The Silicon Alps region produces microchips for the global market

In the provinces of Carinthia and Styria, this tech cluster is driving world market leadership in electronics.

Sustainability, energy, (e-)mobility, innovation and technology – the Silicon Alps Cluster in Carinthia and Styria is leading in these areas, when it comes to networking at the highest tech level. Therefore, some of the world market leaders in the microchip industry come from this region. CEO Robert Gfrerer explains the worlds of Silicon Alps.

How does the public-private cluster Silicon Alps work?
Robert Gfrerer: Clusters in Austria’s provinces – and also across the provinces – work similarly in terms of their operating model. We are limited liability companies with public and private owners. In our case there are two public owners, the Styrian Economic Development Agency SFG with 26 percent and the Carinthian Economic Development Fund KWF also with 26 percent. In total, we have twelve owners, whereby the others are industrial partners. There are many large companies, but consciously also some small ones, i.e. SMEs. The bottom line is that this structure is not about majorities, but about agreeing on strategies, on procedures. Basically, everything is decided unanimously. In this way, we aim to achieve a balance of interests in our industrial network between the needs of the industrial sector and the design requirements that the industrial sector has of policymakers. The two public shareholders, as funding institutions, are of course involved in the design process. This is necessary because the industrial sector demands suitable framework conditions from policymakers. With a small organisation like a cluster, you want to have a flexible, agile organisation that can react quickly.

That all sounds a lot like lobbying …
Gfrerer: Our activities are manifold. The main activity is networking – we mediate the partners among themselves, but also externally. Our members are institutions from the research sector. We have large companies among us, and two thirds of our members are small and medium-sized enterprises. There are quite a few startups among the SMEs. Our core area is to be the bridgebuilder here. If partners are looking for technologies or research services, or want to find their footing, they can ask us. We are also part of a European network, the Silicon Europe Alliance, in which eleven clusters from all over Europe are represented. Therefore, we can also provide networking to other countries. When the occasion arises, we contact our European partner clusters, and the probability is very high that a suitable partner company will be found there. This usually happens very quickly with the exchange of a few mobile phone numbers. These mediation activities are our main task.

So, you can influence political framework conditions in the same way as finding suitable research facilities for industrial corporations or suppliers?
Gfrerer: We also help with the acquisition of new technologies, because our members cannot always develop everything themselves. If, for example, one of our smaller companies wants to get in touch with one of our very big partners, we usually quickly find a direct contact person in the group concerned and establish the connection. Another business area is based on projects, both in development and research, as well as for applications. If someone wants to set up a joint venture, we take over the coordination.

What about help with funding?
Gfrerer: We handle so-called Cascade Funding programmes. There are very attractive funding programmes at a European level that are very complex for SMEs. Going it alone would be too complicated and too bureaucratic for many companies. In such cases, we stand in between with

How many partners does the network currently consist of and how much is it growing?
Gfrerer: As is always the case in business, new partners join, and others drop out. The bottom line is that we are growing by an average of ten percent per year. However, the business of our member companies is growing much faster – in 2023, some of our partner companies from the microchip sector recorded a growth of 30 percent. Last year, the European Chips Act came from Brussels, with which the European Union set up a programme to double the world market share of the European chip industry in the next ten years

Which developments are you particularly proud of?
Gfrerer: There would be no Supercharger anywhere in the world without chips from our industry. The entire boom that is currently taking place in electromobility would not be possible without the high-performance electronics of our partners from the region.

When will the next large chip factory be built
Gfrerer: It’s already there, and there are constant construction sites. At Infineon another hall was completed in the summer. At AT&S in Leoben, half a billion euros are currently being spent on construction. And investment projects are also underway at numerous other partners.

What about your cooperation with research institutions and universities?
Gfrerer: The relationships are very intensive. We are the cluster that has the most research institutions as partners that are also paying members. These include, for example, the Graz University of Technology, COMET centres such as the Know Center, PCCL, MCL and the Virtual Vehicle, Silicon Austria Labs SAL and many others. The interconnections are extremely intensive, and that’s the way it should be. Our leading technology companies have an average R&D quota of about ten percent. This only works if you cooperate with research institutions at various levels. At a national level, the R&D value is usually around three to four percent. Some of our partners have also established endowed professorships at universities. It takes research performance, but also the competence of applied research, so that new technologies can go into product development. Finally, we need implementation competence, and we have plenty of that in the cluster.

Is the focus on Carinthia and Styria a limitation or an advantage?
Gfrerer: The business itself is global, of course. But Europe has realised that certain competences have been outsourced to too great an extent, and it is very risky if you no longer have them in your own country. The European Chips Act is a massive attempt to change that. If you look at the AT&S construction site in Leoben, for example, capacity is being increased in a production area in Europe to reduce dependencies. But it is not a question of no longer doing global business. That would be absurd, and we would only close ourselves off.
Operating across two provinces is an ingenious development. In these two provinces, more than 80 percent of Austrian companies are operating in the electronics sector. So, it also makes sense to look at this as one region. But we also have partners in Vienna, in Lower Austria, in Salzburg and recently also in Croatia. As a local cluster, you draw a radius of 300 kilometres; all partners who are within this radius can be well looked after with a small, agile team. Furthermore, virtual support is possible. When it comes to networking, however, you should meet in person.

Do you also use artificial intelligence?
Gfrerer: We are the first cluster to work with AI in business development. We have already implemented solutions here, but we see that we still have a lot of learning to do as a team.

You name a few ‘Areas of Excellence’ in which you are active. Can you give us some exciting examples?
Gfrerer: Power Electronics stands out. Our region has a global market share of 20 percent in the field of power electronics. This is about smart grids, photovoltaic control systems and e-charging stations that can transfer a high amount of electricity. E-mobility drives many of our partners, and it’s about wind turbine control components. The region is number one in the world when it comes to security chips in passports. They are found in 90 percent of passports, including those of the United States. Our region is also the “We need many young people to take up such a profession.” Robert Gfrerer The Infineon plant in Villach, a leading supplier of semiconductor solutions © Infineon World Champion Austria Silicon Alps Cluster 142_143 leader in light sensors, with a 55 percent share of the world market. These components are found in a lot of products, but hardly anyone knows that. In the field of cyber security, the latest international standard in lightweight cryptography, Ascon, was developed by a professor and his team at the Graz University of Technology. In addition, the most powerful and smallest dual charger in the world, the Tiny Power Box, comes from the region. With it, the battery of an electric vehicle can be both charged and used as a power storage unit for applications at home, for example.

Do you experience a shortage of skilled workers?
Gfrerer: The issue runs through all sectors, and the situation will become even worse when the baby boomer generation starts to retire. This will increasingly affect technical professions. We need many young people to take up such a profession. We cannot intervene here ourselves. What we, as a cluster, can do together with our partners is to work on concepts to promote this location and these jobs attractively. In any case, it makes more sense for a whole network to try to promote technical jobs to young people than for each company to do it on its own.

How do you make technical jobs appealing to young people?
Gfrerer: If you make them understand that the job is very cool and then show them the mountain bike trails and the ski slopes, that’s the icing on the cake. But nobody comes just for the beautiful scenery and the beautiful mountains if there are no cool jobs – but there are. Of course, people from other countries who want to work here inquire if there is already a community. Both in the big companies in Styria and in Carinthia there are employees from about 70 nations. So, there is a community. But we still have to work on our welcome culture, the environment has to fit and be family friendly. If someone wants a top job in research, they can have it with us. Silicon Austria Labs alone has a hundred open positions.

You work directly with ESBS-Austria (Electronics and Software
Gfrerer: The ESBS is an organisation that represents the interests of the electronics and software-based industry. There is close cooperation here. They produce studies, for example, that show where Austria is the world market leader.