The German government is preparing a massive investment plan to boost local telecommunications companies in an effort to shift away from dominant providers such as China’s huawei.
Berlin’s 2 billion euro exit plan from Huawei was revealed in a Thursday article in Politico, as cited by Wall Street Digest. The plan, proposed by the German interior, economy, research and transport ministries, is considered a “joint action proposal” by POLITICO. The plan outlines how the government plans to spend 2 billion euros from its recovery stimulus package. “German and European prosperity and competitiveness will increasingly depend on mastering new communication technologies,” according to the proposal, which adds that this will “require a common political and industrial commitment at national and European levels.
European governments are increasingly taking steps to keep Chinese tech giant Huawei out of 5G plans for security reasons. The restrictions mean that telecoms operators have become more dependent on Sweden‘s Ericsson and Finland’s Nokia, prompting calls from telecoms operators and some lawmakers to open up the supply chain to new players.
Germany‘s draft proposal includes more than 300 million euros for investment in open-run technology, 237 million euros for 6G research centers and 250 million euros to boost demand and expand 5G networks. The draft also sets aside 550 million euros for public investment in the European chip market through a joint project between the government, the EU and local chip industry players announced Tuesday.
According to the report, the German government wants to prioritize “open run” technology in its telecom investment plan, a concept that would split the 5G supply chain into smaller parts, breaking the market power of large end-to-end suppliers such as Huawei, Ericsson and Nokia. The program aims to facilitate “Germany’s entry into the field of open operating solutions technology”, hoping to establish new companies in niche markets such as network integration and edge computing software. These services and products are currently part of major contracts between operators and major vendors such as Huawei, Ericsson and Nokia.
Experts warn that open-run technology is still immature and it could take years for these new networks to function like traditional 5G systems.
But the concept is already having an impact in some countries, including the United States and the United Kingdom, where parliamentarians are looking for alternatives to Huawei. In the European Union, Germany is by far one of the most enthusiastic about promoting the concept, which is also being strongly supported by the German telecom giant as it seeks to move away from its reliance on Huawei equipment.
Also on Tuesday, the German government said it wants to boost the German and European semiconductor industry with new investments from the EU, Germany and private parties to boost chip manufacturing and design companies, according to the report.
The global semiconductor supply chain is dominated by companies from the United States, Taiwan, China and South Korea. Europe lags far behind in the supply of high-end chips, although it has a handful of companies that dominate supply chain niches such as chip design and equipment and automotive chips.
Germany’s call to launch an IPCEI project comes after the country’s auto industry warned last month that chip shortages were affecting its production.
The European Commission is also developing a strategy to catch up on chips, according to the report. It has begun discussions with leading European companies in an attempt to create a “coalition” of companies, institutions and national governments this spring to pool investment and build joint projects, including a high-end chip manufacturing plant.
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