Europe in the Sweet Spot
By Adele Hars
The semiconductor industry has new drivers in automotive, Internet of Things (IoT), both high- and low power, sensors, and medical and industrial applications—which happen to be traditional European core strengths. The new CEO of French RTO Leti and other industry leaders and analysts see this as a golden opportunity.
Is the European semiconductor industry finally in a sweet spot? Yes. In fact it’s hard to find anyone who’s not enthusiastic about Europe’s prospects, because while it may not be at the top of the overall worldwide charts, Europe has key players in key areas, and that’s a good place to be.
One of Europe’s strengths has always been R&D. For decades, the world’s top semiconductor companies and suppliers have quietly worked with Europe’s top research and technology organizations (RTOs)—the triumvirate of Leti in France, Fraunhofer in Germany, and imec in Belgium—as well as with leading universities throughout the continent, redefining the limits of what’s possible.
|Emmanuel Sabonnadière,CEO of Leti(Photo credit: Jayet/CEA)|
Take Leti for example, a driving force behind FD-SOI as well as a host of other leading-edge technologies. Having recently celebrated its 50th anniversary, Leti now has a new CEO, Emmanuel Sabonnadière. Under his watch, he says, “Leti will spearhead novel technologies to enable artificial intelligence, higher-performance augmented reality, cybersecurity, personalized healthcare for all, and many more digital tools that will help us tackle the societal changes of the next 50 years.”
It’s not unusual to hear European executives talk about the role the semiconductor industry plays in advancing the common good. Paul Boudre, CEO of SOI wafer-maker Soitec (one of over 60 very successful Leti spinoffs), says, “Europe has a vast society. We care about the balance between life and work. How can we develop models where semiconductor technology brings society to the next level? Getting the right information, feedback and learning. The new wave is not just about performance, but how do you build into silicon sensing, computing, communications, memory—for the long run without cables? This doesn’t only need 7nm technology. This needs technology in which Europe has been investing for years. I’m very optimistic.”
Leti has a budget of over $375M (75% of which comes from contracts with over 350 of the world’s tech leaders) and over 90,000 square feet of cleanroom space (most of it 300mm). Having firmly established the technology behind FD-SOI for low-power SoC integration (which was a priority in the last decade), Leti will now largely pursue More-than- Moore technologies, complementing imec’s More-Moore position, says Sabonnadière. And while it is producing new ideas as a “lighthouse for science,” he says, the core model is bilateral research, working one-on-one with industrial partners.
Leti researchers meet in one of the clean rooms. (Photo credit: Jayet/CEA)
EUROPE: RESEARCH POWERHOUSE
In 2013, Europe put some serious muscle into transnational research with the Horizon 2020 program. This eighth in a series of “framework” programs (also known as FP8) for research, development and innovation (RDI) has a budget approaching $100B, about $20B of which has been earmarked for “industrial” applications, including information/communication technologies, nanotechnologies, materials, biotechnology, manufacturing and space.
Specifically for the semiconductor business, the gateway to Horizon 2020 funding is through the Electronic Components and Systems for European Leadership (ECSEL) public-private partnership. With a budget of over $3B, ECSEL objectives include aligning strategies with member states to attract private investment, and maintaining and growing semiconductor and smart system manufacturing capabilities in Europe.
Leti’s home at the Minatec Innovation Campus in Grenoble boasts 10,000 square meters of clean room space. Pictured here is Leti’s mobile clean room, which they call the LBB (for Liaison Blanc Blanc), carrying wafers from one clean room to another. (Photo credit: Jayet/CEA)
RTOs have been immensely involved in Horizon 2020 projects. For example, Leti, in European Research Area 2016-2017, documents over 100 projects federating RTOs, academia and industrial players large and small, with budgets ranging from a few to several hundred million. The range is breathtaking: sensors, computing, photonics, power electronics, wireless, cybersecurity, imaging/ vision, medical devices, metrology and lithography.
The model of EU funding attracting private investment is clearly working. For example, in the ECSEL THINGS2DO project to build and develop the design ecosystem for FD-SOI, the EU investment was about $21M—the rest of the funding for the roughly $145M project came from over 40 industry and research partners. (It followed on the successful FP7 PLACE2BE project to establish two European manufacturing lines for FD-SOI.) Led by STMicroelectronics, the THINGS2DO project, which was just completed at the end of 2017, included Leti, NXP, Airbus, Cadence, GLOBALFOUNDRIES, Mentor, Fraunhofer and many more. The results included an ADAS SoC that reached record power efficiency and that provides a design platform on which European carmakers and tier 1 automotive component suppliers are creating custom derivatives.
Europe boasts multiple technology centers. Leti, imec and the Fraunhofer Institutes anchor large research and industrial ecosystems. But others abound; in fact there is an organization called Silicon Europe bringing together a dozen of the strongest clusters. It represents clusters in Germany, the Netherlands, the UK, Ireland, Spain, Austria, Belgium and France.
The analyst group Yole Développement says that there are more than 250 semiconductor fabs in Europe, from large digital 300mm fabs to multiple diversified fabs doing microfluidics, MEMS, photonics, specialized lighting and more. They note that a handful of European companies are in the top 25 semiconductor players worldwide, including STMicroelectronics, Infineon, and NXP. But there are also many companies playing in very high-growth markets, such as Bosch, ams, TDK/Epcos, and Osram, as well as established specialized players such as Dialog Semiconductor, Elmos and xFab.
|James Robson, Corporate Vice President, Applied Materials Europe|
James Robson, corporate vice president of Applied Materials Europe, notes that throughout Europe, semiconductor companies large and small are installing new tools and upgrading their existing equipment. Like the leading-edge 300mm fabs, all of the multiple 200mm fabs want the most technology-enabling and cost-efficient tools and solutions.
“They are all experiencing significant growth in the niches they’re working in,” he says, especially those related to the automotive industry, power electronics and sensors. “Practically all of the 140+ customers that Applied Materials serves in Europe are running at maximum capacity today.”
The Dresden region, dubbed Silicon Saxony, has scored some big wins recently, notes Yole. Bosch is building a $1.1B 300mm fab there to produce chips for IoT and mobility applications. Infineon has announced the 2018 opening of a Dresden center to develop new products and solutions for automotive and power electronics, as well as artificial intelligence.
Bosch’s future semiconductor fab in Dresden, Germany. The illustration shows a bird’s-eye view of the fab from the northeast. Completion is scheduled for the end of 2019, with production beginning in late 2021. (Courtesy: Bosch)
And of course, there’s GLOBALFOUNDRIES’ Dresden Fab 1, spearheading production for the automotive industry and FD-SOI for IoT, AI and more. Mark Granger, who heads up GF’s automotive division, recounts how at their recent Automotive Day in Dresden, the auditorium was packed, and you could “feel the energy.” A real advantage for the region is that the workforce is passionate about automotive, he said. Zero excursions, zero defects—that’s the mindset of the OEMs, and it continually drives the foundries.
While European semi players are highly visible on the global stage, there is also a definite “Europe Strong” vibe happening these days. When Bosch announced the new Dresden fab, a government official cited IoT and connected manufacturing as “among the most important topics in the microelectronics sector, and in European industry as a whole.”
When Leti and Fraunhofer announced a research tie-up last year, it was positioned as a way “to spur innovation in their countries and strengthen European strategic and economic sovereignty.” Their emphasis is on extending CMOS and More-than-Moore technologies for sensing and communication applications for IoT, augmented reality and the health, automotive and aeronautic sectors. Advanced packaging is also in the mix. Is the collaboration working? “Yes!” says Sabonnadière. “We are very much stronger all together.” He adds that the two institutions are also working together to launch some big programs.
In More than Moore, Europe can do a lot, he contends. Semiconductors are the base of a strong software industry, he believes, and there is a responsibility to develop hardware to fuel the European strategy, with things like Leti’s CoolCube™ technology for monolithic 3D architectures. He sees opportunities in automotive, 5G, cybersecurity, neuromorphic computing and AI.“We are working to create conditions for European industry to benefit from these innovations,” he says. Specifically, Leti is addressing five major topics:
- New advanced materials
- Novel technologies for human health, including biologically inspired research in connection with MIT and Shanghai Tech
- Power efficiency, by developing innovative devices (especially GaN) and architectures, and finding ways to use SOI to deepen energy savings for big systems
- Complex systems in a digital world, by revisiting complex architectures and looking for ways to simplify them for things like cybersecurity.
POWER UP AND MORE
Power is a place where Europe is extremely strong. In fact, Infineon, ST, NXP and Bosch control over 50% of the worldwide power semiconductor market. Infineon is the world’s largest supplier of power ICs, holding a worldwide market share of over 18.5%, and leading in both discrete power semiconductors and power modules. It’s certainly a position of strength, as revenue from power devices is expected grow at an annual rate of 7.5% from 2015 to 2022. Citing “soaring demand,” Infineon announced a new $1.9B 300mm fab in Villach, Austria, which will start producing power semiconductors in 2021.
This visualization previews Infineon’s new factory for power semiconductors at the company’s Villach location in Austria. Construction starts in early 2019, production in 2021. (Courtesy: Infineon)
In sales of automotive chips, Europe continues to be the world leader. In terms of “connected cars,” seven of the top ten players are in Europe: Bosch, Continental, Infineon and ZF (all in Germany), NXP (Netherlands), Valeo (France), and Delphi (UK).
Looking ahead, AR/VR is extremely promising, with Europe positioned to become the leader. And tech companies from around the world are setting up R&D centers in Europe. Yole points to investments in R&D centers by Huawei (UK), Sony (Germany), Apple (Germany, France, UK), and Samsung (UK, Germany, Poland, Hungary). France and its strong math education base has been a major beneficiary of R&D investments in AI, with Fujitsu, Samsung, Facebook and Google all setting up labs there.
Yole further points to a substantial list of factors that further bode well for Europe. Beyond the traditional strength of the automotive industry, there is strong commitment to the development of next-generation automotive connectivity, ADAS, transport electrification and more. The Renault-Nissan-Mitsubishi Alliance, Audi, BMW and VW are among the leaders worldwide. Likewise, Europe is home to top tier 1 equipment suppliers such as Valeo, Continental, Bosch, and Magnetti Marelli. Another new segment where Europe is strong is radar for automotive.
According to Yole, the lighting management and MEMS markets are driven by European giants (>$1B companies: Bosch, ST and ams) who are giving a second breath to the smartphone/consumer market with 3D imaging and AR/VR. For example, ST and ams are supplying key parts to Apple for its latest iPhone X, and 3D imaging is a hotspot for startups. What’s more, ST is also the world’s leading silicon photonics manufacturer—a market Yole predicts will hit $4B at the transceiver level in 2025.
Leti is located in the heart of the Minatec innovation campus in Grenoble. Minatec was founded by CEA Grenoble, INPG (Grenoble Institute of Technology) and local government agencies. The project combines a physical research campus with a network of companies, researchers and engineering schools. Minatec is home to 2,400 researchers, 1,200 students, and 600 business and technology transfer experts on a 20-hectare (about 50-acre) state-of-the-art campus with 10,000 square meters of clean room space. An international hub for micro- and nanotechnology research, the campus is unlike any other R&D facility in Europe. (Photo credit: Jayet/CEA; courtesy Minatec)
THE NEXT HORIZON
With the end of Horizon 2020 coming up fast, industries are jockeying for position in the next framework, dubbed Horizon Europe (FP9). The budget for FP9 is about $117B, an increase of about 20% over FP8.
A major interim report deemed Horizon 2020 a success, noting that for every euro invested, the macroeconomic return is 6–8.5 euros ($7–10). While Europe only has about 7% of the world’s population, it accounts for 24% of the GDP and 30% of the scientific publications. However, industrializing research remains a challenge: the amount of venture capital available in Europe is only one-fifth of what is available in the US, the report notes.
Even there, Emir Demircan, senior manager for Advocacy and Public Policy for SEMI Europe, is optimistic, noting that “with its leading research and development hubs, materials and equipment companies and chipmakers, the EU is in a strategic position in the global electronics value chain to support the growth of emerging applications.” However, he calls for changes in the regulatory environment to better serve small young businesses. Policymakers and industry should work with the continent’s financial sector so they develop the financial tools needed by industrial SMEs and startups.
The finance community seems to understand. “[W]e believe that far from hiding in the shadows, Europe is playing a pivotal role in this technological revolution as the IoT becomes an increasingly dominant and powerful force,” writes Anis Lahlou-Abid, co-manager of the Europe Technology Fund at JPMorgan Asset Management.
All of which explains why Leti’s Sabonnadière sees the coming years as very, very exciting indeed.
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 Share of automotive power semiconductor market worldwide in 2016, by manufacturer. Statistica.com 2018.
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 Annual Power Semiconductor Market Share Report 2017 – The power semiconductor market recovered in 2016, August 30, 2017, Richard Eden Principal Analyst, Power Semiconductors, IHS Markit.
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 Mobility trends: What’s ahead for automotive semiconductors by Stefan Burghardt, Seunghyuk Choi, and Florian Weig, McKinsey.com, April 2017.
 Global Connected Car Market 2018-2025 with Bosch, Continental, Harman, Denso, ZF, NXP, Infineon, Valeo and Delphi Dominating the $219 Bn Industry, Research & Markets 2018.
 Virtual Reality and Its Potential for Europe, Ecorys 2018.
 Horizon Europe - the next research and innovation framework programme - LAB – FAB – APP: Investing in the European future we want. ec.europa.eu.
 Enhancing Europe’s Position as Global Leader in the Digital Economy – 6 Key Takeaways from ISS Europe 2018, by Emir Demircan, Senior Manager Advocacy and Public Policy, SEMI Europe
 "Silicon Valley’s shadow should not obscure Europe’s unsung tech heroes," Financial News, September 6, 2017.
Adele Hars is a director of the High Tech Intl. consultancy in Paris. She served on the founding committee of SOI Consortium, and is editor in chief of its ASN newsletter. She is also a communications expert for the French Tech Hub and has been a contributing editor for over a dozen industry and technology publications.