Government grants billions in subsidies – crucial questions unanswered

The die has been cast, as far as one can ever finally say in such a complex multi-billion project as the Magdeburg chip factory. Predominantly non-European chip manufacturers are subsidized with 20 billion from the 180 billion strong shadow budget of the climate and transformation fund: against the background of geopolitical conflicts, the need for supply chain diversification and technological sovereignty in selected high-tech areas.

10 billion of this subsidy will be spent on a new Intel wafer factory in Magdeburg – the FAZ once dubbed it the miracle of Magdeburg. 5 billion are planned for a chip factory of the Taiwan Semiconductor Manufacturing Co (TSMC) in Dresden. TSMC finally decided to build the factory yesterday. Infineon gets one billion for a semiconductor factory in Dresden and ZF/Wolfsspeed around 750 million for a silicon carbide chip plant in Saarland.

Talent magnetism essential for future innovation ecosystems

I want to concentrate on the main investment in Magdeburg, so I refrain from writing about the sense or nonsense of this billion-dollar subsidy, about problems in the security of supply, water shortages, high energy prices and focus on the implementation in Magdeburg, i.e. the topics of securing skilled workers and expansion or Optimizing a semiconductor ecosystem , especially in research.

Location decisions are highly complex, as they usually affect not just one entity, but an entire ecosystem. Especially when it comes to high and deep tech. More than 20 years ago, the US economist and sociologist Richard Florida published his groundbreaking work ‘The Rise of the Creative Class’, in which he posited the conditions for the growth of a high-tech region: talent, technology and tolerance.

Region needs many thousands of techies

Three factors that are also central to the location decision of a high-tech factory. Finally, Intel wants to hire 3,000 employees, more than 2,000 of them as specialists in chip production. Experts tell me that when it comes to workforce structures in semiconductor foundries, we have to assume that around 30 percent are academic experts, around 40 percent are specialists such as master craftsmen and technicians, and another 30 percent are operators, skilled workers with vocational qualifications and semi-skilled workers.

And that’s not all: during my time as Secretary of State, Intel spoke of up to 17,000 more techies who will be working in the newly developing ecosystem around the foundry over the years. This number seems high if the ecosystem in Dresden is included, but even if it were halved, we are talking about a considerable need for thousands of specialists and experts in Magdeburg

Nobody stands in line to be allowed to work in Saxony-Anhalt

I don’t follow Gabor Steingart’s morning briefing when it simplifies that it is deeply indecent for the traffic light to throw German citizens’ hard-earned taxpayer money down the throat of a US corporation just because it promises to create jobs.

Scientists like Oliver Holtemöller, deputy president of the Leibnitz Institute for Economic Research in Halle, comment more profoundly: Nobody stands in line to be allowed to work in Saxony-Anhalt – and this in a city without an airport, without regular intercity connections and without sufficient international school infrastructure!

In addition, in a federal state in which the population has been shrinking for many years (currently: 2.2 million inhabitants) and is older than in almost any other part of Germany. In view of the outlined qualification structure of the foundry and probably also the forecast Magdeburg ecosystem, the reference to 25,000 unemployed people in the north of Saxony-Anhalt, with which the head of the local employment agency, Matthias Kaschte, downplayed the expert and specialist gap, does not help either. In addition, Magdeburg will be cannibalized in the labor competition with the Dresden chip center. The settlement of TSMC will reinforce this.

Unanswered questions about universities and xenophobia

So it would be interesting to ask at the electrical engineering faculty of the Technical University of Braunschweig how many graduates can imagine a job at Intel in Magdeburg. And it would be interesting to ask the University of Magdeburg how many microelectronics or related graduates it can provide in 2025-2030.

Holtemöller also addresses the massive locational disadvantage of xenophobia, which turns off the tap of a growing international tech community right from the start. Prime Minister Haselhoff, who relies heavily on immigration, has a solid foundation in front of his chest that can hardly be drilled through. A current election forecast speaks of 26 percent for the AFD in Saxony-Anhalt, in whose state capital Magdeburg the party conference of the AfD recently took place.

In Europe there is only one big player – from France

When analyzing the academic semiconductor research, one finds that there is actually only one really big player in the whole of Europe, the IMEC in Leuven, Belgium, in close cooperation with the University of Leuven, followed by the CEA-Leti in Grenoble, that probably largest French research institute for electronics and information technology – albeit lagged behind by the USA. Germany is also running here.

To illustrate the comparison: In 2019, IMEC contributed almost 50 percent of the requested European research papers for the leading conferences in this field. For comparison with Germany: While the Fraunhofer Microelectronics Group and Dresden in particular contributed a total of 62 papers from 1995 to 2022, the IMEC contributed four times as much between 2010 and 2022 alone, i.e. in less than half the years, with around 240 publications.

Chip research: Academic zero number in the top 20

The New Responsibility Foundation published a study entitled “Who is developing the chips of the future?” in June of this year. In this study, Infineon is the only German company named among the top 20 organizations worldwide contributing from corporate research and academic research, which has contributed fewer and fewer research papers since 2010. So on the academic side, a complete zero number.

This also coincides with the statement by experts that Fraunhofer is hardly proactive in technical discussions with IMEC and LETI and that IMEC is fully in the lead. Since the ‘research power’ of the EU semiconductor industry has been declining since 2010, intra-European cooperation between the two research sectors is also declining, or there is a shift in academic research towards cooperation with non-European companies.

Of course, we are only talking about the research paper indicator here, but it is the central and only indicator currently available. Incidentally, in the study there was not the slightest mention of the University of Magdeburg and its possible research performance.

It is important to make the best of it under the conditions described

I usually write my recommendations for action here at the end under the headline ‘innovating innovation’. Today I am concerned with mitigating the implementation risks of this investment.

1. The federal government has to present a quantitative and qualitative analysis for securing skilled workers, which names regional as well as national and international sources of talent. This needs to go hand-in-hand with an action plan to attract and retain. Leaving all this to Intel would be negligent. Global corporations have their nomadic logic.

2. The state of Saxony-Anhalt and the city of Magdeburg have to develop a planning concept for an international tech community in the fields of school and university education, housing, leisure infrastructure, integration initiatives and a culture of welcome.

3. The German microelectronics industry and its suppliers formulate their demands for the development of the Magdeburg ecosystem and incorporating the Magdeburg Initiative into the broader Dresden ecosystem, but with one vote please. And the clear!

Public online project review

4. The Federal Ministry of Education and Research (BMBF) has to initiate an independent and international review of the strengths and weaknesses of the microelectronics network from Fraunhofer and the Research Fab Microelectronics Germany (FMD) in a European and international comparison. Linked to this is an action plan to increase the efficiency and competitiveness of applied research in the field.

5. TU Dresden professor Hubert Lakner, who is also head of the Dresden Fraunhofer Institute for Photonic Microsystems (IMPS), and Albert Heuberger, head of the microelectronics network, report on the basis of the review and its demands for strengthening the Dresden and generally the German side in the European ecosystem on project progress based on output and impact factors.

With regard to the above points, it would be innovative if the interested community could ask questions in a public online project review every six months and – based on progress-oriented indicators – give feedback.