Europe can overcome its semiconductor shortage with these lessons from a lightbulb company
Osram’s success dates back to 1906
Spotlight on Osram
Osram traces its roots back some 115 years to Austrian chemistCarl Auer von Welsbach, who greatly improved on Thomas Edison’s light-bulb designs with the use of a metal filament in 1906. Osram-branded bulbs started manufacturing the same year and went on to become the flagship product for one of thebiggest lighting companiesin the world. Osram later played a key role in the development of other lighting technologies, including compact fluorescent light bulbs.
Key to Osram’s survival over the years has been its ability to adapt by proactively seeking out new markets. Followingthe global effortto phase out incandescent lamps in the 2000s, Osram was well placed to capitalize. Scientists at Osram and the German Fraunhofer Institutehad patenteda white LED as early as 1996. This was only weeks after the Japanese researchers that would go on to win the2014 Nobel Prize in physicsfor their groundbreaking invention, and Osram’s early start in LED research established its IP portfolio.
But when highly subsidizedChinese companiesentered the market after 2010, LEDs for general illumination became increasingly ubiquitous and less profitable. Osram instead focused on developing market segments that demanded high-performance LEDs.
Backed by its in-house strength in research and development, fruitful university collaborations, and production capacity in the EU, Osram secured market leadership positions in niche applications likehorticultural lightingfor high-yield agriculture, infrared sensors forheart rate monitoringand lights, and sensors for theautomotive industry.
High-performance LED development
Osram stayed ahead of the competition by moving to niches where higher device performance and electrical efficiency were of paramount importance, rather than low manufacturing cost. The company’s product and IP portfolio todayremains amongthe industry’s largest inkey patent classes. And the takeover by AMS shouldn’t be seen as a sign of failure. It creates a global leader in high-tech optical solutions that has a much better chance of staying ahead of emerging Asian competition in these niche sectors.
Other western companies have not navigated the lighting sector as successfully. General Electric, a long-time competitor, had opted against developing its own LED research department, instead of procuring chips from overseas manufacturers to include in its lamps. Faced with increasing economic pressure, and unable to fall back on more specialized products, the company that traces its roots back to Edison had little choice but tosell its lighting unitin 2020.
Lessons to learn
My department’s researchhas shown that maintaining in-house research capabilities and academic collaborations will be key to the survival of European high-tech companies in the near future. Governments can support these efforts of private industry by strengthening the academic landscape in Europe. This can be achieved through projects like theHorizon Europe Programme, which funds both basic university research and collaborative efforts with industry.
In the long run, the best way to ensure the resilience of Europe’s high-tech industries is to “backshore” manufacturing of these products to Europe. With Sino-US tensions only expected to mount in the coming years, this would largely decouple strategic industry sectors from economic sanctions and mitigate geopolitical risks. It would also reduce the risk ofIP theftin overseas manufacturing.
Two of Europe’s largest suppliers of semiconductor components have already moved a significant part of their production back to Europe:Infineon Technologiesin Austria andBoschin Germany. This was enabled by unprecedented levels of factory automation and advanced robotics that is known as thefourth industrial revolution. As the Osram experience shows, controlling the most important parts of your technology is often the secret to long-term survival.
Article byMichael Weinold, Researcher, Cambridge Centre for Environment, Energy and Natural Resource Governance,University of Cambridge
This article is republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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