand challenge (GC)

1. || Automotive and transport || Intelligent Electric Vehicle

Safety in traffic

Co-operative Traffic management

2. || Communications and digital lifestyles || Internet multimedia services

Evolution to a digital lifestyle

Self-organizing network

Short range convergence

3. || Energy efficiency || Sustainable and efficient energy generation

Energy distribution and management- Smart grid

Reduction of Energy consumption

4. || Healthy ageing and living || Home healthcare

Hospital healthcare

Heuristic healthcare

5. || Safety and security focuses || Consumer and citizen security

Securing the European challenging applications

Enabling technologies for trust security and safety

6. || Design technologies || Managing complexity

Managing diversity

Design for reliability and yield

7. || Semiconductor process and integration || Know-how on advanced and emerging semiconductor processes

Competitiveness through semiconductor process differentiation

Opportunities in system-in-packaging

8. || Equipment, materials and manufacturing || Advanced CMOS – 1xnm and 450 mm

More than more

Manufacturing

Chapters 1-5 are strongly focused on more market
oriented research and development (transport, communication, energy,
healthcare, safety &security), where the 6th chapter is enabling on design
tools, chapter 7 on the more fundamental chips manufacturing processes and 8 on
(supporting) manufacturing equipment. Figure 31 shows that the programme addresses
strongly the semiconductor manufacturing part, but also the more subsystem
oriented part of the value chain is addressed by Chapters 1-5.

Figure 31 - Overview of value chain addressed by
ENIAC JU

The 40 projects selected for funding in the
period 2008 – 2011 cover all areas of research; their distribution is shown in Figure 32.

Figure 32 - Projects per area of activity

On average, there are some 20 participants
per project from 6 different Member States as detailed in Figure 33.

Figure 33 - ENIAC Projects 2008-2011

The participation of the R&D actors in
the ENIAC JU projects is representative for an industry in which all players,
large or small, public research or private companies have a significant part to
play. Since the beginning, the projects exceed 800 participations of more than
400 non-affiliated organizations distributed as shown in Figure 34.

Figure 34 - Unique participants by type of
organisation

In Figure 35, the results of the yearly calls
for proposals demonstrate that the JU created a favourable environment for
leveraging public (i.e. national) and private funds. The impact of addressing
higher TRLs according to the KET report is remarkable in the 2012 forecasts.

Figure 35 - Programme execution (in M€)

The distribution of funding per type of
participants is shown in Figure 36. This is in line with the value chain and indicates that the
differences in funding rates applied by the national authorities are geared
towards more support for SMEs and academic/research partners.

Figure 36 - Funding per type of participants

As examples of concrete achievements, the
following projects were concluded successfully as a result of the first call
for proposals in 2008:

·
The project E3Car improved by 35% the overall
efficiency of the electrical vehicles resulting in reduction of the energy
consumption and reduced ecologic footprint. It innovated at the component,
sub-system and system level, creating a view of the electric vehicle
architecture adopted and further developed and implemented in several follow-up
projects.

·
The project IMPROVE advanced the
state-of-the-art in virtual metrology, predictive maintenance and adaptive
control plans, reducing by 30% the measurement steps in manufacturing,
improving the up-time of the equipment items by 1%-5% and virtually eliminating
disruptions caused by unexpected failure. It enables the European manufacturers
to compete based on innovation and efficiency.

·
The project LENS integrated results from various
research activities improving the accuracy in photolithography by 40-50%,
introduced new materials and demonstrated process integration schemes using
dual exposure and pitch doubling technics that prolonged the applicability of
the incumbent immersion tools for two more technology generation

ARTEMIS Joint Undertaking

The focus of ARTEMIS is the electronic
systems industry, with special focus on the more market oriented sub-system
industries. Special focus is on embedded systems. Three main research domains
are distinguished in the Multi-Annual Strategic Plan [43] between: 1) Reference
Designs and Architectures, 2) Seamless Connectivity and Middleware and 3)
(System) Design Methods and Tools. A set of "ARTEMIS Sub-Programmes"
are identified to further provide more focus and detail to the program
objectives:

·
ASP1: Methods and processes for safety-relevant
embedded systems. This subprogram focuses on the transport, industry,
healthcare and public infrastructure, looking at the enhancement of safety and
efficiency. Its focus is on software development and architectural design.

·
ASP2: Embedded Systems for Healthcare systems.
Important needs for applications in this sub-programme are: gathering and
(pre-) processing of data by a large variety of detectors, sensors, control
treatment by various actuators, real-time processing of large volumes of data,
high reliability, dependability and interoperability in complex heterogeneous
environments.

·
ASP3: Embedded Systems in Smart Environments.
The overall goal is to provide methods, tools, technology and models with which
developers will be able to build 'smart environments', i.e. ecosystems of smart
and heterogeneous devices interacting with each other and with the environment,
and cooperating together to provide a foundation for rapid local applications
and service innovations.

·
ASP4: Manufacturing and production automation.
The main themes of this subprogram are embedded systems supporting sustainable,
competitive, flexible, reconfigurable manufacturing and delivery of products,
and the support of products over their complete life-cycle.

·
ASP5: Computing platforms for Embedded Systems.
The main themes of this subprogram are: 1) new architectures for embedded
systems, addressing very high throughput (multi-core) embedded systems, low
power (power management), as well as HW / SW architecture strategies; 2) new
design paradigms that render the practical implementation of multi- and
many-core solutions tractable.

·
ASP6: Embedded Systems for the Security and
Critical Infrastructures Protection. The focus is on embedded systems
architectural, design and communication topics, ensuring seamless and secure
communication/cooperation of heterogeneous embedded systems in large-scale
dynamic networks using models/methods/tools for predicting complex, dynamic
behaviour in distributed and cooperating embedded systems.

·
Embedded Technology for Sustainable Urban Life.
The subprogram calls for integration that crosses several technology domains
and diverse application sectors. The research strategy is to develop a series
of platform ecosystems that progressively converge to integrate the management
of more resources in larger areas.

·
ASP8: Human-centred Design of Embedded Systems.
The aim is to promote technology development that supports designers to build
intuitive Human-Machine Interfaces that integrate naturally into operational
environments and that are effective and easy to use, especially in safety
critical domains.

Looking at the industry value chain in Figure 37, it is clear that more focus is
given towards application oriented subsystems, but also the connection to
semiconductor devices is relevant (ASP1, ASP5, ASP6). No attention is given to
materials and semiconductor manufacturing equipment, but subsystem
manufacturing equipment (and equipment for other manufacturing industries) is
addressed (ASP4). Especially design tools for subsystem manufacturers are of
importance.

Figure 37 - Overview of value chain addressed by
ARTEMIS JU

Looking at the subprograms, it becomes
clear that the main focus is on embedded software. However, also the hardware
architecture is relevant, as this is very often directly linked to software
architectures. In some subprograms, attention is given to the development of
new micro transducers (sensors and actuators) which are also important research
topics for the EPoSS ETP. The manufacturing technologies are limited to
enhancing equipment for the manufacturing of subsystems and systems.

The 44 projects selected for funding in the
period 2008 – 2011 cover all areas of research; their distribution is shown in Figure 38.

Figure 38 - Projects per area of activity

On average, there are some 20 participants
per project from 6 different Member States as detailed in Figure 39.

Figure 39 - ARTEMIS projects 2008-2011

The participation of the R&D actors in
the ARTEMIS JU projects shows a balanced representation of all the players.
Since the beginning, the projects exceed 900 participations of more than 500
non-affiliated organizations distributed as shown in Figure 40.

Figure 40 - Unique participants by type of
organisation

In Figure 41, the results of the yearly calls
for proposals show that the JU is leveraging public (i.e. national) and private
funds but at a lower level than anticipated initially. The impact of calling
for Innovation Pilot Projects explains the 2012 forecasts.

Figure 41 - Programme execution (in M€)

The distribution of funding per type of
participants is shown in Figure 42. As for ENIAC JU, the value chain is well covered and the national
authorities are geared towards more support for SMEs and academic/research
partners.

Figure 42 - Funding per type of participants

As examples of concrete achievements, the following
completed projects from the call in 2008 are considered as flagships:

·
CESAR (ASP1: Methods and processes for
safety-relevant Embedded Systems): very large project – the largest in the
ARTEMIS portfolio to date. Its importance, both in size and of its topic, has
generated such gravitational pull that many projects have quickly "moved
into orbit" and provide inputs to CESAR or make use of its output. It also
lies at the heart of CRYSTAL – an AIPP from Call 2012. CESAR created a "Reference
Technology Platform" (the CESAR RTP, or CRTP) and associated "Interoperability
Specification" (IOS). In essence, this is a sophisticated toolkit to
manage the plethora of other tools needed when developing SW-intensive products
that demand absolutely highest standards of reliability. The CRTP allows
relevant and interoperable tools to be selected for particular market/product
requirements and generates a customised working environment in which these
tools can be used to their best advantage.

·
eDIANA (ASP7: Embedded Technology for
Sustainable Urban Life): created and demonstrated a so-called "Middleware
Platform" specification that allows various sensors and controls to
communicate with each other, specifically aimed at energy management in houses
and larger buildings (offices and/or residences). The middleware ensures that
devices from different manufacturers can operate together, using wireless or
wired technologies. It also foresees connection to larger, district-level
networks such as "smart grids". The platform's functionality and
usefulness in the retrofit scenario were tested on three medium-scale
application demonstrators. The eDIANA consortium is at the heart of the
recently certified ARTEMIS-IA Centre of Innovation Excellence "ES4IB"
(Embedded Systems for Intelligent Buildings).

·
INDEXYS (ASP5: Computing Platforms for Embedded
Systems): developed and evaluated 3 different demonstrators, in the automotive,
aerospace and railway industrial domains, allowing partners to patent the
approach developed for the CAN Router - a star architecture device for the CAN
network (the CAN bus, popular in automotive and industrial applications, was
initially designed as a bus-architecture but INDEXYS has expanded it towards
the more secure star-architecture). It also significantly influenced and
contributed to the release of the SAE Standard for the Time-Triggered Protocol
TTP.

EPoSS European Technology Platform

The focus of the EPoSS ETP is on supporting
research and development in the subsystem and system manufacturing. Core to the
program is the integration of smart systems. Based on the 2009 Strategic
research agenda of EPoSS [44], the core technologies are: Materials, Micro/Nano
effects, Packaging, Design, Smart power management, Signal and information
processing, Energy conversion systems, Chemical and biological sensors,
analytical systems and Vision sensors. The thematic priorities are structured
according to the following application areas:

·
Smart Systems for Automotive Applications,
enabling a quicker move to the era of full electrical mobility. This includes:
Smart Systems for the Management of Energy Storage Systems, Intelligent Power Electronic
Devices, Active Control Units for Electric Motors & Wheels, Smart
Integration of Range Extenders, Advanced Vehicle to Grid Connection Systems

·
Smart Systems for Medical Applications,
including the integration of micro-sensors and micro-actuators in products for
cure and care that will provide the healthcare professional with more advanced
and improved options to treat and take care of patients and will enable
patients to attain a better quality of life, even when suffering from chronic
diseases.

·
Smart Systems for the Internet of Things,
opening the way towards multi-dimensional, context-aware, and smart
environments that can bridge the real, virtual and digital worlds by using
wireless connectivity for energy efficient and environmentally friendly
applications and services.

·
Smart Systems for Information and
Telecommunication, focusing on Personal connectivity and communication,
High-performance variable components component level, Integration on
module/subsystem level, Machine-to-machine connectivity, RF antenna and filter
design for miniature, low-power designs, New scalable architectures.

·
Smart Systems for Safety and Security, including
low-cost personal smart secure portable objects and home protection systems
which are affordable for consumers, and high-performance, high-efficiency
systems for applications such as public transportation, stadiums, business and
banking centres, administrative offices, public IT infrastructures, border
security, water and energy distribution, telecommunications and other safety
critical systems.

·
Smart Systems for Aerospace, including the
Electrical Aircraft (Sensors, Actuators, Networks); the Connected Aircraft
(Communication, RF technology), the Intelligent Aircraft (Sensors, Actuators),
the Efficient Aircraft (Sensors, Actuators. Power).

Looking at the industry value chain in Figure 43, the focus is on systems, but
within the perspective of manufacturing of components and devices. Although
limited attention is given to the fundamental research in semiconductor device
development, still this link within the value chain can be of importance.
Overall the program is focused on application products for distinctive markets
and manufacturing equipment is not a priority.

Figure 43 - Overview of value chain addressed by
EPoSS ETP

So far, the EPoSS SRA was implemented via
different means: the PPPs on the Green Car and Efficient Buildings, and
'regular' FP7 objectives in the ICT Work Programme. It was only loosely
coordinated with the activities in ARTEMIS and ENIAC.

Annex 4 – Final
report of the study on the future impact of ARTEMIS and ENIAC

The final report of the study SMART
2012/0050 [4] is available in a separate document.

Annex 5 – Sources

[1] || European Commission, “Proposal for a Regulation of the European Parliament and of the Council establishing Horizon 2020 - The Framework Programme for Research and Innovation [2014-2020],” COM(2011) 809 final, 30 November 2011.

[2] || European Commission, “Operational guidance for assessing impacts on sectoral competitiveness within the Commission impact assessment system - A "Competitiveness Proofing" Toolkit for use in Impact Assessments,” SEC(2012) 91 final, 27 January 2012.

[3] || High-Level Expert Group, “Final report on Key Enabling Technologies,” June 2011. [Online]. Available: http://ec.europa.eu/enterprise/sectors/ict/files/kets/hlg\_report\_final\_en.pdf.

[4] || TNO - eutema, “Electronic components and systems in Europe - Future impact of ENIAC and ARTEMIS,” SMART 2012/0050, December 2012.

[5] || ARTEMISIA, EPoSS, AENEAS, “High Level Strategic Research and Innovation Agenda of the ICT Components and Systems Industries,” 25 April 2012. [Online]. Available: http://www.aeneas-office.eu/web/downloads/strategic-docs/sria\_ict\_components\_systems\_industry\_corrected.pdf.

[6] || European Commission, “Report on the public consultation about the future JTI(s) on electronic components and systems,” November 2012. [Online]. Available: https://ec.europa.eu/digital-agenda/en/news/report-results-public-consultation-future-joint-technology-initiatives-electronic-components.

[7] || ESIA, “WSTS Forecasts 2012Q2,” [Online]. Available: http://www.eeca.eu/esia.

[8] || iSuppli, Wikipedia, “Semiconductor sales leaders by year,” 2012. [Online]. Available: http://en.wikipedia.org/wiki/Semiconductor\_sales\_leaders\_by\_year.

[9] || VDI-VDE and CEA-LETI, “ICT Man - exploring the potential of ICT components and systems manufacturing in Europe,” 1 April 2011.

[10] || European Commission, “Commission Staff Working Document accompanying the Proposal for a Council regulation setting up the ENIAC Joint Undertaking - Impact Assessment,” SEC(2007) 851, 22 June 2007.

[11] || W. Bernotat, “First interim evaluation of the ARTEMIS and ENIAC Joint Technology Initiatives,” 30 July 2010.

[12] || M. Goetzeler, “Second Interim Evaluation of the ARTEMIS and ENIAC Joint Technology Initiatives,” 2013.

[13] || JTI Sherpas' Group, “Designing together the 'ideal house' for public-private partnerships in European research - Final Report,” January 2010. [Online]. Available: http://ec.europa.eu/research/jti/pdf/jti-sherpas-report-2010\_en.pdf.

[14] || European Commission, “Impact assessment of Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020),” SEC(2011) 1427, 30 November 2011.

[15] || IDC France, “Design of future embedded systems,” April 2012.

[16] || European Commission, “Report from the European competitiveness week,” 18 September 2012. [Online]. Available: http://ec.europa.eu/digital-agenda/en/ict-competitiveness-week-17-20th-september-2012.

[17] || European Commission, “Proposal for a Council decision establishing the Specific Programme Implementing Horizon 2020,” COM(2011) 811, 30 November 2011.

[18] || AENEAS and CATRENE, “Innovation for the future of Europe: Nanoelectronics beyond 2020,” November 2012.

[19] || European Commission, “First interim evaluation of the ARTEMIS and ENIAC Joint Technology Initiatives,” COM(2010) 752, 16 December 2010.

[20] || European Commission, “Communication on Partnering in Research and Innovation,” COM(2011) 572, 21 September 2011.

[21] || European Commission DG RTD, “Cost benefit analysis of the Joint Undertaking as choice of administrative structure to implement a JTI,” 16 November 2012.

[22] || Euripides2, “Vision, Mission and Strategy,” 2013.

[23] || European Commission, “Guide on regional/national Research and Innovation Strategies for Smart Specialisation (RIS³),” May 2012. [Online]. Available: http://s3platform.jrc.ec.europa.eu/s3pguide.

[24] || EDP Science, “Quel futur pour les métaux? - raréfaction des métaux: un nouveau défi pour la société,” 2010.

[25] || European Parliament and Council, “Regulation on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002,” Regulation No 966/2012, 25 October 2012.

[26] || Yole Development, “Market overview and commercialisation of miniaturised Smart Systems,” European Competitiveness week, 18 September 2012.

[27] || The Institute for Prospective Technological Studies, “The 2011 Report on R&D in ICT in the European Union,” EUR 24842 EN (2011).

[28] || World Economic Forum and INSEAD, “The Global Information Technology Report 2012 – Living in a Hyperconnected World,” 2012.

[29] || The Institute for Prospective Technological Studies, “Prospective insights on ICT R&D (PREDICT): Main results of the first phase (2008-2011),” 10 November 2011.

[30] || The Institute for Prospective Technological Studies, “Performance of ICT R&D,” EUR 24934 EN (2011).

[31] || IDC France, “Design of future embedded systems, interim study report,” 04/2012.

[32] || ARTEMIS-IA, “ARTEMIS Strategic Research Agenda,” 14 December 2011.

[33] || Network of Excellence HYCON 2, “Position Paper on Systems and Control in Horizon 2020 - Contribution of systems and control science and technology to the challenges of future engineering systems,” September 2011. [Online]. Available: http://cordis.europa.eu/fp7/ict/embedded-systems-engineering/documents/hycon2-report2011.pdf.

[34] || iSuppli, “Intel Reasserts Semiconductor Market Leadership in 2011,” 1 December 2011. [Online]. Available: http://www.isuppli.com/Semiconductor-Value-Chain/News/Pages/Intel-Reasserts-Semiconductor-Market-Leadership-in-2011.aspx.

[35] || ITRS, “International Technology Roadmap for Semiconductors,” [Online]. Available: http://www.itrs.net.

[36] || J. Ellis, “A 450mm World…Preparing for Battle,” 26/09/2012. [Online]. Available: http://450mm.com/blog/2012/09/26/preparing-for-battle/.

[37] || Decision & Future Horizons, “Benefits and Measures to Set Up 450mm Semiconductor Prototyping and to Keep Semiconductor Manufacturing in Europe - The role of Public Authorities and Programmes,” SMART 2010-0062, 16 February 2012.

[38] || McKinsey & Company, “The evolution of business models in a disrupted value chain,” Automn 2011. [Online]. Available: http://www.mckinsey.com/client\_service/semiconductors/latest\_thinking/the\_evolution\_of\_business\_models\_in\_a\_disrupted\_value\_chain.

[39] || D. Byrne, “Pricing and Product Sourcing in an Offshoring Market: Evidence from Semiconductor Production Services,” June 2012. [Online]. Available: http://www.andrew.cmu.edu/user/bkovak/BKM\_semicon.pdf.

[40] || IC Insights, “The Global Wafer Capacity Analysis and Forecast,” November 2011.

[41] || University of Pennyslvania - Global Semiconductor Alliance, “Collaborative innovation in the global semiconductor industry,” 2011.

[42] || ENIAC Joint Undertaking, “Multi-Annual Strategic Plan,” 18 November 2010. [Online]. Available: http://www.eniac.eu/web/downloads/documents/masp2010.pdf.

[43] || ARTEMIS Joint Undertaking, “Multi-Annual Strategic Plan,” 7 December 2011. [Online]. Available: http://www.artemis-ju.eu/governing\_board.

[44] || EPoSS ETP, “Strategic Research Agenda of the European Technology Platform on Smart Systems Integration,” 10 March 2009. [Online]. Available: http://www.smart-systems-integration.org/public/documents/publications.

[45] || European Commission, “A European strategy for Key Enabling Technologies – A bridge to growth and jobs,” COM(2012) 341, 26 June 2012.

[46] || C. Mack, “Why the Big Players Like 450-mm Wafers,” 20 August 2012. [Online]. Available: http://semimd.com/mack/2012/08/20/why-the-big-players-like-450-mm-wafers/.

Annex 6 –
Glossary of Terms

AENEAS || Private non-profit organisation established under French law to represent the R&D actors involved in the ENIAC JU

ARTEMIS || European Technology Platform for embedded computing systems

ARTEMIS-IA || Private non-profit organisation established under Dutch law to represent the R&D actors involved in the ARTEMIS JU

ARTEMIS JU || Joint Undertaking implementing a JTI on embedded computing systems

E&M || Equipment and Materials

ENIAC || European Technology Platform for nanoelectronics

ENIAC JU || Joint Undertaking implementing a JTI on nanoelectronics

EPoSS || European Technology Platform for smart systems

ETP || European Technology Platform (grouping of R&D actors in a specific field, driven by industry who produces primarily a Strategic Research Agenda covering the key issues requiring a dedicated and joint effort)

Fab || Manufacturing plant for electronic components

Fabless || Company designing electronic components without own manufacturing capability (outsourcing to foundry)

Foundry || Company owning fab(s) and offering manufacturing services to fabless customers

IC || Integrated Circuit (also named 'chip')

ICT || Information and Communication Technology

IDM || Integrated Device Manufacturer – company designing and manufacturing its own electronic components

IP || Intellectual Property

JTI || Joint Technology Initiative – a Public-Private Partnership for R&D&I in a specific technology domain

JU || Joint Undertaking (as defined by Article 187 TFEU)

KET || Key Enabling Technologies (identified by a High-Level Group of experts as advanced materials, biotechnology, micro- and nanoelectronics, nanotechnology, photonics and manufacturing as a cross-cutting issue)

PA || Public Authority

PPP || Public-Private Partnership

R&D R&D&I || Research and Development Research, Development and Innovation

RTO || Research and Technology Organisation

SME || Small- and Medium-sized Enterprise

SRA SRIA || Strategic Research Agenda Strategic Research and Innovation Agenda

TRL || Technology-Readiness Level – a measure of the industrial maturity of a technological product or service (scale 1-basic principles to 9-successful mission operations)

[1]               This finding comes out of direct interviews at a time
where further developments of the future JTI model were available compared to
the situation at the time of the public consultation.

[2]               Advances in electronics follow a sustained "more
for less" curve characterised as Moore's Law (doubling of performance for
the same price every 18 months)

[3]               Including not only within the electronics sector but also
across the economy

[4]               Embedded systems are increasingly referred to as
"cyber-physical systems" to illustrate their role in connecting
physical objects to the web

[5]               See Annex 2 for synthetic tables of recommendations
from the 2 interim evaluations. The first number refers to the first or second
evaluation and the second number is the recommendation number.

[6] See the criteria which should be fulfilled by Joint Technology
Initiatives under Horizon 2020 in section 0

[7]               The other JTIs currently implemented through
bipartite JUs are Clean Sky, Innovative Medicines Initiative and Fuel Cells and
Hydrogen.

[8]               http://intranet-rtd.rtd.cec.eu.int/int\_com/docs/CBA\_JU.pdf

[9]               FDSOI: Fully Depleted Silicon on Insulator

[10]             See the constituting clusters of Silicon Europe

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