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1、Forging Germanys digital destinyThe imperative of a sustainable microelectronics strategyContactsMunichTanjeff SchadtPartner,Strategy&Germany+49-151-6733-About the authorsTanjeff Schadt is an advisor to global semiconductor,high-tech,software and automotive clients.He leads the Strategy&semiconducto
2、r business in EMEA,and also advises governments and industry clients on semiconductor funding strategies.Tanjeff is a Partner with Strategy&Germany,based in the Munich office,and a member of the telecommunications and technology practice.Marcus Gloger is a senior advisor to executives in the electro
3、nics and high-tech industry for Strategy&.He specializes in disruptive innovation and go-to-market strategies in all areas of the development of software,(micro)electronics,and mechanics for industrial component suppliers.Stanislav Huley is a Manager with Strategy&Germany and a member of the telecom
4、munications and technology practice based in the Munich office.He advises clients in the semiconductor and its application industries on investment and funding strategies,and supply chain management.Dr.Richard Weller is a Senior Associate in Strategy&s technology strategy practice,based in the Dssel
5、dorf office.With a passion for disruptive technologies,he combines his scientific,academic and industry background to support his clients on semiconductor and other high-tech topics.Julian Hhler is a Senior Associate with Strategy&Germany and a member of the telecommu ni-cations and technology pract
6、ice based in the Munich office.He leverages his expertise from strategic technology projects to drive innovation and transformation with his clients.Ruoyu Jiang is a Senior Associate with Strategy&Germany and a member of the tele commu-nications and technology practice,based in the Munich office.Wit
7、h a strong background in the semiconductor industry,she provides valuable insights for her clients.Jan Philipp Otter specializes in EU state aid law and German subsidy and grant law.He is a Partner with PwC Legal,based in the Hamburg office,and advises private companies as well as public sector enti
8、ties and their companies.He and his team apply a multidisciplinary advisory approach that combines legal,commercial and technical aspects in a holistic manner.Kerstin Rohde is a Senior Manager with PwC Legal,based in the Hamburg office.She specializes in EU state aid law as well as subsidy and grant
9、 law.One of her focus areas is providing advice on regional and R&D subsidies as well as Important Projects of Common European Interest(IPCEI).Adrian Roseanu is a Senior Associate with PwC Legal,based in the Hamburg office.He specializes in EU State aid law as well as national subsidy,grant and admi
10、nistrative law.His focus lies on advising on regional aid,IPCEI,as well as on the EU Chips Act.Strategy&|Forging Germanys digital destiny3TABLE OF CONTENTSExecutive summary041.Introduction062.Current situation092.1 Microelectronics value chain102.2 Microelectronics types112.3 Industry environment123
11、.Microelectronics strategy133.1 Program I:Building a holistic,sustainable chip design ecosystem133.2 Program II:Strengthening and expanding the existing European microelectronics landscape183.3 Program III:Providing a sustainable environment for the microelectronicsindustry203.4 Program IV:Other imp
12、ortant strategic fields of microelectronics214.Outlook:Time to join forces22References24Strategy&|Forging Germanys digital destiny4Microelectronics has an exponentially growing importance for national economies and is crucial for digital sovereignty.Yet,Europe and Germany lack a significant global f
13、ootprint in this sector.Thus,the continent needs to develop and implement a sustainable strategy to restore its own digital sovereignty.In this report,such a potential strategy for Germany is presented.Currently,Europe and Germany are highly dependent on Asia and the US.The share of US companies in
14、overall microelectronics design is around 80%,with design being a major value contributor to the entire value chain.75%of all silicon wafers,the base material for nearly all microelectronics,is manufactured in just four Asian countries:Taiwan,South Korea,Japan,and Mainland China(hereinafter referred
15、 to as China).The same countries control a similar share of microelectronics front-end production.For memory chips,present in nearly all electronic devices,the production share for these countries is even higher,at 93%.To reduce these dependencies and secure digital sovereignty,countries around the
16、world have set up comprehensive,multi-billion-dollar funding programs,including the EU and Germany.A comprehensive and holistic microelectronics strategy is required to guide these efforts and ensure sustainable impact.This report presents such a potential strategy for Germany,consisting of four coh
17、erent strategic programs:EXECUTIVE SUMMARY1The first and largest program aims to establish a chip design ecosystem to foster innovation in Europe.It is centered on a chip design campus where different players across the microelectronics value chain come together and collaborate.2The second program s
18、trengthens and expands the existing European microelectronics landscape with a focus on wafer production and medium nodes,required e.g.,for power electronics,sensors,optoelectronics,and safety microcontrollers.3The third program ensures a favorable and sustainable environment for the industry toflou
19、rish.4The fourth program covers further important fields for expansion,namely memory chips and photovoltaic cells.Strategy&|Forging Germanys digital destiny5While the report mainly focuses on Germany,similar topics need to be considered in the European context.To implement this strategy and secure G
20、ermanys digital sovereignty,roughly 115 billion of public and private investment is required over 10 years.More than half of this will be needed for production sites for smallest nodes,the most advanced microelectronics technology currently available.Considering all synergy effects,the positive impa
21、ct on the global macroeconomic situation is estimated to reach over 3 trillion in 2035,comparable to the current GDP of the UK or India.The positive impact on Germanys GDP alone can be up to600 billion.The government has to provide the right basic conditions,as well asfunding,support,and direction,b
22、ut industry has to align and take ownership of the strategy implementation.Measures such as the chip design campus depend on active participation by industry players.It is time to join forces and secure Germanys digital sovereignty.Strategy&|Forging Germanys digital destiny6SECTION 1EXHIBIT 1Develop
23、ment stages of human economy and their impact on a nations GDP Entwicklungsstufen der menschlichen Wirtschaft und ihre Auswirkungen auf das BIP einer NationGDPMechanizationAgricultureElectrificationAI+ConnectivityExponential importance of microelectronicsMetaverseTimeEurope todaySource:Strategy&anal
24、ysis1.IntroductionIn an increasingly interconnected and technology-driven world,the importance of micro-electronics as a foundational pillar of innovation cannot be overstated.Megatrends such as artificial intelligence(AI)or the metaverse will lead to sizable growth in a nations gross domestic produ
25、ct(GDP),as Exhibit 1 indicates.These megatrends,as well as critical infrastructures such as power plants or telecommunications networks,are heavily dependent onmicroelectronics.At the same time,the global chip shortage that started in 2020 showed clearly how fragile the industrys globalized supply c
26、hains are.The increasingly tense geopolitical situation added an additional layer of uncertainty.Taking in particular resilience,competitiveness,and national security aspects into account,itbecomes clear that microelectronics will be crucial for a nations digital sovereignty.Thisterm refers to a nat
27、ions ability to independently control,develop,and utilize its own digital infrastructure,services,technologies,and economic policy,ensuring autonomy,data privacy,and security,without relying on foreign entities or technologies.It involves fostering domestic innovation and research to reduce dependen
28、ce on external influences,thereby safeguarding interests in the digital era.Increasing digitization is leading to the creation of digital twins of individuals,companies,and even whole nations.Without digital sovereignty,they are exposed to a very high risk of external influence.The consequences can
29、be dramatic,from altered consumer behavior to manipulated elections.As a result,countries around the world have acknowledged the importance of microelectronics to secure their digital sovereignty.Regulatory actions have been put into place to protect critical infrastructure from external influences,
30、such as the ban on 5G telecommunications components from Chinese manufacturers in the US and numerous European countries.On top of this,comprehensive funding programs have been started to assist with the enormous investments required and to increase supply chain resilience.Prominent examples are the
31、 CHIPS for America Act in the United States,worth over US$52 billion,the China Integrated Circuit Industry Investment Fund(known as the“Big Fund”),with its third phase worth around US$41 billion,and the EUs European Chips Act,with over US$19 billion of public funding(see Exhibit 2,next page).The EU
32、also proclaimed its ambition to reach a 20%share of global microelectronics production in 2030,starting from 9%in 2021.When comparing the GDPs of countries with relevant microelectronics industry,Europe could even set its ambition higher,for a global share of28%.At the same time,the microelectronics
33、 supply chain is highly globalized.When also taking financial and human capital limitations into account,it is clear that neither Germany nor theEU will reach full self-sufficiency in the microelectronics sector.This would also not bedesirable,as inefficient and expensive structures would result,ult
34、imately inhibiting further development and innovation.Instead,collaborations and partnerships between countries with similar value systems will become pivotal in producing critical microelectronics.Likedefending a nations sovereignty,e.g.,NATO allies would equally be ideal partners to jointly safegu
35、ard their digital sovereignty.28%share of global microelectronics production would be an appropriate ambition for the EU,when comparing the GDPs of countries with relevant microelectronics industry.Currently,it is set at 20%.There is no digital without chips.Europes share across the entire value cha
36、in,from design to manufacturing capacity hasshrunk.We depend on state-of-the-art chips manufactured in Asia.So this is not just a matter of our competitiveness.Thisis also a matter of tech sovereignty.Solets put all of our focus on it.“Ursula von der Leyen,President of the European CommissionStrateg
37、y&|Forging Germanys digital destiny7Strategy&|Forging Germanys digital destiny8To maintain a strategic position and strong negotiating power in the global microelectronics market,it is also crucial to establish certain control points within the value chain and defendthem against disruptions.One opti
38、on is to possess a significant technological advantage,such as ASMLs extreme ultraviolet(EUV)lithography in Europe,which facilitates the fabrication of microelectronics with the smallest node sizes.Another option is to control asubstantial share of global production capacity,like the strong dominanc
39、e of China for photovoltaic cells.Germany and Europe have to clearly position themselves in the global context and invest strategically to achieve and maintain digital sovereignty,without striving for full self-sufficiency.A comprehensive and holistic microelectronics strategy is required on a natio
40、nal and pan-European level.For this,the complete global microelectronics landscape must be investigated and analyzed to identify critical topics,potential gaps,and control points,as well as fields ofinnovation that should be prioritized.This report first gives an overview of the current situation in
41、 the global microelectronics sector.Afterwards,a holistic and sustainable microelectronics strategy is introduced.While the report mainly focuses on Germany,similar topics are relevant and similarly need to be considered in the European context.In the outlook,the investments required to realize the
42、strategy are discussed briefly,along with the impact expected on a macroeconomic level.1 Exact amount of phase three not officially announced yet,actual value might still change.Part of it comes directly from the central government budget,another part from state-owned enterprises.The amount does not
43、 include further subsidies planned on provincial and district levels.In total,funding worth$100 billion is expected 2 The amount includes public direct investments and a small part of joint investments with the private sector Source:Strategy&analysisEXHIBIT 2Overview on public funding initiatives in
44、 selected countriesUSAChinaJapanEUSouth KoreaTaiwan$52 bnby 2026$41 bn1by 2028$6.8 bnby 2026$19 bnby 2030$3 bn2by 2032Tax Incentivesuntil 2029CHIPS for America ActBig Fund IIIInvestment FundMicroelectr.industryEuropean Chips Act and IPCEI Microelectronics ClusterTaiwan Chips ActDomestic production,R
45、&DAiming for self-sufficiency in microelectronicsProduction,cutting-edge technologies and jobsDomestic production,R&DCreating an environment for private investmentsProduction,R&D,attracting foreign investmentStrategy&|Forging Germanys digital destiny92.Current situationUnderstanding the global micro
46、electronics landscape provides valuable insights into the strengths and opportunities for Germany and Europe in different areas.To proceed with formulating a comprehensive microelectronics strategy,it is essential to consider these key insights,acknowledging the critical role the different areas pla
47、y in a countrys digital sovereignty.Below,the most relevant findings with respect to the microelectronics value chain(see Exhibit 3),microelectronics types,and environmental aspects are highlighted.SECTION 21 Only share of largest companies 2 Market capitalization of IDMs only considered half to acc
48、ount for other value creation Source:SIA report 2021,SEMI World Fab Forecast 3Q22,Strategy&analysisEXHIBIT 3Contribution to the microelectronics value chain by country/region100%80%60%40%20%0%Software market cap.by HQ1Market cap.by HQ1ASMLNVIDIAShin-Etsu ChemicalGlobalWafersSoitecSumcoSiltronicFormo
49、sa SumcoBroadcomSamsungSamsungASEHon Hai Precision(Foxconn)AppleMicrosoftAlphabet(Google)AmazonNVIDIATeslaMeta(Facebook)TencentBoschBroadcom,Salesforce,Alibaba,Siemens,JabilQuanta ComputerFlexKitronPegatronUSIFabrinetSanmina,Plexus,AmkorJCETSPILPowertechChipbond,ChipMOS,SFA,Hana Micron,Compal,Invent
50、ec,TongfuTianshuiTSMCSK HynixFlash AllianceMicronSMICSony,Toshiba,Silan,YMTC,GlobalFoundries,Texas Instr.,OnSemi,King YuanUTACInfineonIntelUMCAMDIntelTexas Instr.SonyXilinx,Analog Devices,QualcommAMATLAM ResearchTokio ElectronSynopsysKLACadenceARMTeradyne,Coherent,Advantest,Lasertec,ASM Intl.,BE Sem
51、i.,Infineon,NXP,ST,Soitec,NXP,Bosch,Powerchip,Episil,ToolsDesignMaterials/WaferFront-endBack-endAssemblyAlgorithmsMarket cap.by HQ1,2Wafer market cap.by HQ1Production capacity by HQOSAT market cap.by HQ1EMS market cap.by HQ1USEuropeSouth KoreaChinaOthersTaiwanJapanSTMicroInfineon102.1 Microelectroni
52、cs value chainDesign and algorithms emerge as major value contributors to the entire micro-electronics value chain(see Exhibit 3,previous page).The United States has notably focused on these two key positions,with a significant market share(around 80%each).The US is also the only country with a rele
53、vant presence in all parts of the value chain.ASML is the only provider of the EUV lithography equipment required for the smallest node sizes,making it a relevant control point for Europe.It is also the only real counterweight from Europe to the dominance of US companies in the tools market.Chip des
54、ign depends on highly specialized electronic design automation(EDA)tools.These are supplied mainly by just three companies:Synopsys,Cadence,and Siemens Mentor Graphics.This oligopolistic structure complicates access to these essential EDAtools,especially for small and medium-sized enterprises(SMEs).
55、The largest materials share is defined by the raw silicon wafers required for chip production.Roughly 75%of all wafers are being fabricated in just four East Asian countries:Taiwan,South Korea,Japan,and China.Europe supplies around 6%of the global wafer demand,with Soitec and Siltronic being two not
56、eworthy European players.The same East Asian countries also control 75%of global front-end production capacity.China alone accounts for 24%of global installed capacity,as foreign companies such as the South Korean memory makers SK Hynix and Samsung also have significant fabrication sites there.Chine
57、se production capacity covers all types of microelectronics and node sizes,except for the smallest nodes,where US trade restrictions on the required tools are preventing further growth.Currently,the smallest nodes(sub-10nm),an important technology of the future,are dominated by Taiwan(TSMC),South Ko
58、rea(Samsung),and the US(Intel),with Europe itself not yet having relevant production capacities.Recent developments such as the Intel production site for smallest nodes announced for Magdeburg,Germany,are the first signs that policymakers are closing this gap.The largest foundry service provider,TSM
59、C,announced a new front-end production site inDresden,Germany,in a joint venture with Bosch,Infineon,and NXP.It will be TSMCs first fab in Europe and is planned to produce chips with node sizes of 12/16nm and 22/28nm,targeted at the automotive and industrial sectors.Back-end manufacturing is mainly
60、located in Southeast Asia.Advanced back-end technologies will become vital to further increase storage and computation densities,but also facilitate new applications such as co-packaged optics or AI-assisted sensor systems.Strategy&|Forging Germanys digital destinyStrategy&|Forging Germanys digital
61、destiny112.2 Microelectronics typesGermanys current stronghold lies in medium-sized node technology,particularly excelling in power electronics,sensors,optoelectronics,and safety microcontrollers.Memory and micro-compute logic chips collectively contribute 40%of global microelectronics revenue.93%of
62、 overall memory production is located in just four East Asian countries.The memory market is heavily concentrated,with two South Korean companies,Samsung and SK Hynix,manufacturing around 60%of all memory chips globally.Driven by the growing demands of electromobility and the energy transition,the d
63、iscretes market mainly comprising transistors-demonstrates strong growth.Leading players inthis segment are distributed across Europe,the US,and Japan.European companies,such as Infineon,STMicroelectronics,Nexperia,and Bosch,contribute 25%of global production capacity.65%of all displays are produced
64、 in China,and neither the US nor Europe have relevant production capacity.However,the emergence of micro-LED displays will drive strong growth in the coming years,introducing new opportunities for the global microelectronics industry.China supplies over 80%of the global photovoltaic cell market,havi
65、ng a critical control point for the planned energy transition in Europe and around the world.Current state-of-the-art monocrystalline silicon cells used in mass production have efficiencies of up to22%.While cell efficiencies well beyond 30%have long been demonstrated in numerous research laboratori
66、es,the commercialization of such cells is still progressing at only a slow pace.Application-specific microelectronics offer a significant performance gain,reduced size,and power consumption,making them highly diverse and critical for various industries.While computation and communication tasks domin
67、ate this segment,the share of specialized AI accelerators is growing.Strategy&|Forging Germanys digital destiny122.3 Industry environmentEnvironmental factors,and especially the available talent and the research infrastructure,arekey aspects to consider.In the recent Strategy&study“Bridging the tale
68、nt gap”concerning the European semiconductor talent market,it was found that Europe is likely to experience ashortfall of 350,000 professionals,in its pursuit of achieving a 20%market share by 2030.Furthermore,the industry has an increasing image issue,strongly lagging behind big tech companies in t
69、erms of attractive work environments.To successfully attract international talent,Germany too needs to step up and improve its reputation.With respect to research infrastructure,Germany has a strong research landscape,in both basic and applied research.However,successful transfer of research results
70、 into industrial applications and their commercialization is limited.Three main reasons have been identified for this situation:First,research is mainly performed in subcritical and scattered research teams with limited collaboration,as opposed to concentrated research centers,such as the IMEC in Be
71、lgium.To compound matters,university research is also often insufficiently professionalized.Second,applied research is lacking the necessary focus to jointly push topics through to commercialization.And third,especially for microelectronics,the process isoften also very intensive in terms of capital
72、 expenditure.350kprofessionals are likely lacking in Europe to reach a 20%market share by 2030.Strategy&|Forging Germanys digital destiny133.Microelectronics strategyBased on the analysis,14 strategic options to strengthen Germanys digital sovereignty have been identified.The findings have been vali
73、dated with senior experts and managers in the microelectronics industry globally.The strategic options can be clustered in four coherent programs,based on their thematic similarity and implementation synergies.Program I:Building a holistic,sustainable chip design ecosystemChip design makes a major c
74、ontribution to the overall value of microelectronics.New chip designs drive innovation and enable tailored and more efficient applications.Examples are manifold,from hardware-software co-optimized processing units,through to specific chips for software-defined systems.This can lead to the accelerati
75、on of specific algorithms,increased flexibility,shorter development cycles,and improved time-to-market,among other benefits.Enabling application industries to develop their own optimized designs empowers them to utilize these benefits and fosters innovation and customization in the microelectronics
76、domain.However,chip design is currently strongly dominated by the US,albeit with European companies holding strong positions in the applications domain.High entry barriers hinder even large companies from successfully developing their own chips.However,with improved basic conditions,there is a clear
77、 opportunity even for smaller European companies to enter and establish a strong counterweight with their own chip designs.The success of such efforts strongly depends on a prospering ecosystem,which needs to beestablished.This is the aim of the first strategic program.At its center,a chip design ca
78、mpus brings together relevant players of different sizes,from start-ups to global enterprises,andacross the full microelectronics value chain,starting from research,via manufacturing,totheapplication.The campus should offer supporting structures,e.g.,for legal matters,administrative work,intellectua
79、l property considerations,and funding opportunities.Informal exchange and knowledge-sharing between players will be critical for the ecosystems success.There should be regular activities bringing employees from different companies together,exchanging ideas,and discussing the latest research and poss
80、ible applications(see Exhibit 4,next page).3.1SECTION 3Strategy&|Forging Germanys digital destiny14To support activities such as design for manufacturability or design for testability,it is paramount to have a close interaction between design teams and teams working on front-end and back-end process
81、es.The design campus should therefore be built close to a manufacturing site.For example,the Intel fab for newest nodes announced for Magdeburg,Germany,could be a promising seed for such an endeavor.Source:Strategy&analysisEXHIBIT 4Vision of the chip design ecosystem centered around a collaboration
82、campusStart-upsMicroelectronicscompaniesApplicationcompaniesInfrastructure forlife and careerFactory forsmallest nodesSmall batchproductionOpen-sourcedesign toolApplication-specifi cchip designScalable AIbuilding blocksCenter for data analyticsHeterogeneous integrationInformal exchangeCo-createPrese
83、nt and share ideas and knowledgeInvestorsResearchIP and legalGetting togetherContact person on siteChip offi ceStrategic options#Strategy&|Forging Germanys digital destiny151.Factory for smallest nodesSmallest nodes(sub-2nm)are the cutting-edge technology that is driving applications such as artific
84、ial intelligence(AI),high-performance computing and the metaverse.They enable future technological advancements,along withhigh-tech military applications.Especially for this critical technology,Europe needs tobe able to provide for its own essential demand.Establishing multiple new factories will th
85、erefore be crucial for Europe to secure a relevant production share and digital sovereignty.Otherwise,it will be highly dependent on production from other regions for these critical technologies.However,attracting production sites requires successful compensation of locational disadvantages when com
86、pared to Asia and the US,which are mainly driven by high government subsidies.Asacomplement to this,policymakers should consider sourcing a minimum share of high-end chips from European manufacturing sites for critical applications,such as server processors in data centers.Moreover,to enable other p
87、layers in the design ecosystem to manufacture their custom microelectronics,the new front-end facilities should have some reserved capacity accessible for third-party projects,e.g.,via a foundry service model.As the manufacturing technology progresses further,focus should also be put on the ability
88、to upgrade the site for even smaller node sizes in future.2.Application-specific chip designAn essential part of the first program is to get companies,from start-ups to multinational corporations,to design their own chips.Chip designs that are specifically tailored and optimized for a certain applic
89、ation can yield significant performance improvements.The design campus is intended as a hub to bring together relevant players and know-how.Design specialists can provide input for projects and act as sparring partners.SMEs and start-ups,too,should receive sufficient support to create their own desi
90、gns,thereby democratizing chip design.This will require service providers who support the design processend-to-end and should be integrated into the design campus.The government should further consider kick-starting this trend by establishing a chip design competition wherethe winning projects get a
91、dditional funding support to realize their ideas.3.Open source design toolEDA tools are a basic necessity to create chip designs.Yet,the market is currently dominated by only three commercial providers,leading to a high entry barrier.Itcan be lowered by creating and supporting an open-source alterna
92、tive to the existing commercial design tools.A lower entry barrier encourages broader participation and innovation within the application industries,especially for SMEs and start-ups.Design for manufacturability has to be at the center of such efforts.Each foundry company has its own set of design r
93、ules that need to be considered.In the context of the design campus,particularly the factory for newest nodes should be able to be used for production of high-end chip designs.4.Scalable AI building blocksArtificial intelligence(AI)is a key technology and will be critical for a nations digital sover
94、eignty.This demands secure and trustworthy AI systems with a transparent chip architecture.Developing standardized,open-source building blocks in Europe not only fulfills these criteria,but also facilitates customization for specific applications from small AI chips in wearables to powerful ones for
95、 data centers.Private companies,from the microelectronics,tech,and application industries,should actively participate in this shared effort.The recent announce-ment by Bosch,Infineon,Nordic,NXP and Qualcomm on investing in a company to advance adoption of the open-source RISC-V processor architectur
96、e might bea comparable approach on a different topic.Similar to newest nodes,policy-makers should consider putting utilization requirements in place for trustworthy AIsystems in safety-critical applications.Public research can also contribute to the advancement of the technology and should receive t
97、argeted funding.5.Heterogeneous integrationHeterogeneous integration is the combination of separately-manufactured components and functionalities.It merges front-end and back-end technology.Utilizing standardized,reusable 2.5/3D chiplets and innovative packaging technology enables engineers to creat
98、e customized microelectronics with a great range of variants,even at low volumes.Promoting this technology and the development of chiplets lowers the entry barrier and speeds up the development of own chip designs.This encourages specialized microelectronics solutions andcan thereby greatly enhance
99、overall system performance.As part of the design campus,a research center for heterogeneous integration,similar to IMEC,andaback-end production line with advanced packaging technologies should beestablished.Additional funding should be provided for companies to advance heterogeneous integration,simi
100、lar to an IPCEI program,and to create chiplet designs.Because of their high strategic relevance,support should also extend particularly to power semiconductors,intelligent image sensors,metaverse displays,and integrated photonics.Artificial intelligence(AI)is a key technology and will be critical fo
101、r a nations digital sovereignty.This demands for secure and trustworthy AI systems with a transparent chip architecture.”Tanjeff Schadt,Partner Strategy&GermanyStrategy&|Forging Germanys digital destiny166.Center for data analyticsAcross the microelectronics value chain,large amounts of data are bei
102、ng created.Currently,this data is not systematically collected and utilized;at best,this occurs only within isolated silos.Yet,data analytics from the EDA tool to the final test post back-end is a major lever to increase speed of innovation and reduce production costs.Establishing a competence cente
103、r for an end-to-end data analytics platform will harness the power of this data in the microelectronics industry,leading to,e.g.,valuable insights,data-driven decision making,quality improvements,better design manufacturability,and reduced time-to-market.It iscritical that the center is closely inte
104、rconnected with all relevant players across the whole value chain to leverage its full potential.The data analytics platform itself should be open-source,to gain the trust of users.It has to offer secure,transparent,and scalable end-to-end data analytics tools for the microelectronics industry.7.Nat
105、ional chip officeA focused and coordinated approach is required to stay competitive in thequickly-evolving microelectronics industry.Public funding is one measure to provide focus and strategic direction.However,to maximize its efficiency,close coordination of all strategic measures is critical,alon
106、g with organizational support and effective collaboration.Germany and Europe should therefore set up a central government office,akin to the CHIPS for America Offices,which acts as a coordination hub and serves as a point of contact for the microelectronics industry.The chip office should also suppo
107、rt the application process for funding opportunities,e.g.,by providing best-practices and sparring opportunities,or answering questions,and monitoring successful implementation.Especially where funding of applied research is concerned,the economic impact should be assessed and evaluated.Strategy&|Fo
108、rging Germanys digital destiny17Strategy&|Forging Germanys digital destiny18Program II:Strengthening and expanding the existing European microelectronics landscapeEurope already has a diverse and active microelectronics ecosystem with playersacrosslarge parts of the value chain(see Exhibit 5).This i
109、s a stronghold that Europe should leverage and further support.Strategic investments in parts of the value chain can lead to benefits for the whole ecosystem,e.g.,increased demand for materials and tools providers when investing in a new microelectronics fabrication site.3.2Source:Strategy&analysisE
110、XHIBIT 5Overview of the German and European microelectronics landscape(non-exhaustive)Strategy&|Brochure Title is Helvetica Neue 7pt6EXHIBIT 1Exhibit subtitle is Helvetica Neue Regular 10pt with 12pt line spacing.and many other companies,start-ups,application companies and branches of international
111、companies.ABB/SensirionTechnoprobeGrazMunichStuttgartDresdenDarmstadtHamburgArm/Linde/IQE/Alphawave Semi/Dialog/ImaginationPhilips/ASML/NXP/Nexperia/BesiMelexis/IMECSchneider Electric/Air Liquide Soitec/STMicroToolsMentor/ZEISS/Exyte/TRUMPF/AIXTRON/SSS MicroTecDesign/IDMams OSRAM/Bosch/Infi neon/TDK
112、/First Sensor/Semikron DanfossMaterialsMerck/BASF/TDK EPCOS/Siltronic/SiCrystalFront-endX-FAB/GlobalFoundriesAssemblyApplicationZollnerSiemensGerman companiesStrategy&|Forging Germanys digital destiny198.Existing ecosystemMany of the other strategic options already directly and indirectly strengthen
113、 and expand the existing ecosystem in different aspects.This includes the active integration of European companies and research institutions into the design campus presented in the previous program.Additionally,there is a need to establish unified and strong representation of industry interests,as t
114、hese are currently scattered across multiple organizations,limiting their influence and effectiveness.9.Medium nodes 16-80nmMedium nodes,especially in the 16 to 80nm range,play a significant role in keyEuropean industries such as automotive and the Internet of Things(IoT).Investing in additional man
115、ufacturing capacity for such nodes is vital to strengthen the supply chain resilience of these industries and to serve their capacity demands.The new TSMC fabrication site announced for Dresden canonly be a first step in this regard.Especially for critical infrastructure,microelectronics produced in
116、 Europe should be preferred,in order to support such efforts and safeguard digital sovereignty.10.Wafer productionWafers are a fundamental requirement for all microelectronics.Ensuring European production capacities to meet the basic demand guarantees a stable supply chain and reduces dependencies o
117、n external sources.New materials,such as SiC(Silicon carbide)and GaN(Gallium nitride),should also be considered when investing in new onshore wafer capacities.Strategy&|Forging Germanys digital destiny20Program III:Providing a sustainable environment for the microelectronics industryTo achieve the g
118、oal of a 20%market share,Europe and Germany need to master significant growth.And while strategically-distributed public funding is definitely one prerequisite,providing a sustainable environment for the industry and professionals is another cornerstone required to achieve sufficient growth.Particul
119、arly with regard to the expected talent shortage,Germany has to be perceived as a go-to location for semicon professionals and their families.(see Exhibit 6).EXHIBIT 6Providing a sustainable environment for the microelectronics industryStrategy&|Brochure Title is Helvetica Neue 7pt5EXHIBIT 1Exhibit
120、subtitle is Helvetica Neue Regular 10pt with 12pt line spacingA shortfall of 350,000 professionals in Europe by 2030!1Design specialist(system,analog,digital)MaintenancetechnicianSoftware developerProcess engineerMarketing and media coverageTestengineerResearchCommercializationUniversitySecurityCult
121、ure andleisureWelcomecultureFamily-friendlyenvironmentEducationCutting-edgeresearchTechnology-friendlyJobprospectsOpenexchangeLocalrecreationGood work conditions1 Strategy&study“Bridging the talent gap”,https:/ Source:Strategy&analysis3.3Strategy&|Forging Germanys digital destiny2111.Attractive work
122、ing environmentThe microelectronics industry depends on highly qualified professionals.By2030,there will be a talent gap of roughly 350,000 people that needs to be addressed now.Microelectronics companies need to meet this challenge through a holistic people strategy and clear measures along the emp
123、loyee lifecycle.At the same time,creating an attractive environment for international professionals and their families is also essential to attract,educate,and retain talent in the industry,thereby supporting the anticipated growth in the ecosystem.This should also encompass dedicated marketing acti
124、vities to strengthen the reputation of Germany and its microelectronics industry.12.Research to applicationGermany has a strong research landscape.However,systematic commercialization of research results is lacking.Professionalizing research structures and promoting closer collaboration with the ind
125、ustry facilitates the successful transfer of cutting-edge ideas into real-world applications and will sustainably strengthen the German and European economy.The design campus can be used to bring industry and research closer together and drive necessary investments in commercializing innovative rese
126、arch results.Program IV:Other important strategic fields of microelectronicsWhile the previous three programs already cover many important topics,the analysis revealed two more aspects of high strategic importance for Europe.These are addressed in this fourth and last program.13.Memory productionNea
127、rly all electrical devices depend on memory chips.Production capacities,however,are located in only a few,politically exposed countries such as South Korea,China,Japan,and Taiwan.Germany does not necessarily require its own production,but capacities for memory chips should be built up with partners,
128、e.g.,in Europe or the US.This addresses the widespread need for storage solutions and reduces the current volatile dependency.14.Next-gen photovoltaicsGermanys and Europes climate goals depend on a steep expansion of renewables,including photovoltaics.At the moment,over 80%of solar cells aremanufact
129、ured in China.Germany already leads the field in research and development.What is still lacking is successful transfer to economically-viable production.Investing in European production capacities for next-generation photovoltaic cells with higher efficiencies(over 30%),e.g.,perovskite solar cells,i
130、s therefore a promising action to reduce the dependency on Chinese manufacturers and promote the commercialization of innovative photovoltaic technologies.3.4Strategy&|Forging Germanys digital destiny22The recently-adopted EU Chips Act,together with the European Commissions communication“A Chips Act
131、 for Europe”,provide a new regulatory framework,within the limits of which stateaid may be granted for semiconductor projects within the EU.However,the EU Chips Act itself has been endowed with a very limited budget of only 3.3 billion in EU funds,whichwill largely be granted by competence centers a
132、s part of the well-established EU funding programs“Horizon Europe”and“Digital Europe”.In consequence,the EU is heavily relyingon its Member States to realize funding on their own account.On the other hand,in many countries there are no targeted funding programs for semiconductor projects;instead,gen
133、eral budgets are set within the framework of national recovery and resilience plans,often grouped under the generalized heading of“microelectronics”.As the communication“A Chips Act forEurope”allows for approval of state aid of up to 100%of the funding gap for individual first-of-a-kind facilities(a
134、s defined by the EU Chips Act),Member States are more likely touse this opportunity to substantially fund large investments into semiconductor production facilities.Through this approach the Member States can simultaneously pursue other goals,including national security,regional development,strategi
135、c independence,and general economic policy.However,this may also result in a lack of targeted funding for truly innovative and groundbreaking projects.These large investments alone will not be sufficient to have asustainable impact,thus further highlighting the necessity of a holistic and sustainabl
136、e microelectronics strategy.SECTION 44.Outlook:Time to join forces EXHIBIT 7Required investments in billion over 10 years to implement the proposed strategy Source:Strategy&analysisTotal required investment 115Strategic option 1:Factory for smallest nodes 65Strategic options 2 to 14 50Private 78Priv
137、ate 45Private 33Public 37Public 20Public 17Investment:Investment:Investment:Strategy&|Forging Germanys digital destiny23By pursuing the 14 strategic options presented here,Germany and Europe can lay a solid foundation for such a strategy,enhancing their digital sovereignty while driving innovation a
138、nd fostering a thriving microelectronics ecosystem.Implementation,however,will require substantial investment.For Germany alone,an estimated 115 billion of public and private investment is needed over the next 10 years.It is important to note that the EU goal of a20%market share may vary depending o
139、n the types of microelectronics.The strategy presented does not aim to reach the goal uniformly across all types individually,but instead puts the focus on highly relevant strategic fields.Due to very high investment costs,the largest part(roughly 65 billion)will be required for multiple fabrication
140、 sites for smallest nodes.Of that,approximately 20 billion of public investment will likely be required to incentivize foreign companies to build their high-tech facilities in Germany.This aligns well with the recently-announced intention of the German government to utilize a similar amount from the
141、 Climate and Transformation Fund to boost domestic microelectronics production.However,considering the holistic picture,a further 17 billion of public investment will berequired,mainly to extend the production of wafers and medium nodes,and to establish and foster a design ecosystem(see Exhibit 7,pr
142、evious page).Only then can the synergy effects between the options truly come to fruition.Once the design ecosystem flourishes,the positive effect on the global macroeconomic situation can reach over 3 trillion in 2035,similar to the current GDP of the entire United Kingdom or India.This also takes
143、dependent applications and trends into account,such as the widespread application of AI and Metaverse use cases.The impact on the German economy alone can be up to 600 billion.Looking solely at the microelectronics industry,over 220 billion of additional revenue potential can be expected due to the
144、strategic options in 2035.This makes it clear that,from a financial perspective too,a holistic strategy is in the interests of both government and industry.To achieve this,substantial commitment is required from allstakeholders.The government has to ignite the spark with targeted measures and suppor
145、t the ecosystem in coordinating and steering the efforts.Both sides have to invest strategically in the future of the industry and in Germanys digital sovereignty.But the industry has to alignand take ownership of the strategy implementation.Measures such as the design campus hinge on the active par
146、ticipation of industry players across the microelectronics value chain.It is time to join forces and secure Germanys digital sovereignty.3 tncan be the positive effect of the strategy on the global macroeconomic situation in 2035.200 bnadditional revenue potential can be expected for the microelectr
147、onics industry alone in 2035.Strategy&|Forging Germanys digital destiny24REFERENCESBundesministerium fr Bildung und Forschung(2021).Mikroelektronik.Vertrauenswrdig und nachhaltig.Fr Deutschland und Europa.Rahmenprogramm der Bundesregierung fr Forschung und Innovation 2021-2024.European Commission(20
148、22).European Chips Act,retrieved 16th August 2023.International Energy Agency(2022).Special Report on Solar PV Global Supply Chains.Kim,Sohee and Kim,Sam(2021).Korea Unveils$450 Billion Push for Global Chipmaking Crown.Bloomberg,retrieved 16th August 2023.Kleinhans,Jan-Peter and Dr.Baisakova,Nurzat(
149、2020).The global semiconductor value chain,Stiftung Neue Verantwortung.Kleinhans,Jan-Peter(2021).The lack of semiconductor manufacturing in Europe,Stiftung Neue Verantwortung.Lee,John and Kleinhans,Jan-Peter(2021).Mapping Chinas semiconductor ecosystem in global context,Stiftung Neue Verantwortung a
150、nd MERICS.Market Research Future(2021).Global Micro-LED Display Market Research Report.NIST(2023).About CHIPS for America,retrieved 16th August 2023.SEMI(2022).World Fab Forecast 3Q22 Version 2 Edition.Semiconductor Industry Association(2021).2021 State of the U.S.Semiconductor Industry.Semiconducto
151、r Industry Association(2022).2022 State of the U.S.Semiconductor Industry.Strategy&(2023).Bridging the talent gap,retrieved 16th August 2023.Timmers,Paul(2022).How Europe aims to achieve strategic autonomy for semiconductors.Brookings,retrieved 16th August 2023.U.S.Department of Energy(2022).Semicon
152、ductor Supply Chain Deep Dive Assessment.World Bank(2023).DataBank.World Development Indicators.ZVEI(2021).Semiconductor Strategy for Germany and E 2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see fo
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