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Office of Technology Assessment at the German Bundestag Office of Technology Assessment at the German Bundestag

Information on the project

International competitiveness of the European economy with regard to the EU state aid policy: The case of nanoelectronics

Thematic area: Technology, society, innovation
Analytical approach: Innovation report
Topic initiative: Committee on Education, Research and Technology Assessment
Status: completed
Duration: 2008 till 2010

Background and central aspects of the topic

One of the main principles of the Treaty which established the European Community (EC Treaty) is the incompatibility of State Aid with the Common Market. However, in the EC Treaty special cases for granting aid by the Member States were admitted (Basic Rules in Article 87 and 88). According to Article 88 of the EC Treaty, the EU Commission has to be informed (notification) about every introduction or transformation of State Aid by the Member States. The approval of this State Aid is regulated by EU State Aid Policy. Thus this regulatory framework has considerable influence on the shaping of national and regional promotional and industrial policy.

In the EU (EU-25), state benefits were granted on a large scale (EU-25: ca. € 64 billion; EU-15: € 59 billion) in 2005. Germany takes first place with over € 20 billion. However, the European Commission is continuously striving to reduce state benefits by Member States, as these measures can distort competition and impair the functioning of the Single European Market (e.g. by discriminating against non-promoted enterprises in other Member States). In 2005, the European Commission therefore introduced a reform of the relevant rules and procedures (State Aid Action Plan) which should be completed by 2009.

A glance at the international environment shows that the location of enterprises especially in high-tech sectors is often massively promoted by many regions (e.g. Asia, USA) in order to boost economic growth and employment. This applies also for the semiconductor industry whose European market volume is estimated to be ca. € 200 billion and the future annual growth rates are predicted to reach 8 to 10 %. Strong competitors in the semiconductor sector are located in the USA, Japan, Taiwan and China. Therefore, for nanoelectronics the question of the significance of State Aid for Europe's international competitiveness arises.

Nanoelectronics include both the silicon-based semiconductor electronics with structural widths below 100 nm and nanotechnology-based »bottom-up« approaches. From the »top-down« perspective, an established market already exists. With present lithography methods, structural widths of 45 nm can be reached. According to the »International Technology Roadmap for Semiconductors (ITRS)«, these structural widths could be reduced to 15 nm by 2018. However, in the next ten to 15 years, the conventional CMOS technology (»Complementary Metal Oxide Semiconductor«) will reach its physical limits, most likely making a technology change inevitable. For alternative approaches such as nano-silicon-hybrid designs, the »bottom-up« nanoelectronics (among others single electron transistors or spintronics) and nano-photonic applications, additional basic research will be necessary. Therefore, these approaches are directly funded by EU programs: e.g. the Technology Initiative ENIAC (»European Nanoelectronics Initiative Advisory Council«) introduced in 2008 with a budget of € 3 billion until 2018 or the Technology Program CATRENE (»Cluster for Application and Technology Research in Europe on NanoElectronics«) with a budget of € 6 billion until 2016.

At the national level, nanoelectronic clusters aiming to network industrial and basic research in order to realize nanoelectronics beyond CMOS technology exist in several European countries (e.g. in Dresden, Catania/Agrate, Leuven, Grenoble). Dresden is one of the strongest European locations for nanoelectronics. The Dresden cluster was supported by State Aid worth of € 1.2 billion. In addition, the European Commission approved further public promotional funds amounting to € 232.5 million in accordance with the State Aid regulations in 2006.

Nanoelectronics is a strategically important sector in an internationally very competitive environment which is not only supported by research promotional programs but also by State Aid. The selection of appropriate promotional instruments could be of great importance for the future competitiveness of Europe in the field of nanoelectronics.

Objectives and approach

The following research questions are in the focus of the TAB project:

  • How competitive is the European economy in high-tech sectors? The analyses will use various innovation indicators such as patents and market shares with respect to different high-tech sectors.
  • How competitive is the European economy in the field of nanoelectronics? Which are the most relevant factors influencing the innovation capability and competitiveness in the field of nanoelectronics? The competitiveness of nanoelectronic enterprises is not only determined by State Aid (e.g. subsidies) and direct technology promotion programs, but also from a multiplicity of other influential factors (e.g. availability of qualified human resources). These factors should be identified and assessed within the TAB project.
  • What are the motives for the EU State Aid policy in nanoelectronics? How important is the State Aid policy relative to other influential factors with regard to international competitiveness? Strategic considerations, the history and application practice of the EU State Aid which could argue in favour of state aid as well as arguments against an EU State Aid should be investigated. Based on this investigation, the EU State Aid policy practiced in nanoelectronics up to now will be examined. It will be analyzed whether and in which way an EU State Aid policy in relation with other instruments can positively contribute to European competitiveness in the field of nanoelectronics. In this analysis country-specific aid measures should be characterized and discussed with regard to their meaning for the competitive position of nanoelectronics in Germany. The present EU State Aid policy will be assessed (e.g. with respect to its effectiveness and efficiency) and possible alternative options in order to boost international competitiveness in the field of nanoelectronics will be discussed. In addition, the transferability of the insights from the nanoelectronic case study to other high-tech sectors will be examined.
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