Jessica Vermeer
22 June 2020

Embedded and cyber-physical systems are at the core of Europe’s future competitiveness. Value is shifting from components to systems and solutions. Artemis president Jean-Luc di Paola-Galloni explains how this upcoming market is both an opportunity and a threat to our continent.

We’re on the verge of another industrial revolution. Embedded and cyber-physical systems will act as a bridge between the real and digital worlds. According to Jean-Luc di Paola-Galloni, president of the European industry association Artemis, the only way to achieve success in this upcoming industrial revolution is to create the best possible value chain on our continent. We need to make sure Europe is self-sustaining throughout the entire chain, all the way to application software, while simultaneously being a global force to be reckoned with. “This Europe-inside concept is what we need to protect more, also within our funding schemes. We need to build, enforce and protect our innovation.”

Di Paola-Galloni knows how to deliver his concerns. “Do we want to get digitally colonized in this continent? Or, do we want to grab on to the opportunity to resist?” The EU is being outspent by the US, Japan and China. The Chinese are investing heavily in key policies focused on the transition from being the world’s factory to becoming a self-sufficient leader in innovation. The US is also putting its weight behind R&D investments in software applications. European private-sector R&D in embedded and cyber-physical systems seems to be falling behind, in both hardware and software technologies. “We need to resist. Private-sector research and investments are lagging.”

A splash of fresh water

Artemis is Europe’s association for actors in embedded intelligent systems. It aims to secure the whole value chain, from hardware to software. Last year, it presented the report “Embedded intelligence: trends and challenges.” Di Paola-Galloni launched the study two years ago, when he joined Artemis as president, to assess what exactly was at stake in the global competition for embedded systems and to determine the themes where Europe could create value. Specifically, for embedded intelligence, which is the domain of the Artemis-IA community.

“There’s an unstoppable trend,” says Di Paola-Galloni, who’s also an executive at the French automotive supplier Valeo. “Value is shifting from hardware to solutions and applications.” Electronics and digital automation will be added and the industry will get its own revolution of softwarization.


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The value chain runs from raw materials to fully integrated systems and solutions. Simple components are located upstream and as a product goes through the chain, it gains value. The most advanced products, such as integrated software and hardware systems, are located downstream. Nowadays, as is stated in the report, value is mostly located upstream, but it’s expected to move downstream significantly, with a major shift from products towards solutions. The fully integrated systems and system solutions, together with the embedded and enmeshed electronic systems, will be key in creating value.

Key application areas are transport & smart mobility, energy, healthcare & wellbeing, digital industry and digital life. Their market growth potential is huge and could be a significant driver of growth for Europe in the years to come.

In the meantime, value is shifting geographically as well. Over the last few decades, it has been moving away from the West towards emerging countries like China. This shift is expected to continue over the coming years. Looking at the value chain for embedded and cyber-physical systems, the final stage (systems of systems, applications and solutions) is expected to grow tenfold.

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It’s in no way guaranteed that Europe will be able to keep up with this tremendous growth. Given the rapid, ongoing changes and the consequences of COVID-19, the cards are likely to be reshuffled. “We need to understand how the different regions of the world will evolve,” says Di Paola-Galloni. “We need to get a splash of fresh water in the face of many Europeans. Particularly in Brussels, where they only think inward, while they need to understand that competition on a global scale will remain.” If Europe wants to succeed, we need to spend more on applications and increase public support. In terms of public R&D support, relative to GDP, we’re being outspent five to six times by China, Japan and South Korea.

Di Paola-Galloni’s main task is to highlight the right priorities to those that can make a difference, namely politicians and decision-makers, about the ecosystem and the value chain. “We’ve been voicing the importance of making the right funding decisions and strategic choices to administrations and member states. We also underline the need of coherence in strategy, particularly aligning national roadmaps with global needs of multinational companies and research institutes, which need to find a smart path between international operation and international competition.” Europe should collaborate with partners from outside while protecting certain innovations in order to sell and promote them across its borders.

A staunch believer

According to recent Artemis studies, Europe is leading the developments in transport & smart mobility, energy and digital industry but lagging in some of our historical strongholds, such as health & wellbeing. Di Paola-Galloni states: “We have real strength. For example, we are true leaders in mobility. There’s no avoiding our devices there. We also have a strong position in manufacturing, digitalization and Industry 4.0.”

On the flip side, Di Paola-Galloni sees Europe lagging in AI, cloud and digital applications. “That’s where I think we’re the weakest. We don’t have an IT giant here. We need to check where we’re strong and where we need to bring future strength. Our objectives aren’t just to create jobs but to build integrated leaders, able to compete on a global scale. It’s about scalability, about size, but also about culture, mentality, reliability and interoperability.”

Europe also needs to prepare for more convergence between the applications. For example, a bridge is being built between mobility and health with drowsiness detection in cars. “A too high percentage of deadly accidents with other vehicles are due to heart attacks. That’s a huge opportunity to develop a functioning device that can recognize a driver having a heart attack.” The complete system should be able to move the car to the right lane, adapt its speed and eventually stop when the driver is unconscious, or worse, has died. “We can create converging applications like these because we can create a true ecosystem.”

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At the 2019 Software-Centric Systems Conference, Jean-Luc di Paola-Galloni discussed the outcomes of the Artemis study on embedded intelligence and gave an outlook on software development in Europe.

Unavoidability is key, Di Paola-Galloni emphasizes. “We can make sustainability with ethical value chains a key protective aspect.” To achieve this, Europe needs to stop importing rival subsystems from countries where the value chain is known to be lacking. “This is the message to link to – the protection of sovereignty. We need to be more careful about what we accept.”

Similarly, Europe needs to become a globally recognized force in software. “We need to create unavoidable pieces of embedded software, systems and applications with which we can grab a substantial piece of the market – 10, 15, 20 percent is enough.”

Di Paola-Galloni is a staunch believer in embedded and cyber-physical systems being at the core of competitive growth for Europe. “These systems can have a long-lasting, positive impact, both in terms of economics and research, but also for society. We need to gear up our investments in software technology so that they’re at least on equal footing with those in hardware. Artemis, Aeneas and Eposs together have a key role to play as a tool for the European R&D&I environment to capture the upcoming opportunities in a structured way, for the next key digital technologies, the follow-up program of the Ecsel Joint Undertaking.”