Semiconductor microchips made in Inwil?

Europe and the USA want to reduce their dependence on Asia for the supply of semiconductors. And the micro-chip industry in Switzerland is also to be strengthened. Central Swiss industry experts see potential, above all in research and development in niche areas.

Microchips are at the heart of modern society. Although they are tiny, they are hugely important to the functioning of a wide range of products and machines. Without chips, there would be no smartphones, computers, cars, aeroplanes or medical devices. Eugen Elmiger, CEO of the Obwalden-based motor manufacturer Maxon, says, for example: "Without semiconductors, nothing will work in the high-tech environment. Our drive systems, as well as the devices in which they are installed, will not work without semiconductor components."

In the wake of the Corona crisis, semiconductors suddenly became in short supply due to disrupted Asian supply chains; dozens of industries could thereby not deliver their products on time. This availability is still critical, even though the situation is now easing somewhat.

In addition, however, there are the geopolitical tensions between China and the USA. The island of Taiwan, whose independence is threatened by China, is the world's most important chip supplier - an escalation of the conflict with China could be potentially devastating for global chip supplies.

Against this backdrop, efforts are underway to rid the chip industry of the risk of Taiwan. American chip manufacturers are planning to invest billions in new plants in the USA, and the EU has set itself the goal of doubling its share of global chip production to 20% by 2030.

Swissmem has founded new industry sector
There is growing awareness of the importance of this industry in Switzerland. A fortnight ago, the industry association Swissmem founded a new "Semiconductors Industry Sector" (Semi).

Its president is Cemal Aydogan from Hitachi Energy Switzerland AG in Baden. The aim of the new Swissmem sector is to make the importance of the industry better known to politics and society, to work for good framework conditions, and to strengthen research, cooperation and promotion instruments. Swissmem estimates that the Swiss semi-ecosystem comprises over 100 companies and approximately 15,000 employees.

Engineers at work over a light table. The chip industry is increasingly in the spotlight.              Photo: Getty
The committee of the new Swissmem “Semiconductors” industrial sector, with President Cemal Aydogan (centre), Swissmem Director Stefan Brupbacher (far left) and Head of Swissmem Industry Sectors Adrian Vogel (fourth from right).                   Photo: PD

More than 50 participants from 37 companies and organisations were present at the founding meeting, including Christoph Scheiring, who heads Besi Switzerland AG. In Steinhausen, this company develops machines for major semiconductor manufacturers. The machines are then manufactured close to the customers in the Far East.

These machines help to package the chips in housings, so that, for example, they can be used in computers. In technical jargon, this is called "die bonding" or chip bonding. "This is an essential step to protect the bare silicon chip from mechanical influences and to make electrical contact," explains Christoph Scheiring.

Besi Switzerland is a subsidiary of the listed group of companies of the same name based in the Netherlands. The Swiss headquarters originally came into being at the end of the sixties, when Karl Nicklaus, an engineer from Thurgau, founded the predecessor company Esec in Hünenberg, and later in Steinhausen. A turbulent company history followed with sales and relocations, but the company is still there.

Around a hundred people work in Steinhausen, most of them highly qualified engineers who are involved in the development of new systems. The example shows that there are still many suppliers active in this country today who are historically linked to the Swiss engineering tradition.

Dream of chip production in Inwil
In the wake of the chip crisis and the sabre-rattling over Taiwan, there are now voices that would like to see the sector expand in Switzerland. At the New Year's aperitif of the Chamber of Commerce and Industry of Central Switzerland (Industrie- und Handelskammer Zentralschweiz IHZ) in Lucerne, Director Adrian Derungs said in his speech: "We would be well advised to significantly minimise our dependence on Taiwan. Why not bring semiconductor production back to Switzerland? In Inwil, in the canton of Lucerne, there is a 30-hectare area where such a project would be feasible."

The piece of land to which Adrian Derungs was referring to is called Schweissmatt, and belongs to CKW. Various projects for the area have failed in recent years, be it for a nuclear power plant, amusement park or solar plant. Today, on request, CKW says it is definitely interested in making Schweissmatt available for companies to settle there. "The site is an attractive development area in the canton of Lucerne and is therefore designated as a strategic working area in the cantonal structure plan," says CKW spokesman Marcel Schmid.

He also said that a settlement is not yet possible at present, however, because the area is entered as an interim result in the cantonal structure plan (Richtplan). "Before a concrete project could be examined or implemented, Schweissmatt would have to be definitively designated as a strategic working area in the cantonal structure plan. This is part of the current political process for the revision of the structure plan."

Research and development in niche areas
So, for the time being, the dream of chip production in Inwil remains just an idea. But the anecdote and the new efforts by Swissmem show that something is afoot. Industry expert Christoph Scheiring sees potential above all in research and development in niche areas: "In the area of high-tech applications, where a lot of development work is still needed, it could be possible to build something up." But it’s first important to strengthen the ecosystem around the semiconductor industry, and to expand it further. This also includes reintegrating Switzerland into Europe as a research location.

Industry representatives also point to the cost factor. Eugen Elmiger of Maxon says: "I think the efforts to promote the microchip industry are very good. But this is only possible with appropriate financial resources." Siemens Switzerland, the largest industrial employer in the country, with a strong presence in Zug, says that regional independence from Asia is desirable, but: "Whether Switzerland is the right location for a Swiss ‘Silicon Valley’ is questionable because of the high land prices. That would mean a campus approach, with factories the size of football pitches, supplier industries and nearby universities," says Siemens spokesman Benno Estermann. Like Christoph Scheiring, however, he is of the opinion that Switzerland is quite suitable when it comes to niche products. And: "The high Swiss wages are not a counter-argument, because of the high level of automation in production”.