Commission approves R&D aid for Altis Semiconductor in France

Brussels, 16 March 2004

The aid approved today is intended to help set up a research centre for the design and development of a new generation of smart chip incorporating an on-chip memory for use in computers, mobile communications, card products or other applications. The aim of the "HyperSoc" R&D centre is to design and develop a new generation of chip (120 nm-90 nm non-volatile memories, magnetic memories). The Commission considers that the aid will have the effect of speeding up the research projects qualifying for assistance, while helping them to match the development rate for each generation of integrated circuit as set by the International Technology Roadmap for Semiconductors (ITRS). The total amount of the aid is of €23,6 million and this project will be carried out between May 2003 and May 2006.

The aid takes the form of grants financed by the State and by regional and local authorities (Conseil régional d'Ile de France, Conseil général de l'Essonne, Communauté d'Agglomération Seine-Essonne). All grants made to public establishments have been included in the aid intensity calculation in order to ensure that the aid ceiling provided for in the Community framework is not exceeded.

Altis came into being in July 1999 as a result of the merger between Infineon Technologies (a Siemens subsidiary) and IMD (IBM's microelectronics division). It is housed at IBM Microélectronique's CorbeilEssonnes site, a pioneer in the manufacture of semiconductors in Europe with a track record dating back to 1964. The company currently employs 2 000 people (25% of whom are engineers and doctorands, 25% technicians and 50% operatives). Its business is centred on the development, manufacture and sale of semiconductor components (advanced circuits), with a production capacity in excess of 45 000 eight-inch-diameter slices (silicon wafers) a month. The research work will be conducted in partnership with a few selected public laboratories.

The aid is intended to promote R&D activities. It was therefore assessed in the light of the criteria in the Community framework for state aid for research and development.

The work programme notified by the French authorities comprises activities forming part of each of the three stages of research as defined in Annex I to the R&D framework. An independent expert has sanctioned the overall cost of the work involved in each research stage within the meaning of that Annex. The Commission agrees with the French authorities as regards the nature and cost of the activities involved in the various research stages.

The independent expert considers, moreover, that 90 nm MRAM technology and copper interconnects suited to that technology have yet to reach the market place. Pursuant to point 6.2 of the R&D framework, it must be shown that the state aid will induce the company to pursue more research than it would otherwise have pursued:

• First of all, the aid granted by the authorities is decisive to the carrying out of the project within Altis inasmuch as Altis's own resources would not have been sufficient to fund such an ambitious R&D project. It should be pointed out that similar projects undertaken by competitors of Altis, including US and Asian firms, are themselves in receipt of state aid.

• Secondly, the development of MRAM technology is in itself a veritable technological breakthrough. Developing MRAM technology as small as 180-90 nm means developing various technological stages which are still uncertain and calls for a major research effort. According to the independent expert, state aid is necessary if such a technological risk is to be accepted.

• Thirdly, the project will have to adhere to a very ambitious timetable. The rate of development of each generation of integrated circuit is laid down by the International Technology Roadmap for Semiconductors (ITRS). This timetable is imposed at world level on all industry operators. It defines the etch sizes to be attained, without, of course, proposing any solutions to the numerous technological problems that must be solved in order to attain such small etch sizes. Each industry major must therefore find, sufficiently early on, its own solutions to the numerous technological challenges posed by the roadmap if it is not to be outdistanced and forced to exit the market. The European industry's main competitors in the US (Hewlett-Packard, Motorola, Honeywell, Nonvolatile Electronics, Quantum, Applied Magnetics and Ford) and Japan (Toshiba, Hitachi, Sony, NEC, Toyota, Fujitsu and Matsu****a) are working on their own products to this timetable.

   If the European industry were to prove incapable of sticking to the stages set out in the ITRS roadmap, it would lose market share and be rapidly marginalised with little chance of catching up when it comes to future generations of integrated circuit.

   The Commission considers that the state aid will have the effect of speeding up the research projects benefiting from the aid and of enabling them to comply with the stages of the ITRS roadmap.

• Fourthly, the independent expert has confirmed that the decision by IBM and Infineon to set up the research centre in question could not have been taken without state aid. In relation to this investment, Altis has submitted a comprehensive R&D project which includes the creation of a think tank based on its research laboratory.

• Fifthly, the French authorities have transmitted quantitative evidence of a substantial increase in R&D expenditure in France by the aid recipient and in its R&D personnel. According to those authorities, Altis's expenditure, which currently accounts for 7-8% of its turnover, with 50 or so engineers devoted to R&D, would, thanks to the aid, increase to 12%, coupled with at least a doubling in the number of research workers.

In the light of all these points, the Commission is of the opinion that the state aid is essential to carrying out research involving such a high degree of technological risk and that the aid has a strong incentive effect. The Commission considers, therefore, that these factors demonstrate conclusively the aid's incentive effect.

DN: IP/04/353 Date: 16/03/2004