KEEPING EUROPE competitive was the recurring theme at a recent conference for the semiconductor industry in Munich, with a succession of speakers highlighting how the axis of the old industrial world continues to shift.

The decline of European manufacturing may be a familiar story, but new chapters are being written all the time and it’s not certain if there will be a happy ending.

Malcolm Penn, a semiconductor industry analyst, talked about getting used to the new world order.

“Globally, the economy is growing at 4 per cent, which is faster than average, but it doesn’t alter the downbeat mood in Europe because growth isn’t coming from the places it used to,” he said. “There is not a crisis in the economy, but a crisis in Europe’s belief in capitalism.”

The rise of China and the Far East is well documented, but other emerging countries such as Brazil are also coming on to the radar. Europe has to get its house in order if it wants to retain any grip on advanced manufacturing, according to Penn.

Much of the conference was about next- generation silicon fabrication, a process that has taken incremental leaps in wafer size every decade, from 150mm, to 200mm to 300mm. Within the next five years, 450mm plants will go into production, meeting an explosion in demand for microprocessors and memory that is expected to double in the next decade, fuelled partly by a proliferation of mobile devices.

Penn represents one school of thought which believes silicon fabrication facilities will hold at least some of the keys to the new economy.

“If Europe doesn’t embrace 450mm, then it’s history,” he said. “450mm is a game changer because integrated circuits have become more than components; they are strategic.”

Other speakers pointed out that the absence of a cutting-edge facility would have disastrous consequences for an entire ecosystem, including equipment makers who supply the plants and employ 100,000 people across Europe. Smaller size, 300mm fab production will continue until at least 2025, but demand will fall sharply after that, signalling the end of an industry in Europe if there is nothing to replace it.

This all matters to Ireland, home to Intel’s only wafer manufacturing plant in Europe. Along with Samsung, Intel is expected to lead the charge to 450mm, but if it’s planning to upgrade its Leixlip facility in Co Kildare from 300mm, it’s not saying. Two plants are being made ready in the US, but no decision has been made on Europe, according to Paolo Gargini, director of technology strategy for Intel.

“If Europe puts the right elements together, then an offer would be considered,” he said, making the point that it would cost a lot less to attract Intel than the billions the EU spends on farm subsidies.

The onus is on the EU to incentivise manufacturers with research grants and support ecosystems. But there is some concern that too much focus on 450mm production will damage other manufacturing prospects.

Prof Gabriel Crean, an Irishman now working in France for the Atomic Energy Commission, is also director of an expert group in the EU commission, focused on key enabling technologies (KET). Rather than concentrating on multinationals, his focus is on finding ways to re-industrialise Europe with a new wave of indigenous manufacturing.

Concerned that medium-sized companies are choosing to set up in the Far East rather than at home, he wants to create an environment that makes it conducive for them to stay.

“We need globally competitive manufacturing mapped on to a technology readiness ladder,” he said. “We need start-ups to get to a pilot stage instead of stopping at validation.”

Crean believes Europe’s manufacturing problems start at the research phase, pointing out that the United States and China pour the vast bulk of their RD funds into applied research, while Europe – Ireland included – spends most on basic research.

One consequence of this, according to Crean, is that too many European start-ups stall between the laboratory and commercial marketplace. He wants to bridge this “valley of death” with more applied research and closer ties to industry. In the past, the EU framework programmes have provided a model for co-funding research, but the last decade has seen industry participation fall from 39 per cent to 25 per cent.

A microcosm of the problem was apparent during the conference when manufacturers on a panel were clearly not excited about facilitating pilot lines to try out new manufacturing methods. Not for the first time, a discussion involving different European interests was fractured and inconclusive.

Next year, the European Commission will produce an integrated industrial policy for the globalisation era that will map out strategy to take Europe to 2020. A snapshot of different opinions at the Munich conference suggests a lot of work needs to be done to achieve consensus on what is the best way forward.

Intel is expected to lead the charge to 450mm but if it’s planning to upgrade its Leixlip facility in Kildare from 300mm, it’s not saying