European competitiveness study sees growing gap -

European competitiveness study sees growing gap

LONDON — The estimated net cumulative income from an Asian fab will be 2.2 times greater than a comparable fab in Germany by 2010, according to the first Competitiveness Report from the European Semiconductor Industry Association (ESIA).

The single most significant difference is the incentive package offered followed by labor costs. The magnitude of these differences should give industry executives pause and should not be ignored by European governments, ESIA warned.

ESIA proposed ten steps to boost competitiveness, including:

  • Promoting a generalized tax credit system for R&D spending.
  • Adopting the commission’s original R&D 7th framework proposals.
  • Reversing the European brain drain.
  • Promoting more and stronger multiple partnerships.
  • Establishing a sectoral framework.
  • Ensuring consistent and efficient customs operations.
  • Pooling expertise in the EU and national institutions.

    During a meeting Tuesday (Nov. 22) in Brussels, Belgium, ESIA discussed the report and how the European chip industry can maintain and enhance its competitiveness with Günter Verheugen, Europe’s enterprise and industry commissioner

    The ESIA delegation, which included the CEOs and general managers of STMicroelectronics, Infineon, Philips, Freescale Semiconductor, Micron and Robert Bosch, focused on the report's key findings and how they link to the commission’s initiatives to boost Europe's competitiveness.

    “The future development of the semiconductor industry in Europe stands at a crossroads,” said ESIA's Martin Spät. “In order to fully reap the benefits of a globalized economy and continue to develop leading-edge innovation technology, Europe should not shy away from looking at sectoral approaches which match or exceed those of other regions.” The report called for “tilting the global playing field back towards Europe.”Citing the chip industry's role as a technology enabler, the commissioner acknowledged that “the semiconductor industry in Europe has made remarkable strides in the past decades, with three of the top ten global semiconductor companies headquartered in Europe and with Europe being a major manufacturing and R&D home for nearly all global competitors.”

    Carlo Bozotti, ESIA president and CEO of STMicroelectronics, said, “Our motivations for this report are the concerns of the industry about its very future in Europe. Semiconductors are the enabling technology for the Information Society, and their contribution to the success of the European economy is essential.”

    The ESIA report provides a comprehensive overview of a sector which produces record growth rates, making substantial contributions to the development of the European economy and to technology innovation.

    With up to 20 percent of annual revenues reinvested in R&D, and an additional 25 percent in capital expenditures, semiconductor companies lead Europe’s innovation list, the report said.

    Despite the steady rise of Asian chip makers and declining market shares in other regions, Europe has been able to maintain a relative stable market share of around 20 percent, the report found.

    The European competitiveness report mirrors similar concerns in the U.S. about flagging competitiveness.

    Verheugen welcomed the ESIA's proposals. “Your report is a significant contribution to the current competitiveness and industry location debate. We hope that we can count on the European-based semiconductor industry to support our own efforts for European industrial excellence.”

    ESIA represents European-based chip makers which directly employ more than 86 000 workers in a market valued at around 31.7 billion ($37.4 billion) in 2004.

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