Innovation and the Regions Cohesion and the Lisbon Agenda

in the Free State of Saxony

since 1991

1

Prof. Dr. Georg Milbradt

Prime Minister

Prague

London

Stockholm

Moscow

Warsaw

Budapest

Rome

Paris

Madrid

Helsinki

Reykjavik

Athens

Vienna

Bern

Lisbon

Oslo

Amsterdam

Copenhagen

Brussels

Tallinn

Riga

Vilnius

Minsk

Kiev

Dublin

Bratislava

Zagreb

Sofia

Bucharest

Saxony -a central European Region

Hamburg

Frankfurt

Munich

Berlin

Luxembourg

3 h3 h

2 h2 h

1 h1 h

24 h24 h

48 h48 h

24 h24 h

10 h10 h 5 h5 h

12 h12 h

SaxonySaxony

SSAAXXOONYNY

Source: WFS

4 Universities - 3 with main focus on natural & engineering sciences

5 Universities of Applied Sciences

13 Fraunhofer Institutes and Research units

7 Leibniz Institutes (3 with focus on technology)

21 Agencies for Technology Consulting 21 Technology business incubators

2.800 R&D projects (1995-2005) with a volume of approx. € 1.6 billion €; 800 Mio. € financed by Saxon Technology Funding Programs (75% ERDF co-financed)

Science and R&D Infrastructure

High-Tech Competence in SaxonyStarting Points in 1991

Leipzig

Dresden

Chemnitz

Freiberg

Zwickau

MicroelectronicsInformation Technologies

BiotechnologyMaterial Research

AutomotiveMachine Engineering

Semiconductor MaterialsSolar Technolgy

Automation TechnologiesMaterial Research

Microelectronics Microsystem TechnologiesProduction Technologies

OEM/ AutomotiveMachine Engineering

OEM/ Automotive

BiotechnologyMedical Technologies

Communication TechnologiesMulti Media Applications

OEM/ Automotive

Microelectronics

- AMD, Infineon, ZMD ... 200 companies, 20.000 employees

Car manufacturing industry

- VW, Porsche, BMW, Neoplan ... 450 companies, 60.000 employees

Machinery (Chemnitz, Dresden)

- 430 companies, 34.000 employees

Life Sciences Industry (Biotechnology, Medical Technology,

Pharmaceutical Industry)

- 150 companies, 5.800 employees

Aerospace Industry

- 30 companies, 3.000 employees

Technical Textiles

- 60 companies, 4.100 employees

Main Fields of Excellence in Saxony – a Selection

Centre of Competence (Research and Development, Industry) in High Technologies of the former COMECON

(Micro-) Electronics in Saxony - centering in the Dresden Region - has a long tradition

- Basic Research (molecular electronic, Prof. Hartmann, 1961)

- Production of Semiconductor Materials (Freiberger Elektronikwerkstoffe: 1.600 employees)

- Development of a One-Megabit-Chip (Zentrum Mikroelektronik Dresden: 3.300 employees)

- Production of Computers, Printed Circuit Boards (Robotron: 30.000 employees)

Break-down because of lacking competitiveness after 1990 Remaining: Human Capital, qualified and qualifiable employees,

population with a special affinity for technology

Sächsisches Staatsministeriumfür Wirtschaft und Arbeit

Electronics Industry in Saxony until 1989

Chip Industry in Dresden 2005

Integrated Circuits

ASICsASICs D RAMs, LogicD RAMs, Logic MicroprocessorsMicroprocessors

ZMD AGZMD AG

jobs: 700products: applied specific ICstechnology: 0.35 micrometerinvestment: 0,13 billion € since ´99

INFINEON INFINEON

jobs: 5.500products: dyn. memories, logic circuitstechnology: 0,14 micrometer and belowinvestment: 4,05 billion €

AMD Fab 30 (Fab 36)AMD Fab 30 (Fab 36)

jobs: 2.000 (+ 1.000))products: microprocessorstechnology: 0,09 micrometer and belowinvestment: 2,5 (+2,4) billion €

Total Investment: > 9 billion €> 9.000 jobs

Network of the semiconductor electronics and microsystem technology industry

Connectsmanufacturers, suppliers, service providers, universities, institutesand policy in the region

Companies and jobs 171 member companies,15.000 employees,2 billion € turnover

“Silicon Saxony”

R&D in Nanoelectronics in Dresden

R&D

PhotomasksPhotomasks 300mm Si-WaferTechnologies

300mm Si-WaferTechnologies

AMTC GmbH & Co.KGAMTC GmbH & Co.KG

jobs: 170products: high end photomasks technology: 90 nm and belowinvestment: 360 Mio €

CNT Center for

Nanoelectronic Technologies

CNT Center for

Nanoelectronic Technologies

jobs: approx. 50-70R&D for the next generation of seminconductorprocess technologyproject volume: 170 Mio €

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

per

son

s

Construction 1269 2484 541 1914 1638 198 1612 1482 401 300 200

Income effect 346 952 653 1333 1505 1391 2154 2441 2341 4300 4600

Service and equipment 0 689 815 868 1224 1512 2273 2387 2572 3500 3800

Direct employment 100 600 1230 2500 3100 3800 4650 5800 6300 8100 8700

1994 1995 1996 1997 1998 1999 2000 2001 2002 2005* 2006*

1715

4725

3239

6615

7467

6901

10689

12110 11614

16200

17300

Job Effects of AMD and Infineon Investments(Dresden Region)

Source: Deutsches Institut für Wirtschaftsforschung (DIW) 2002; * SMWA (2005, 2006 = estimated)

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

in M

ill.

(cum

ulat

ed)

1994 1996 1998 2000 2002 2004 2006 2008 2010

public subsidies1.219 billion €taxes1.956 billion € reduced social security expenses0.944 billion € additional social security proceeds 2.988 billion €

Fiscal Effects of the Public Subsidies toAMD and Infineon Investments (without Fab 36)

Source: Deutsches Institut für Wirtschaftsforschung (DIW) 2002

Primary reasons to invest in Saxony (investors view):

1. Financial subsidies (grants for investments) including funding of R&D

2. Qualified and qualifiable people, with an affinity for technology

"It is all about people. People come first,

products and profits will follow."

J. Sanders, Former CEO of AMD

3. Science Community and R&D infrastructure

4. Partnership of political leadership, public administration and entrepreneurs

Qualities and IncentivesAttracting Investments in Saxony

a) R&D is the basic element for the innovation process

b) R&D is an integral part of high-end manufacturing

c) Investments in manufacturing facilities for high-tech industries are quite substantial (up to several billion €)

d) An investors decision for a production site is influenced by comparison of incentives on a global scale

e) higher incentives outside of the EU imply the risk of loosing not only the production line but also the R&D

Conclusion:

Where Europe invested in R&D, State Aid

should be allowed for subsequent Investments

Future State Aid for large Investments– a Key Element for the Lisbon Process

Strategy for Innovation

Recognising and exploiting endogenous potential. The ability that exists in the region is the best breeding ground for innovation.

Developing an efficient research landscape and striving for a healthy sectoral mix of SMEs and large companies.

Networking of industry and science with the objective of forming clusters (networks, integrated projects)

Creating a favourable economic climate (the costs of bureaucracy are increasingly becoming an industrial location factor)

Continuity, also in relation to support, so as not to have investment stop halfway in ruins.