Why Innovation in Photonics is crucial
In the run up to the World Technology Mapping Forum (June 14 - 16th 2017) we're publishing a series of interviews with Photonics & Strategy specialists to better understand how different continents are strengthening their respective Photonics Ecosystems. Ronan Burgess has a background in microelectronics and nanotechnology research in industry before joining the European Commission to become more closely involved in building Europe’s technology advantages in photonics. Ronan is currently Deputy Head of the Photonics Unit at DG CONNECT/A4 in the European Commission. He was in discussion with PhotonDelta's Jonathan Marks during the recent European Photonics Venture Forum in Dublin.
At this moment in Europe's development, there is a proven link between high economic growth and investment in innovation. We see that countries who invested more in research and innovation in 2010, at the height of the economic crisis, were better able to survive the storm. In the European Commission, we believe that understanding next generation innovation means you can build a powerful investment strategy.
Value Creation is the reason for Investing
Innovation, particularly in a key enabling technology like photonics, provides the underlying level in the pyramid of value. This creates a knock-on effect this, speeding up the creation of new industries as more sectors like healthcare and robotics adopt digital processes. Note that manufacturing, i.e. making things, is an important part of this success strategy.
In the graph above, from consultancy firm Roland Berger, we see that countries that have do more domestic manufacturing are better able to embrace Industry 4.0. And look at the front-runners - Ireland, Austria and Sweden are up there alongside Germany.
Digital innovation in ICT is driving innovation in many sectors, well beyond the telecom and datacenters. Increased automation creates markets for new digital products which can perform functions that were not available before. New, smaller, safer sensors to scan for diseases or blood circulation problems for example. And photonics, being an instantaneous technology is important to LIDAR radar used in next generation autonomous cars and trucks.
But implementing a key enabling technology also leads to transformation of processes. It often means a new product can be built more economically in Europe. Or that a traditional product can be manufactured in a more efficient way producing less of a carbon footprint.
And we're also witnessing radical disruption in business models. For instance, cloud hosting services mean high-tech startups can build new services without having to invest in their own servers.
So, our goal is to enable more businesses to benefit from the digital revolution and to keep those value chains in Europe. If you lose part of the value chain, either manufacturing or services, there is a danger that you lose everything to another continent. The European commission has produced several publications which contain more details of strategies large and small companies can follow.
Or look at the agricultural sector where photonic sensors are starting to play more of a role in more accurate and less wasteful mechanized harvesting. This explains why we want to make digital technologies more accessible to other sectors, so we can remain competitive on the global stage.
There is a lot at stake
The figures are in. Over the next decade, a potential of €1 trillion Euros could be added to this continent’s GDP. But if we reduce our investment just at the point it is needed, it could equally mean a loss €600 billion Euro's if we don't keep up with innovation.
So where are the barriers? Large international companies obviously have the resources to innovate on their own. But remember that 80% of industry in Europe is dependent on SMEs.
SMEs (small and medium-sized enterprises) account for 60 to 70 per cent of jobs in most OECD countries, with a particularly large share in Italy and Japan, and a relatively smaller share in the United States. They also account for a disproportionately large share of new jobs, especially in those countries which have displayed a strong employment record, including the United States and the Netherlands. Some evidence points also to the importance of age, rather than size, in job creation: young firms generate more than their share of employment.
In short, SMEs in Europe are ubiquitous, and in 2014 accounted for 99.8% of all enterprises in the non-financial business sector in the EU28. For every square km of land surface, the EU has an average of 5 SMEs. Moreover, in 2014 SMEs employed almost 90 million people - 67% of total employment, and generated 58% of the sector’s value added. Almost all SMEs (93%) are micro SMEs, employing less than 10 people. We see that is also the case for photonics and other high-tech companies.
But whereas over half of the large European enterprises are using digital technologies, overall only 17% of the SME’s have embraced digitization. Of course, you need to be careful in generalizing. Most companies working in ICT, telecommunications and media are now fully digital. Yet in the construction industry and food processing, the figure is only around 10%. There are also large regional variations.
The growth of Digital Technology Hubs like PhotonDelta
The European Commission is supporting the creation of Digital Technology Hubs. Many are centered around a technology – so, for example, PhotonDelta is focusing on photonics around SiN and InP. Ireland’s IPIC is championing the challenges of photonics packaging – connecting the photonics chips to the rest of the device. In total, we're talking about €190 million a year being invested by the European Commission in the photonics sector. That will rise to €300 Million in 2018. Note that other national and regional authorities are also available to stimulate industries where photonics is starting to play an important role as a key enabling technology.
These hubs need to be very pro-active in their outreach to industry, not just waiting for SME's to find them. In many cases the SME's don't know what is possible with technologies like photonics. So, the technology hubs need to have deep technology and industry knowledge to be effective.
Interaction with related hubs
But, bear in mind that application hubs are also springing up. Look at European initiatives in truck platooning or smart agriculture. Both sectors can make use of applied photonics where there is a need for advanced light-based radar and sensor systems. We see our role in the European Commission to stimulate interaction between regions where there are complementary centres of competence. If we share IP, then we can reduce duplication of effort and keep a global competitive advantage. In 2020, we are looking to include sectors like additive manufacturing, although exact details are still being discussed.