French Chip Research Institutes, A Model for EU Tech Sovereignty?
Visiting CEA-Leti in Grenoble, the heart of the French Alps 🇫🇷🇪🇺
*My original French version of this article is available on the Observatoire des Semi-Conducteurs.
French President Emmanuel Macron's call for European sovereignty could have a decisive impact on the Old Continent. Whether at the EU or national level, France's semiconductor research policy is already placing technological sovereignty at the forefront. In doing so, France could become a model for all countries and markets seeking to ensure their place in the technological race of the decades to come.
The Laboratory for Information Technology Electronics (CEA-Leti), located in Grenoble, exemplifies the French chip research model. It also draws a sharp contrast to the Institute for Electronics and Components (Imec), located in Flanders. While Leti is a lever for promoting innovation in France, Imec is an international, industry-led partnership that does not try to favor any particular region.
By comparing Leti to Imec, this article will show how sovereignty is baked into the French approach to innovation. There are advantages and disadvantages to such a strategy, and other governments seeking to bolster their own semiconductor ecosystems should take note.
A Mid-Sized Chip Power
As a non-continental player, France does not have as vast and diversified a chip industry as the US. However, the Hexagon boasts champions in niche sectors that are central to its technological policy.
French chips are significant source of inputs for European original equipment manufacturers (OEMs). Three-fourths of French semiconductor exports, valued at nearly 7 billion euros in 2021, are destined for the EU. The remainder targets the consumer electronics market in East Asia, mainly OEMs in Singapore, Taiwan, and South Korea.
France clearly does not rank among the world’s semiconductor leaders. Since 2003, it has produced between 30 to 60 semiconductor-related patents per million inhabitants less than any given year’s most innovative chip-producing nation. It does, however, boast competitive players in low-power compute. STMicroelectronics, a multinational originally from Grenoble, focuses on analog chips and low-power sensors, while Soitec specializes in the design and manufacture of semiconductor materials.
Taking a step back, it is important to contextualize France within the broader European semiconductor ecosystem. Since the 1980s, Europe has maintained a share of about 10% of global chip production. (Another oft-cited report published by the Semiconductor Industry Association traces the decline of European production over the past thirty years, from 44% to 8% of global market share. However, some question the statistical methods behind these figures.) Despite this stable share of global chip production, Europe lacks a champion like TSMC or Samsung capable of producing the most advanced chips in terms of size or speed.
France and Europe face the same challenge. Both must discern their roles in the global semiconductor industry. There is no consensus yet at the continental level, but the French have a clear vision of what goals Europe should pursue.
A Narrow Path to Tech Sovereignty
France’s industrial policies are not always in sync with the EU. During the COVID-19 pandemic, European observers criticized the continent's decline in manufacturing, and Brussels policymakers promised grand recovery plans for key sectors. While promoting one such plan, the EU Chips Act, EU Commissioner for the Internal Market Thierry Breton, reaffirmed his dream of attract cutting-edge, sub-2nm chipmaking to European soil.
Despite Breton’s desire to thrust the EU to the cutting-edge of chipmaking, companies and technologists have reminded the EU Commission of the continent's non-existent cutting-edge capabilities. A major tech trade association urged that the EU Chips Act target legacy chip production, not just the smallest nodes. It reminded policymakers that downstream OEMs need highly efficient chips at larger nodes, an area in which Europe already leads.
For its part, CEA-Leti highlighted the importance of its research aimed at improving the energy efficiency of legacy node chips. Rather than following what it calls the "More Moore" path, which aims for continuous node shrinkage, and in which TSMC and Samsung have already invested heavily, Leti's research follows a "More than Moore" approach. This research agenda seeks to reduce energy consumption and expand the capabilities of chips at mature nodes. Leti wants EU policy to support Europe’s current champions by focusing on sensors, power electronics, and 5G telecom chips at less advanced nodes.
The message from companies and technologists is clear: it will be more effective and less costly for EU tech policy to focus on the continent’s strengths. Leti’s model, in particular, shows how France guards the results of public research on its own soil, guiding research programs in line with a national agenda.
Tech Sovereignty at Leti: Guarding and Guiding
Founded in 1967, Leti was founded by the French Atomic Energy Commission (CEA) to increase the country’s industrial competitiveness. It boasts substantial (though indirect) funding from the French state, making it an institution anchored in national sovereignty. Its intellectual property (IP) policies reflect the French government's desire to guard research results in France and Europe. Its research agenda also reflects a prioritization of areas in which French companies are already active.
An Indirect Subsidy Mechanism
Public announcements by Leti often mention that subsidies account for only 20% of its annual budget of 330 million euros. It is true that, over the past decade, direct public funding has only made up about a third of Leti's budget —with most of these public funds allocated to academic research and education. However, another third of its budget comes from public funding through research contracts, and it is only the final third that is purely funded by industry.
This segmentation of public funding allows the French state to support its industrial champions without violating EU regulations. The EU Framework for State Aid to Research, Development, and Innovation (R&D&I Framework) provides exceptions to EU prohibitions on state aid. While France cannot directly subsidize its champions, the R&D&I Framework permits support for public entities like Leti that conduct research in the general interest. Even when such research is conducted in with the private sector, as in the case of Soitec’s "NanoSmart" project, the EU Commission does not consider such public funds to be state aid. Furthermore, the Commission counts academic research and education as public goods, making them directly eligible for state subsidies.
Keeping IP in Europe, in France, in Grenoble
To boost the innovation clusters and patents of its national ecosystem, France leverages CEA-Leti as a tool of industrial policy.
CEA, Leti’s governing body, remains the owner of the results obtained by Leti researchers; it also retains the "industrial building blocks" (basic patents) of bilateral projects. These "industrial building blocks" not only help disseminate know-how to startups but also keep the seeds of innovation in France, specifically in the Rhône-Alpes region. If external industrialists want to take full advantage of Leti's services, they must strengthen their presence, investments, and workforce in the region. As a result, Leti's IP policy bolsters France's technological sovereignty by preventing innovations –and innovators– from leaking out of the country.
Leti’s IP policy also has an openly protectionist dimension aimed specifically at increasing the competitiveness of French and European firms. A former director of CEA's investment fund and head of Leti's microelectronics program stated that "Leti's objective is not to do research for research's sake but to help our industrial champions grow." To do this, Leti not only keeps its patents in France but also grants preferential licensing terms to French and European companies, over their non-European counterparts. If a company who has not participated in a research project wants a license for a patent from that project, Leti grants "priority valuation for French and European companies." From the French perspective, technological sovereignty requires guarding the innovations born on French soil.
Guiding Research Toward a National Agenda
State influence manifests not only through Leti’s budget but also through the governance of CEA, under which Leti operates.
CEA is governed by a board of directors and by the French Atomic Energy Committee (distinct from the the Atomic Energy Commission). The board includes 18 members, representing ministries responsible for energy, research, economy, industry, budget, and defense, as well as members representing labor and CEA subsidiaries. It appoints the directors of CEA subsidiaries (including Leti), determines CEA's budget, sets scientific agendas, and more. For its part, the Committee has working-level responsibility on issues delegated to it by the CEA board and is mainly comprised of civil servants.
While French state agencies entering research contracts with Leti certainly also influence its research priorities, the way state policy makes it way into Leti’s agenda is primarily via CEA’s investment arm. Founded in 1999, CEA Investissement has funded dozens of startups in various sectors, from microelectronics to materials and industrial equipment. CEA also has another fund, Supernova Invest, whose decisions are independent. However, when economically or politically important startups fail to secure funding from Supernova, CEA Investissement plays the role of a strategic investor that can go beyond financial considerations. Companies in CEA's strategic portfolio in turn benefit from privileged access to the infrastructure, researchers, and patents of the entire CEA ecosystem, including Leti.
Leti's private sector partners certainly also influence its program since they contribute a third of its budget. However, the three levers of the French state – Leti's public contracts, the appointment of its director, and CEA's strategic fund –maintain public influence capable of guiding Leti's research programs toward national priorities.
Globalization at Imec: Following Industry Interests, Not Factional Disputes
Unlike Leti, which considers itself a French institution with global reach, Imec considers itself a global institution from the get-go. This global orientation stems from its funding model.
Like Leti, Imec only receives 17% of its funding from its government (in this case, that of Belgian region of Flanders). However, while Leti compensates for this shortfall through external research contracts, Imec compensates for it through membership fees. Generally speaking, consortia receiving limited funding from their governments have two options: either charge license fees on their patents or impose membership fees. Imec opts for the latter, which means it often does not retain exclusive ownership of research results.
Due to this fee-based funding model, Imec has a more liberal IP policy than Leti. The Imec Industrial Affiliation Program (IIAP) has three principles that guide its IP sharing:
After paying membership fees, IIAP partners receive a non-exclusive, non-transferable license to use Imec's "background" IP. This IP is available from the start of cooperation and lasts throughout the course of a project.
IIAP partners enjoy joint ownership with Imec of the IP to which they have contributed.
While the majority of IIAP activities are conducted as cooperative projects, each partner can request to conduct limited independent research within an IIAP. The ownership of these side projects’ results can then be exclusively granted to the partner.
Although Leti uses similar rules to share the results of bilateral projects, the vast majority of its projects are contractual. Therefore, it lacks both a consistent way of and desire to transfer IP to the private sector, keeping most of its IP in Grenoble. In contrast, Imec's IP resides in companies and startups around the world.
Imec’s approach to IP may not maximize benefits for the Flemish and Belgian ecosystems, but it has paved the way for breakthrough innovations, namely EUV technology. Since Imec's research agenda is not subject to influence from the Belgian government, its expertise has been able to grow beyond the scientific agendas of Belgian and EU companies. This global institution does not limit itself to enhancing its own home turf; it brings new paradigms to the global semiconductor industry.
Leti or Imec? Sovereignty or Globalization?
As the world's largest economies dole out mind-blowing subsidies for their semiconductor industries, each government must consider its development path. A strategy focused on local objectives, similar to Leti's, may better bolster a national ecosystem; while a policy focused on private sector objectives may better anchor a country to the global cutting-edge.
Europe will soon have to make this choice. Following this July’s enactment of the EU Chips Act, the EU Commission decided to issue €750 million to expand Imec's labs for research on advanced nodes. This decision suggests an initial desire to give Europe new capabilities, rather than to deepen its comparative advantage in energy efficient legacy chips. In contrast, if France seeks funding under the EU Chips Act, it will likely be for a project to further strengthen the EU’s existing capabilities. The question of how to allocate resources to new frontiers and existing strength will be a balancing act for European policymakers in the years to come.