EU Commission Approves $2 Billion Public Funds for High-End Chips and Driverless Cars Research

about 3 months ago by Biljana Ognenova

IoT technologies have added another layer to the meaning of a digital single market, a policy the European Union has been pushing forward since the adoption of the Digital Single Market Strategy in May 2015. The Internet of Things is connecting virtual and physical touch points and dissolving many of the previously unshakable cross-border limitations and will continue to do so, thus changing the tapestry of societies as we know them.

In all its hype, IoT is not an all-powerful connectivity breakthrough. It still comes with considerable commercial, security, and technological obstacles for Europeans, and these are not much different from other regional and global market challenges.

These obstacles are preventing the IoT from fully blooming into what it’s supposed to be: an all-encompassing public-private sensor platform, which, thanks to microelectronic innovations, will make our lives easier and more secure. Cost and implementation are two major factors helping this groundbreaking technology hit the mainstream. However, there are a few regional specifics that make the EU a fruitful field for IoT advances.

Research to Drive Forward Industrial IoT and Connected Cars

Recent progress in EU IoT research has been aided by the $2 billion (€1.75 billion) injection in public funding coming from the UK, France, Germany, and Italy, and cleared by the European Commission, to boost a series of 40 overarching IoT projects or over 100 collaborations for advancing microelectronics for connected cars, commercial, and industrial IoT solutions. Funded projects must be highly innovative and publicly supported, for which goal the EU has already set a date for an annual conference (to be held in November 2019) and a series of smaller industry events.

Phases in an IoT ecosystem. Image courtesy of Forrester via Forbes.

IoT Market Maturation

Sufficient business maturation in the short term—over 1 to 3 years—is possible only for a small portion of IoT applications. For the majority, it takes well over a decade to become lucrative.

When so many projects are good in theory but turn out to be not so great in practice, one must think of how to pipeline costs, facilitate implementation, and eliminate data privacy and data security concerns. Consequently, the better question to ask about this funding shot is not whether it is worth it, but whether now is the right time to make it. The answer, of course, is a resounding yes, because of the reasons that will be explained below.   

Smart Sensors: Costs and Compatibility

The $2 billion approved by the European Commission is aimed at developing energy efficient, high-end chips made out of advanced compound materials, as well as reliable power semiconductors, and new versions of optical, magnetic, and motion sensors that could potentially overcome many of the typical pain points of autonomous vehicles. Another problem is product compatibility, something that is not only messing with things on a micro level but also with end products, thus further complicating and raising the costs of large-scale implementation.

Smart sensors that used to cost between $10 and $50 when they first hit the market have now dropped to an average price of $0.50 per sensor, a number which is predicted to drop to $0.38 by 2020.

The European region, including major players from the UK, Germany, France, and Italy, holds 28.8% of the global smart sensor market. Although sensors are only a small piece in the formula for calculating the real costs of successful IoT implementations in high-level IoT architectures, having the four major shareholders on board in this funding wave is a huge bonus.

What goes into the costs of high-level IoT architecture. Image courtesy of RS Components.

Favouring Regional Development

To reduce costs, 60% of EU-based executives are choosing to outsource IoT services.

Such practice drains significant capital from the EU market which, compared to U.S manufacturers, has typically been in favour of quality over quantity. Therefore, this injection comes at the right time to support local players in creating high-quality business solutions that could stand against their more aggressive competitors.

What are the current regional advantages?

Alignment Between Stakeholders

Small businesses struggle with making potentially viable IoT solutions.

Only 26% of IoT startups consider themselves a success. As it comes to light, the key hindrance to preventing IoT success is alignment between digital stakeholders. By bringing 4 countries and 29 direct participants from in and outside the EU on the same page, technology-wise and strategy-wise, as well as the publicly granted approval, this hindrance has been substantially erased.

Data Concerns

Data deluge has been a serious challenge for companies that produce IoT devices.

On the other hand, contrary to its U.S. counterparts, most EU companies and public institutions don’t treat their customers as walking data containers, or at least take a more gentle approach by adopting integral data privacy policies and guarding consumer data from unauthorised breaches.

Three huge German automakers, Audi AG, BMW Group and Daimler AG have already set the stage by acquiring Nokia’s digital mapping and location services. Localised funding could make this even more secure, while solving one of the biggest problems in IoT, especially for driverless cars: data security.

Infrastructure Set in Place

The European Union has the administrative infrastructure already set. This prevents bureaucracy from meddling with research and delaying progress. The common rule of law, as well as the supportive geographical constellation, make Western Europe the best lab rat for testing expensive and risk-prone technologies. If we consider  Eurail, formerly known as Europass, a company that has successfully been connecting 28 European countries since 1959, EU transportation authorities have over seven decades’ worth of experience in successfully handling transnational commuting, something which could be useful for emerging tech, too.

Smart EU Companies

Meanwhile, market drivers are not asleep.

IDC reports that companies in Western Europe are staying level with IoT by concentrating on evolving IoT platforms, edge computing, IoT-fueled business models and ecosystem expansion, such as connected spaces and the emergence of European smart cities. Giants like Schneider, for example, have invested $8 billion for developing energy efficient platforms. It’s only natural for public institutions to take lead in the cohesion of analytic applications, AI, connected vehicles, enterprise asset management, and the IoT to drive forward commercial and technological progress for the greater public good.

Image courtesy of Bain & Company.

Three Leading Areas of Research Interest

Where could this money go?

As a natural consequence of Europe’s positive stance toward waste reduction, we hope to see this money funding energy efficient manufacturing as well as supporting small businesses in reducing running costs. Transportation is another key area ripe for innovation, as well as the inevitable smart cities and connected spaces that shape the bigger picture of the IoT.

One thing for sure, though: although this research project is programmed to end by 2024, its long-term beneficial impact should extend well beyond that period. Only then we can judge its success with greater precision.

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