Monday, May 24, 2021
How do we beat the chip crisis?
“Need clusters like Silicon Valley in the 70s”
The global shortage of chips is paralyzing industry: Many plants have to shut down, factory workers go home. Above all, automakers and electronics manufacturers do not have enough semiconductors. Harald Zapp, founder of Next Big Thing, explains why Germany should invest in its own production.
The all-important question right at the beginning: How do we get out of the chip crisis?
Harald Zapp: I believe that we have to teach ourselves certain skills and methods from scratch. We are Germany, but also Europe. It starts with microchip design, it continues with production. At the same time, we need to push billions in investments. Of course, the money has to go to factories that build chips. But it is much more important that we concentrate on designing chips. We have to ask ourselves the question: Which chips will we actually need in the future? What is the purpose of these chips?
Does that mean that the way out of the chip crisis is long and actually has nothing to do with current production?
Harald Zapp is a co-founder of Relayr. Today he is building new start-ups with Next Big Thing (NBT) together with corporations. NBT is a Berlin-based accelerator that specializes in the Internet of Things (IoT).
Yes, in the short term we will of course solve the current shortage through global production. But it’s only about chips that are already designed and in use today. There is little else we can do about the current situation. The real question behind this is another: How digitally sovereign do we want to be? It’s about more than the current scarcity. And here we have to learn to think in terms of long-term and in platforms. Nothing works in the modern world without the tiny chips.
So you mean that we should use the current chip crisis as a starting signal to develop new skills in this area in Europe?
Correct. Now is the time. Building up production capacities is one thing. In the long term, we should invest in chip design and development and ask ourselves what the future application scenarios for chips will look like. Because that is where most of the added value lies. It is of course important to have the production on site. But we have to realize that this will not work without gigantic investments.
Who do you see as responsible?
Politics must create the framework. In the area of the large chip factories, this is only possible through subsidies. You can see it in America: there is massive subsidies. Joe Biden now wants to raise $ 50 billion in this area because they have recognized the importance of the production and development of microchips. South Korea has just announced that it intends to invest 370 billion euros in its semiconductor industry.
How should we go about this in concrete terms?
I think that we have to create a cluster for semiconductors in Germany and Europe. I am an advocate of this approach. Various examples show how well this works. One of them was Silicon Valley in the 1970s. Before that, there were various clusters in the greater Boston area. Take MIT and Harvard University. The best of the best gather in such clusters, where there is the highest competition and the greatest density of innovation. That then attracts investors again. It is important that we in Europe do not try to set up several small clusters as usual. We have to focus on one center. Otherwise the whole thing will be tattered. “Silicon Saxony” is Europe’s largest microelectronics location and the fifth largest worldwide, here we should continue to expand on what has already been achieved.
Regardless of how we do it, why should we even approach it?
It’s also a question of geopolitics and digital sovereignty. If we develop and build the next generation of chips here in Germany, we can actively shape the direction in which the technology is developing – and we can work to ensure that the data from these devices is secure. With the Internet of Things, with autonomous mobility, with smart buildings and cities and other technologies, a huge explosion in this area is just ahead of us. Soon billions of chips will be built out there, all of which will provide zettabytes of data. And then we just have to ask ourselves, what are we going to do with the technology? A good example of this is always the MP3 technology, which was developed here, but the benefits of which were then recognized and commercially implemented in the USA. In this country we have largely overslept the subject of the cloud and also the subject of e-commerce. But we are still the world champion in exports and we export capital goods that will all have to become digital in the future.
So if we act now, can we benefit from this development?
Yes absolutely. This can be our decade. As a country of machine builders and engineers, we have to benefit from this. I see a clear opportunity to play at the very front here – we have to seize it.
Why?
Anyone who has read what China is planning to do in this area as part of the “Made in China 2025” strategy must, conversely, ask what Germany and Europe want to counter. This is a wake-up call for German industry. The high-tech industry in China is gigantic. It is not surprising that they also invest in microchips and develop and build for the Chinese market as well as for export. And then we just have to ask ourselves, do we want to make ourselves dependent on the USA and, in the future, China in another area? And how safe are the products that are produced there? In digital high technology there is often the possibility that we will be spied on by them. We now need to build the skill and intellectual capacity to build the next generation of microchips and processors ourselves. We have to think about what the hardware of the future should look like and how it fits the software. And we have to see that these technologies are already becoming increasingly important for industry.
Which are they?
For example artificial intelligence. But it’s also about autonomous driving or factories that are automated and digitized. In the future, we will have gigantic amounts of data in these areas that we will have to process without great latency. The companies that work in these areas will ask themselves what information they can and want to give to the outside world in the future. If we design and produce the chips for the various solutions here in Germany, “Security made in Germany” so to speak, that is a global locational advantage.
Are you optimistic about the topic?
Basically yes, when I see what the EU Commission is saying on the subject. The basic idea is good. And we are a land of inventors, we have good investments. But: if it really becomes a European political issue, then it must not be tattered. We mustn’t lose focus or speed. We often see that when it comes to investing billions of dollars, every country holds out its hand and demands the right of way. With that we often stand in our own way. But the direction is correct.
The interview was conducted by Bastian Hosan.
It appeared first at Capital.de.
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