The German government is preparing a massive investment plan to boost the development of local telecoms firms, in an effort to pivot away from dominant suppliers like China's Huawei.
The plan, dubbed the "joint proposal for action" by the ministries of interior, economy, research and transport, and seen by POLITICO, lays out how the government plans to spend €2 billion in funding from its larger coronavirus recovery stimulus program presented in June.
"The prosperity and competitiveness of Germany and Europe will increasingly depend on mastering new communication technologies," the proposal said, adding that this would "require a common political and industrial commitment at national and European level."
The plan comes as European governments increasingly take steps to box out Chinese tech giant Huawei from 5G-rollout plans due to security concerns. The restrictions mean telecoms operators have become more reliant on Sweden's Ericsson and Finland's Nokia, triggering calls from telecoms operators and some lawmakers to open up the supply chain to new players.
The German draft proposal includes over €300 million of investment in Open RAN technology, €237 million for a 6G research hub and €250 million to boost demand and expand 5G networks.
The draft also earmarked €550 million of German public investment in Europe's microchip market through a joint project, announced Tuesday, between the government, the EU and local industry players.
The draft proposal was first reported by Handelsblatt.
Looking for new 5G
The government wants to prioritize "open RAN" technologies throughout its telecoms investment plan, a concept that would chop up the 5G supply chain into smaller pieces and break the market power of large end-to-end vendors like Huawei, Ericsson and Nokia.
Ericsson and Nokia "for long have held a globally good position," the text said, but "China is however technological frontrunner in 5G mobile networks."
"Germany and Europe need to urgently strengthen their competences and develop industrial ecosystems for Open RAN and 6G technologies, including hardware and software," it said.
The adoption of Open RAN could mean a blow for Ericsson and Nokia, which have benefited from the pushback against Huawei. But the concept is heavily favored by telecoms operators, who use the equipment and complain that they are too reliant on gear from the two European suppliers.
The plan seeks to facilitate "Germany's entry into technologies for Open RAN solutions," with hopes to establish new companies in niche markets like network integration and edge computing software.
These services and products are currently part of major contracts between operators and major vendors like Huawei, Ericsson and Nokia.
Experts have warned that the Open RAN technology is still immature and it could take years for these new types of networks to function as well as conventional 5G systems.
But the concept has gained influence in countries including the U.S. and the U.K., where lawmakers sought ways to replace Huawei.
In the European Union, Germany so far has been among the most eager to promote the concept — which is also heavily favored by its telecoms giant Deutsche Telekom as it looks to exit its dependency on Huawei equipment.
Microchip plan
Also on Tuesday, the German government said it wants to boost the German and European semiconductor industry with new EU, German and private investments to boost chip manufacturing and design firms.
“We want Germany and Europe to become more sovereign and independent of imports when it comes to microelectronics and communication technologies," Economy Minister Peter Altmaier said in a statement, announcing the government's plan to launch a so-called Important Project of Common European Interest (IPCEI), elected projects that are set up to allow EU and national public funding to help private companies develop new technologies like microchips..
The global semiconductor supply chain is dominated by U.S., Taiwanese, Chinese and Korean firms. Europe lags far behind in the supply of high-end chips, though it has a handful of companies that champion supply-chain niches like chip-printing machines and chips for cars.
The German call to launch an IPCEI project comes in the wake of warnings by its car industry last month that a chip shortage was disrupting its production.
The European Commission is also working on a strategy to catch up on chips. It launched discussions with Europe’s leading firms in a bid to launch an “alliance” of firms, institutes and national governments to pool investments and set up joint projects this spring, including a manufacturing plant for high-end chips.
This article was updated to reflect that Important Projects of Common European Interest are approved under EU state aid rules.
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