UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To
be published as HC 599-i
House of COMMONS
MINUTES OF EVIDENCE
TAKEN BEFORE
INNOVATION, universities, SCIENCE AND SKILLS COMMITTEE
PLASTIC ELECTRONICS ENGINEERING
WEDNESday 18 jUNE 2008
PROFESSOR
SIR RICHARD FRIEND, DR IAN FRENCH AND
DR SUE ION
MR
MIKE BIDDLE, MR VINCE OSGOOD, MR HERMANN HAUSER
and
MR FERGUS HARRADENCE
Evidence heard in Public Questions 1-102
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Oral Evidence
Taken
before the Innovation, Universities, Science and Skills Committee
on Wednesday 18 June 2008
Members present
Mr Phil Willis, in the Chair
Dr Roberta Blackman-Woods
Mr Tim Boswell
Mr Ian Cawsey
Dr Ian Gibson
Dr Brian Iddon
Dr Desmond Turner
________________
Witnesses:
Professor Sir Richard Friend, Cavendish Professor of Physics, University of Cambridge,
appearing on behalf of the Institute
of Physics, Dr Ian
French, Philips Research Laboratories and Dr Sue Ion, Vice
President, The Royal Academy of engineering, gave evidence.
Q1 Chairman: Welcome to our first panel
of witnesses to the first evidence session on a case study of plastic
electronics engineering, which is part of an overall inquiry into engineering
which the Innovation, Universities, Science and Skills Committee is undertaking.
I welcome in particular Professor Sir
Richard Friend who is here on behalf of the Institute of Physics. Welcome to Professor Sue Ion, Vice President
of the Royal Academy of Engineering, and an old friend of the Committee -
sorry, a friend of the Committee, who is here quite often! Welcome to you, Sue. Last but by no means least, welcome to Ian
French of Philips Research Laboratories, who is here representing himself today
and certainly is not here in an official capacity on behalf of Philips Research
Laboratories.
Dr French: That is correct.
Q2 Chairman: I confess that when plastic electronics was mentioned as an
interesting area by Sir David King, at his valedictory session with the
Committee, before he stood down as the Government Chief Scientific Adviser, it
was he who said that this could be the most exciting development for UK
plc. Logystx UK said in evidence to
us: "Plastic electronics will
disruptively impact every aspect of conventional living across the globe over
the next decade." What did they mean, do
you think, Dr French?
Dr French: I think they have taken some basic developments and extrapolated
far, far too far. I think that plastic
electronics has potential in relatively small areas short-term; and these areas
would have to be very successful before it could be extended to much larger
areas. For instance, David King said
that it could replace silicon chip technology.
If that happens, it is beyond 25 years from now and the plastic
electronics then will be unrecognisable to the plastic electronics we have
today. I think that the case has been
very overstated.
Q3 Chairman: Professor Friend, do you share that pessimism of this new exciting
technology?
Professor Sir Richard
Friend: No, I do not. I think one has to look back to see how
radical technologies innovation has been and understand that what we take as
technology here for ever is not a wise course of thinking. You can look at almost any aspect of current
electronics and reckon that it is a pretty crazy way of making things, and a
lot of it is very susceptible to revolution.
I do agree with the statement that it would not be wise to try and
replace silicon in areas where silicon works very well; but the opportunity is
to take electronics into areas where it currently does not play.
Q4 Chairman: Like where?
Professor Sir Richard
Friend: At the moment, in order to make a
circuit with electronic devices in it, you really have to make it on a very
stable, expensive substrate - a slice of a silicon crystal, or a sheet of very
expensive glass - and that means that these are prized items that have to be
placed carefully and used carefully. If,
on the other hand, we can have functionality painted or printed everywhere,
then there are huge ranges of applications for semi-conductors that are
currently not served.
Q5 Chairman: Dr Ion, does it have remarkable potential to be disruptive
technology; in which case, what do you consider is the real potential from your
own point of view and from the Academy's point of view?
Dr Ion: From the Academy's point of view, and indeed from the view of the
Council for Science and Technology, which undertook a report on the plastic
electronics area as part of a wider study for strategic decision-making for
technology policy last year, we have seen plastic electronics as a disruptive
technology, one that would have application in many areas from medical devices
right through to retail and fashion, through to potentially new forms of
photovoltaic cells - so a very broad spectrum of products and processes
together, and therefore worthy of strategic investment by the UK because of the
academic lead in many of the essential elements to get towards these
products. We thought it had a very large
potential. The timescale though, because
of the variety of products and processes, is less predictable. Some will come earlier to market and some
will come out in 15 or 20 years or maybe beyond a 20-year time frame. That is why we classified it as high
potential, high risk in the report that we wrote.
Q6 Chairman: What do you think are the limitations and bottlenecks? We were excited by David King's vision - and
I take the point you are making, Dr French - but let us just get excited for a
little while: what are going to be the bottlenecks; what will stop us really
making the sort of progress, even over the next 25 years, that these disruptive
technologies can bring? I know that
Professor Friend may have different views.
I am coming to him in a moment.
Dr Ion: Access to capital is a key issue to get you from good laboratory
scale work through to a prototype that you can then industrialise. That is true of many areas in the UK
where there has been high potential and where traditionally big, vertically
integrated companies would have been able to make those kinds of
investments. They would swallow the hits
as part of their long-term R&D investment and they would get you from lab
to prototype, where the design may change significantly in order to
industrialise it to enable mass manufacture.
That is a bottleneck for this sector.
The ability to bring together key players in electronics, electronic
design, chemical engineering and material science, in order to deliver you the
sort of products that you might envisage is absolutely essential; and it is not
clear that the UK
has the wherewithal to do that effectively.
Initiatives like PETeC up in the north-east have that sort of aim in
mind; but whether or not that investment is sufficient or geographically
correct or whatever may not be enough.
Q7 Chairman: Dr French - come on now, be more positive here! I am pretty sure that you do see huge
disruptive potential for these technologies, but what is holding this back?
Dr French: The main problem for disruptive technologies is always existing
technologies. If you want to try and replace the functionality, it is very,
very difficult for a disruptive technology to enter. If you want price reduction, you have to
think of price reduction of a greater order of magnitude to justify disruptive
technology, because existing technologies always improve and always get better
and cheaper; so anything you are aiming at now will be reduced. The real opportunity for plastic electronics
is in areas where you create new devices that currently do not exist. The first real application for plastic
electronics will probably be in flexible displays. There are a lot of technologies being
developed to make them in different companies, and there are lots of
permutations, but you need a new application area for disruptive technologies
to really take hold. Once it is
established, and once there is the infrastructure and the knowledge base, then
it can probably be spread out sideward.
A lot of proposals for what plastic electronics will do, apart from the
plastic displays, will be largely for replacement technologies. LCD is getting better and cheaper all the
time. Electronics and functionality are
getting faster. More and more TFTs,
transistors, crowd into smaller areas.
It is very difficult for new technologies to come into an area.
Q8 Chairman: Obviously, Professor Friend, displays is an area where this
technology is currently envisaged; and yet when we received evidence from the
TSB, they did not believe that it would play at the high end of this market;
that it would not fit into that high-end space.
Do you agree with that?
Professor Sir Richard
Friend: If you are looking at where a relatively
radical technology is going to get into the market place, it is not going to
be, as Ian French has said, as a replacement of something existing; you have to
go in with new functionality. The e-books
space looks very attractive, where the chance of having something flexible and
not breakable and easy to read is very appealing. Once it is established, that will then reduce
the cost base or improve the quality of manufacturing. Of that, doubtless other applications will
flourish. That has been the pattern all
the way through. If one looks at what
was done with thin-film silicon that is currently used to make transistors for
liquid crystal displays, that was originally produced as a kind of curiosity,
as little solar cells in Japan;
but it turned out that that gave them the competence to be able to translate it
into making areas of transistors. Along
came liquid crystals in need of an active matrix backplane technology, and off
it went. No-one looking at the state of
that early application for amorphous silicon would have foreseen what it turned
out to be very important for. We have to
recognise that we are at an early stage of this technology. We can identify that there are all those
indicators to say that it can be disruptive; that it has reached a level of
manufacturing competence that it ought to be able to find its way into some
useful products. Beyond that, everything
is possible.
Q9 Mr
Boswell: Following on from that, I think that
the Members of this Committee with a humanities background will be rather
tickled to know that e-books are a likely runner, as you have identified. I just wonder if the other two wanted to give
their own thoughts about areas that they see as being relevant to this. Could it be, for example, that plastic
provides the option for overcoming some of the constraints in relation to
medical devices, for example, that might have to use silicon?
Dr Ion: The area of medical devices in its widest sense was an area that
was discussed with us when we looked at it - for example, smart bandages, where
you are able to put an electronic carrier on that would send signals that are
very cheap - and so in health service space, throw-away. That is only one area. There is potential yet to be realised, but
medical devices certainly, and wider than I have just described.
Dr French: My main activity is in plastic solar organic(?) cells and we are
trying to industrialise it through a Taiwanese company. I spend a lot of time looking for
applications. There is a range of
smaller specialist applications like intelligent bandages, maybe implantable
drip delivery - where having flexible electronics compared to silicon is
advantageous in a large area - and plastic imaging. I see potentially lots of small specialist
areas that may be more suited for the UK, with high added value. Personally, I do not see any large break-through
areas.
Q10 Mr
Boswell: I wanted to ask a question about
the people end of this in areas of operation, as to whether or not this is
research or whether it is realistic to look at long-term manufacturing in the
UK because of levels of expertise that are difficult to reproduce elsewhere -
but also, given that we are looking at engineering generically, researchers in
this field - do they think they are engineers?
Do they call themselves engineers and what is their typical
profile? Are these materials scientists
who have got some electronics or are they electronics specialists who are
looking now at materials or something else?
What is the pattern of this?
Professor Sir Richard
Friend: At the moment this is not a well-recognised
mainstream occupation, and the strength is that it has been hiring into it
people from many different backgrounds, from chemistry, from materials science
and a significant amount of physics, and increasingly from engineering of all
sorts. That is one of the areas where
the UK
does very well; that we do seem to be quick to be able to pull together these
different skills.
Q11 Mr
Boswell: You can make a team with the
various areas of expertise!
Professor Sir Richard
Friend: The evidence seems to be that in the
larger early-stage industrialisation activities in the UK we have been very successful in
hiring really excellent teams that do have this breadth.
Dr Ion: I would agree with what Richard has said there. Traditionally, in the United States you would probably
find this sort of activity in a materials-science and engineering department
where the breadth of coverage would encompass that which you would expect to
see in the plastic electronics arena. In
the UK,
as Richard said, many of the current experts have their origins in physics
departments or in electronics departments, where people with an interest in
nano electronics have decided that this is a rich field of research for
them. EPSRC's initiative to bring
together multi-disciplinary work under this sort of banner is also quite
helpful in bringing together materials scientists, physicists, chemists,
chemical engineers and electronics experts to move towards challenge-based
initiatives rather than particular narrow areas of research.
Dr French: I think you need a whole range of experts from very narrow
specialists that typically work on materials, to generalists, to systems people
and a whole range. They can be pulled
together if there is an interesting proposal for them. Plastic Logic has shown that very admirably.
Q12 Mr
Boswell: Is it an area where it is too early
to organise representation in terms of either authenticating professional expertise
or, dare I say, lobbying government or research councils?
Dr Ion: Lobbying for its own sake it is difficult to justify; but
initiatives that would move the platform along, and not consider it as a narrow
area but consider it as it is, which is a very broad spectrum of technologies
with potential uses and different process routes to market and different
products to market - because you do not know which one is going to win
out. Richard gave an earlier example in
the silicon-based area - it is important to treat it as a platform and not
something that is narrow.
Q13 Dr
Turner: Can I go back to a very basic
question? Can you define for us in terms
that an intelligent layman might understand, just exactly what plastic
electronics is?
Professor Sir Richard
Friend: Everyone will give a different
definition. To go back to what I said
earlier, traditional electronics requires that you manufacture - usually at
high temperatures on to an extremely rigid substrate. That limits the materials set you use, and it
particularly limits the substrates you could use. We would like to deposit or print a wider
range of materials on to a wider range of substrates, and a way of doing that
is to use materials that one would call plastics, that is polymers that would
provide the semi-conducting behaviour.
They are not unique. There are
interesting developments with nano crystalline inorganics, which can be
processed in the same sorts of ways. I
would describe plastic electronics as the move away from the traditional semi-conducting
manufacturing environment towards a large-area, low-temperature process, which
enables flexible displays or, for example, low-cost solar cells, which I
believe will be a very important area in the future. It is fair to say that the difference in principle
is not one of electronic principles but of materials and fabrication methods.
Q14 Dr
Turner: Can you envisage any situations
where you might want to produce a hybrid product, which embodied both
traditional solid-state electronics and plastic technology?
Professor Sir Richard
Friend: If you were to look inside the
prototypes around at the moment, they embody both technologies; but there are
the bits that you want to have plastic and flexible, and of course there is
considerable need for innovation of the conventional bits of silicon that might
provide some of the drive support for the device.
Q15 Dr
Turner: Are there applications where the
organic semi-conductor can have such advantages over silicon-based or inorganic
that they will essentially out-perform not necessarily in physical performance
but commercial performance? One obvious
example is photovoltaics, which are extremely expensive to manufacture using
traditional technology; but is there potential for making an order-of-magnitude
reduction in the manufacturing cost of photovoltaics?
Professor Sir Richard
Friend: There is. There is an interesting figure of merit which
is the right one to use for solar cells, and that is if you buy a solar cell
and put it on your roof and leave it switched on all the time so that all the
electrons are used to displace carbon-generated electricity, how long should
you have to have it on your roof in this part of the world before it has repaid
the carbon debt involved in making it and putting it there? The figure I hear for silicon is five years,
which means that most silicon solar cells do harm to the environment and not
good, if they are not switched on all the time.
We have to reduce that by an order of magnitude, and I think that will
be very hard to do with silicon; I think that it will need a radical
technology, and plastic electronics in its broad sense is probably the way that
is going to happen.
Q16 Dr
Turner: What about medical
applications? Would it be possible,
using plastic technologies, to produce, say, an automatic pancreas that you
could implant in a diabetic - that sort of application?
Professor Sir Richard
Friend: I am not particularly expert in that
area. I think one has to be very careful
to understand what the advantage is. It
may be an issue of bio-compatibility, and there are certainly some organic
conductors that appear to show good properties in that respect; or it may be
about flexibility of the final structure.
The thought of being able to make something as complex, where there are
all the physiological operations as well, is certainly challenging. It may happen!
Dr Ion: When you are looking at plastic electronics it is important not to
look at it as a competitor to silicon but something that is different. The silicon-based industry has moved for many
years now to higher and higher device performance, and smaller and smaller
means to achieve that. At the moment the
response in the plastic electronics arena is nothing like as good as that, but
it will improve over time. That is where
the innovation in the electronics side, coupled with things like printing
technology and mass manufacture of much larger devices, will come into its
own. Very simplistically, you could
envisage a plastic sheeting that is rolled out across rooms, which is able to be
deployed as photovoltaic delivery of electricity. It may be quite some time off, but it is
that kind of challenge that will bring together the electronics experts, the
chemical engineering experts and the materials experts to hit a challenge of
that type.
Q17 Dr
Turner: We have discussed two obvious areas
of application. Dr French, can you tell
us something -----
Dr French: Can I make a comment on the plastic loop? To me, plastic electronics is really thin
flexible devices, and they can be made by a whole range of different
techniques, including organic and inorganic semi-conductors. I do not think that polymer TFTs will be the
successful technology in the long run; and that will be decided by the market
and the industry over the next few years.
Q18 Dr
Turner: We talked about two examples of
possible areas of application, which essentially use functionalities or desired
functionalities we are already familiar with.
You rightly suggested that to get real disruption you have to introduce
new functionalities that at the moment we have not even dreamt of. Can you give us some examples?
Professor Sir Richard
Friend: It may not meet your criterion, but
lighting is a very important area where there is obviously a huge premium now
on energy efficiency. Semi-conductor,
light-emitting structures, both inorganic and organic, appear to be able to
offer more efficient ways of converting electricity into light and are vastly
more efficient than current technologies.
Q19 Dr
Iddon: Plastics become brittle over time, as
the plasticisers in them leach out. Is
there any evidence so far about the stability and durability of plastic
electronics devices, or is it too early days?
Professor Sir Richard
Friend: There is no single statement about how
stable a plastic is or is not. The evidence
to date is that you can take a technology that emerges out of a university
environment, where it lives for a day, good enough to get a letter published in
Nature but not enough to make a technology; but you can spend some tens
of millions doing some proper engineering and then the transformation of
performance is absolutely spectacular.
The original light-emitting diodes that were made in Cambridge in the early 1990s would last for
long enough to get our letters published in Nature. They now last for in excess of 100,000 hours,
which is a very long time. The message
that I picked up when starting my life as a physicist is that one should never
under-estimate the power of engineering to convert something that appears not
necessarily to be promising into something that is spectacularly good.
Dr French: I think all the indications are that the plastic electronics being
developed will be good for lifetimes of five to ten years and probably beyond.
Q20 Dr
Iddon: Which is probably as long as the
device is needed!
Dr French: Yes, I think so.
Q21 Dr
Iddon: Another concern, particularly of
younger people, is the environmental friendliness of new devices. Can you compare the environmental
friendliness of existing silicon devices with future plastic electronics devices? Are there any advantages to be gained on
disposing of the devices, for example?
Professor Sir Richard
Friend: There are two aspects. The first is the environmental unfriendliness
of making it in the first place; and that is both the energy used and the
chemicals used in making it. The silicon
industry is notoriously bad in that respect because it uses some very toxic
chemicals and huge amounts of energy, but what we are calling plastic
electronics should be an order of magnitude better. The devices themselves contain less material,
and most of it is carbon based and essentially it is non-toxic, so disposal
should be relatively trivial.
Dr Ion: I would not disagree with what Professor Friend has said there.
Dr French: I think most devices you make will only be hybrids anyway for the
next 15 or 20 years, with very, very small areas of silicon giving very fine
functionality and computing, and a larger functionality at lower levels being
given by plastic electronics. If you
take the total hybrid on its own, then I think having an electronic keyboard
compared to paper-making, shipping books around the world, printing and
disposal, will give us significant environmental benefits.
Dr Ion: The plastic electronics component of new devices and new products
will probably be small in the overall scheme of things, so the overall
environmental impact of the total product is likely to be greater than that of
the plastic electronics component of it.
Q22 Dr
Blackman-Woods: I have seen some of this
research in Durham on lights and materials, and it looked pretty exciting to
me, I have to say! Some of the academics
at Durham expressed to me that it is quite difficult moving from the laboratory
into manufacturing. Do you think that is
true? What is the biggest challenge in
doing that?
Professor Sir Richard
Friend: I think that question has in part been
answered earlier in respect of the need for capital to be able pay for what can
happen in the early stages of a recession environment. The current challenge we have is that across
the West we have lost the large corporate R&D labs. Bell Labs has gone. We never quite had Bell Labs! We do have a much better R&D base in the
universities than we used to. The UK is
rather good at the moment. The challenge
is in understanding the instruments that are needed, and it is not just
government money in various forms but it also needs to come from the markets to
be able to those next stages. I do not
believe it is a skill shortage that is critical; it is more capital and
management commitment.
Dr Ion: It is not just the financial aspects; it is bringing the right
players together at that point in time.
Whilst the initial breakthrough might have been in the physics or the
materials science or whatever the proposition is, the delivery of it to the
marketplace will involve manufacturing of some sort; so the addition of
relevant mechanical engineers and electronic engineers at that point to
industrialise the process is absolutely essential. That is an area where we have not been as
good as we could have been at bringing the right people together and financing
their activities.
Q23 Dr
Turner: You have outlined what is
essentially a generic problem in the UK with, for want of a better word, the
innovation process and its capital input.
It does not function, and so we have lost out in many areas, and other
countries then reap the commercial benefit.
Can we make a case to institutions that if UK plc is to benefit from
plastic electronics, then it has to do something about its capital provision processes? Do you think that the new engineering
technology - is it board or institute - I can never remember because we create
institutions with such rapidity -----
Dr Ion: The ETI.
Q24 Dr
Turner: The ETI - has the potential to
fulfil the function you have identified; and have you made that case to it?
Professor Sir Richard
Friend: I
have to say that I do not know in great detail what the ETI is going to do, but
my understanding is that it is likely to put support into existing industries
because a pre-requisite is that there be a large company that puts its support
in. I am not convinced that it is an
instrument that is likely to nurture new technology across into the
manufacturing environment. I believe it
has been created for a different purpose.
Dr Ion: I think the jury is out on that one. Richard is right that the combination of
private sector and public sector monies into it - given the way it has been set
up you would think it ought to yield some demonstrated benefits. However, because of the influence of the
private sector and its wish to have certain technologies pushed forward as part
of their right of passage, then it may well still not do what you want it to
do, which is to allow interesting and innovative energy technologies to get
beyond that research and early development stage, out to a point where they can
be successfully deployed. It is the
energy sector - and the plastic electronics arena covers a much wider sector
than just energy. It is clear that
something has to move. We just do not seem
able to get beyond the valley of death in the UK, where universities get to a
certain point and then cannot get any further.
Professor Sir Richard
Friend: If I am allowed to make a parochial plug
for Cambridge, the capital markets in Cambridge have been
relatively successful, not just in the plastic electronics sector; but there
does seem to be some ability to raise money to have got a number of
technologies to a relatively large scale.
Dr French: I think Dr Blackman-Woods's comment was very interesting because
one thing that is capital, but also manufacture is getting harder as we have
less manufacturing in the UK. NESTA talks about hidden innovation: there is a lot of knowledge in making things
that is not captured in research labs, and it is getting harder to transfer
things into manufacturing.
Q25 Dr
Blackman-Woods: Can I go back to the point
you made, Sue, about bringing engineers into that process. Why is that not
happening? Is it because of the
organisation of universities, or because they are not available, or does this
only happen when the technology goes out to be commercialised? I would like you to say something more about
that?
Dr Ion: I guess it is at the point where you decide you are going to make
the investment in the prototype and beyond stage, which, if the finance were
there, would automatically bring those sorts of people into play. It is not just the availability of the money;
it is the timescale to get it. If you
look at the initiatives that we already had in place in the UK, it has taken a long time to get
them to realisation. Even with PETeC in
Sedgefield, it has taken a long time to get it to where it is even beginning to
have a point to make. We are behind the
pace in other areas. Plastic Logic, and
its investment in Dresden
took 15 months from nothing to a working factory! We just do not appear to be able to do that
in the UK.
Q26 Dr
Blackman-Woods: One of the points that UK
Display and Lighting make is that academics here do not have access to research
facilities and materials in the UK. Is
that the case, do you think?
Professor Sir Richard
Friend: I do not believe we are
disadvantaged. I think the UK
academic sector is relatively well placed.
Dr French: I have visited lots of research institutes in Japan, Korea
and Taiwan; they are
different, but I do not believe the UK is that disadvantaged,
personally.
Q27 Dr
Blackman-Woods: We have mentioned the
plastic electronics technology centre at Sedgefield. I was very interested in your comment as to
why geographically that could be a problem.
It is just outside my constituency, but I am very glad it is there, I
have to say! We are expecting great
things of it. Will that help improve
access to research facilities, do you think?
Will it help commercialise some of this research - and what is wrong
with where it is?
Dr Ion: I am not saying that where it is is wrong per se in terms of
regionally, but when you look at where you would choose to site things, in
terms of where there is an existing lead, then the Cambridge endeavour and what
has been done there is a very big success story, with not a lot of public money
in taking it forward. The north-east
initiative is potentially a good one.
You are effectively asking everybody who was a player in it to move to
the location that is identified. There
is expertise in Newcastle; there is expertise at
Durham and
there is expertise in Teijin and the other big chemical industries that are
around the Teeside area - so everybody has to move to take part in the
Sedgefield initiative.
Q28 Chairman: They would have to move to Cambridge -----
Dr Ion: That was not the point I was making, Chairman! It was just that - why would you not choose
to site it more closely to one of the players in the region that was an
existing player and make local transport easier not national transport
necessarily?
Chairman: I am rebuked!
Q29 Dr
Blackman-Woods: I just thought I would sidestep that and say
why it should be absolutely where it is, but I am not going to do that. However, the question is still: will it help?
Dr Ion: It should because one of the areas of weakness is the area that
PETeC has been set to address, which is basically a small prototype factory
where you can plug and play, where you can have your ideas for
commercialisation, for industrialisation, in what has hitherto been in one of
the universities or even the industrial sector located close by, and actually
try it out. The scope is there for there
to be a number of different prototype units at any point in time; so the benefit
it ought to bring will be technicians, who are multi-skilled and able to switch
from one area to another; and a general scientific knowledge base that is able
to help those who are seeking to commercialise get there faster, so it ought to
work.
Dr French: I think there is a more fundamental problem - not where it is but
whether it is doing the right thing. In
the area of plastic electronics there are several different permutations of
materials and manufacturing techniques that have been tried by different establishments
and companies around the world. PETeC
has chosen a very specific one, which is roll-to-roll manufacturing of organic
semi-conductors. If in five years' time
that is proven to be the wrong technology to back, then it would not matter
where PETeC would be; it would be a failure.
Q30 Dr
Blackman-Woods: So it needs diversification.
Dr French: I think it is wrong to try to second-guess the industry at the
moment as to which will be the dominant technology in ten years' time.
Q31 Dr
Blackman-Woods: That is interesting! We are picking up that this area of research
is being hampered by the fact that it is not really recognised by the RAE in
the research on materials and process.
Dr French: I think the UK
is doing rather well so far.
Dr Ion: The recent RAE exercise took into account the ability to do inter-disciplinary
research as well as to do the normal mainstream single discipline
research. If the panels have done their
job properly, then they will have taken it into account and the industrial
interest into account and the inter-disciplines into account. The jury is out because we do not know what
the outcome is but they ought to have taken that sort of initiative into
account.
Professor Sir Richard
Friend: I am not aware that the RAE has
influenced this positively or negatively.
Q32 Dr
Blackman-Woods: Where should we say the key
institutions leading research are - or can you suggest three that we should go
and look at?
Professor Sir Richard
Friend: There is a useful list of active
institutions in the assembled evidence that you have, simply in terms of people
on the ground doing research. The two
largest are Cambridge and Imperial
College, but there is very
distinguished work distributed around the country, and Durham is certainly one of them.
Q33 Mr
Cawsey: I want to go back to manufacturing. We know about Plastic Logic going to Dresden
because of the 15 months and, as you said, we do not seem to be able to do that
in the UK. Is that a God-given decree so
there is nothing we can do about it? Do
you envisage that we will end up with mass manufacture of plastic electronics
in the UK; and, if we are going to, what steps do we need to take to ensure we
can do what other countries already are?
Dr Ion: In general terms there is no reason why manufacturing could not
take place here in the UK. It is not an established industry world-wide. It has potential for modularity and a number
of modules - small manufacturing pieces of a value chain - before a product is
brought to market - not necessarily the mass investment that is required for a
silicon fab, say - so you are talking of tens of hundreds of millions of
investment as opposed to billions of investment to take it forward. Capital investment is high, but the
differentiator between the Western world and Asia
is getting less as expenses rise in the Asian market place. There is no reason why the UK could not play a role in
manufacturing in a yet-to-emerge market.
We need a faster way to get integrated, joined-up decision-making. At the moment people have to go to many
different places to get the money together - a mixture of central government, RDA and private sector. I do not have any magic answers here, but it
just seems there ought to be some merit in looking at how moneys are released,
tax benefits given, et cetera, to make the decision chain an easier one -
a one-stop shop instead of a many-stop shop - for an emerging SME that might
become a larger company.
Professor Sir Richard
Friend: It is dangerous to argue from the
particular, which was the decision of Plastic Logic to go to Dresden, to the general. There are examples of manufacturing going on
in the UK, and there is some
mention in the submissions of G24I, the company in Wales attempting to produce novel
solar cells in a large area of technology - not exactly plastic electronics but
nearby. I do not know why that came to
be in Wales,
but presumably the capital and manpower was found to be attractive. On the whole, I would take comfort from the
fact that Plastic Logic went to Dresden and not
to Asia.
I do not believe that the fundamentals in Germany
are very different from those in the UK.
We should perhaps learn from the Dresden
experience and take that as something we ought to be able to replicate here.
Dr French: I do not see manufacturing of plastic electronics as being
significantly different from other forms of manufacturing, so I imagine that
high-volume manufacturing will tend to be done more towards Asia, and there
will be significant small specialist manufacturing in the UK.
I am not an expert, but I think small manufacturers need a whole raft of
help from the Government still, in changes.
Q34 Mr
Cawsey: Can plastic electronics be
considered purely a printing process? Is
that a desirable way to describe it?
Dr French: No. The technology I have
invented that is being commercialised in Taiwan at the moment uses
traditional TFT LCD factories to make plastic displays. The displays are made on a glass substrate
and then released by a data process, but the end result - the product that
would be delivered to a customer would look identical to the Plastic Logic TFT
devices that are made by printing.
Q35 Mr
Cawsey: I understand that plastic
electronics devices can be printed at room temperature as opposed to silicon
being in fabrication plants. Is there
going to be a long-term requirement for fabrication plants and do we utilise
the ones we have in the UK to the full extent?
Professor Sir Richard
Friend: This is existing silicon plants?
Q36 Mr
Cawsey: Yes.
Professor Sir Richard
Friend: There has been some recycling of these
in the polymer vision activity - a former Philips plant.
Dr French: I think that this plant has become redundant and it will either be
discontinued, or hopefully we will find new uses.
Q37 Mr
Cawsey: It strikes me - and this is
particularly true of this sector - that one of the things we do well in the UK
is R&D and coming up with ideas, but then the manufacturing of them in the
end is done elsewhere, for all kinds of reasons. We saw the silicon semi-conductor industry
establish some fabulous companies. Do
you think in plastics that will be the same in the UK?
Professor Sir Richard
Friend: I enjoyed reading the submission from
Teijin Films, which pointed out that in the LCD industry the two most
profitable companies are not Asian. One
of them is Merck, that is principally in Germany
but also in the UK,
that sells liquid crystals into that industry; and the other is Corning Glass
which has a unique technology for making the glass back panes and is extremely
profitable. Those are materials
technologies. There is no reason why the
UK
should not be an extremely successful model in the plastic electronics world.
Dr Ion: I agree with that. Going
back to your point about re-use of existing silicon fab organisations, Innos,
in their polymer division at Southampton, made very good use of an existing
silicon fab factory down in the Southampton area, and that was part of the
reason that they have been as successful as they have been and as speedy as
they have been.
Dr French: I agree with what Richard says about materials. Materials can be provided to the display
industry, but the question of design, the model for fabrics design - the amount
of design content and IP content in the design of a display is a small fraction
of that for an IC. At the moment, all
the design for TFT LCDs is done on site by small design teams.
Chairman: Thank you very much indeed.
I do not know whether to be excited or depressed at this moment in time,
but we thank you very, very much indeed for your contributions this morning.
Witnesses: Mr Mike Biddle, Technology
Strategy Board, Mr Vince Osgood, Engineering and Physical Sciences
Research Council, Mr Hermann Hauser, Amadeus Capital Partners Ltd., and Mr
Fergus Harradence, Deputy Director of Innovation Policy, Department for
Innovation, Universities and Skills, gave evidence.
Q38 Chairman: Welcome to our inquiry on plastic electronics. We welcome in particular Vince Osgood of the
EPSRC, Mike Biddle of the Technology Strategy Board, Hermann Hauser of Amadeus
Capital Partners Ltd., and Fergus Harradence from the Department of Innovation,
Universities and Skills. Welcome to you
all, gentlemen. Can I start with you,
Fergus? Funders such as EPSRC and TSB
support plastic electronics research and development. To what extent do the funding arrangements of
the EPSRC and TSB overlap so that therefore we are not getting perhaps the best
bangs for our bucks - or do you feel there is not a problem?
Mr Harradence: I do not think that they overlap.
The TSB and the EPSRC work together as closely as possible as part of a
wider arrangement between the Technology Strategy Board and the research
councils, whereby the research councils will align £120 million of funding with
TSB activities over the three financial years of the current comprehensive
spending review period, starting from 1 April 2008 and running to 31 March
2011. The TSB and the research councils
are both co-located in Swindon, and working
relationships between the organisations are very strong. That is certainly the perception of the
Department, and we seek to encourage that.
Q39 Chairman: Mike, in terms of funding, just to give the Committee a clear idea,
are we talking about co-funding, or replacement funding, or overlapping
funding? What is the mechanism for
sorting that out?
Mr Biddle: The competition process itself is very collaborative. We have the proposals in; everything is
marked on its merits by the independent assessment panel. We end up with a rank list and then we go
through that with the research councils to look at what they might fund and
what we would then invest in separate to that.
A recent example - the Advanced Lighting and Laser Displays Competition
that we have just held was over-subscribed.
Some of the money that came in from EPSRC helped us to put some more
projects through, so that was a good example of where we do work together.
Q40 Chairman: Vince, the EPSRC report on investment stated you had £68.2 million
in projects "of direct relevance to plastic electronics". What does "direct relevance" mean?
Mr Osgood: It means we support long-term basic strategic and applied
research. We can identify within that 68
million things that feed in directly to the plastic electronics chain. Some of the things that Richard Friend
mentioned this morning - the chemistry, physics, engineering and materials
science that underpin plastic electronics, we can identify specifically. There are broader areas of chemistry, even
mathematics and other areas that may in time relate to it, but do not have that
direct link at the moment. It is things
that we can identify that are playing within the plastic electronics space that
is the 68 million.
Q41 Chairman: We will come on to the
funding of developments later with Hermann, but sticking with research at the
moment, is there a tendency to be - if not quite picking winners in terms of
research, actually moving in the direction of saying, "We are only going to
fund this research council in those areas which we can actually see having some
tangible benefit"? Does that not
militate against your core mission?
Mr Osgood: Our prime criterion is funded high-quality research. Unless it is high-quality research in
whatever area, we will not fund it. You
are right to say that there has been an increased emphasis in recent years on
demonstrating that the research that we fund has an impact. That requirement has been there on the
research councils since the original research councils of 1965. Certainly building on the White Paper of
1993, Realising our Potential, we said that the research that we should
do should have contributed in some shape or form to both the economic
competitiveness of the UK
and its quality of life. It has to be
high-quality research first.
Q42 Chairman: You do not believe that has been compromised!
Mr Osgood: I do not believe it has been compromised. We have certainly given increased emphasis in
our delivery plan over the next three years to a number of mission-focused
programmes and cross-counselling programmes in areas of national priority,
energy being one, healthcare another, and security. All of those require high-quality research
and training, and that is where the research councils come in.
Q43 Chairman: Fergus, talking about specific missions, were you with the old DTI?
Mr Harradence: Yes. Technically, I am on
loan from the Department for Business, Enterprise
and Regulatory Reform.
Q44 Chairman: You have just been loaned!
Right - so long as you are not loaned to the Scottish Office we are all
right! The DTI developed a proposal
together with UK Display and Lighting, for a managed funding programme for a
very exciting programme for plastic electronics; and yet the proposal was never
funded. Can you tell us what the
stumbling block was there and the lessons to be learned; and is this something
that could be funded in the future with perhaps TSB filling the void?
Mr Biddle: The programme that was discussed was prior to myself joining the
Technology Strategy Board, which became an executive non-departmental public
body in July of last year. What I can
say is that in regard to current investment Technology Strategy Board money,
some of it, in conjunction with research councils, amounts to £38 million to
date, which is not a million miles away from that £50 million that was
discussed as part of that investment programme.
We look at things on a case-by-case basis. We always justify any investment we make
against all criteria: can the UK
do it; is now the time to act; can we add value; and is there a global
market? You mentioned earlier about
picking winners; I would not say we are doing that, but we are trying to pick
people who make sure they can exploit the science and technology within
it. It is all very well to do good
science for science's sake, but at the end of the day we are trying to help UK
businesses to make money. That is where
we are trying to put our investment, and that is the amount of investment we
have made.
Q45 Chairman: You listened to my earlier comment that part of the motivation for
this particular case study was the comments of Sir David King. He spoke so passionately about this area, but
there was a hidden criticism that I picked up in his comments to the Committee:
that we do need to start picking winners, and that plastic electronics is a
potential winner; and that unless we start to back it we will not move
anywhere. Yet this project with UK
Display and Lighting, which seemed to be an incredibly exciting project, has
just died a death.
Mr Biddle: The important part there, though, is that it is not just a case of
throwing money at the problem - if you will excuse the phrase. That always helps, but, let us be honest;
there is also a recognition in businesses themselves. I was at meetings with UK Display and
Lighting when they were discussing what they should be doing for the future,
and some of those people have submitted evidence to this session. They recognise that part of the value-added
is to try and attract new thinking into the area through entrepreneurship,
business leaders and creative designers.
There is an element where you can help by investing in the centre and
there is an element - we talk about innovation climate in the Technology
Strategy Board and part of that is making sure we bring people together. Our recent strategy was entitled Connect
and Catalyse for that very reason:
we recognise that although we have £1 billion to spend over the next three
years in conjunction with the regional development agencies and the research
councils, that that is just a pot of money; it is what you do with that and how
you can leverage that investment for the benefit of the UK.
Q46 Chairman: The TSB has identified, quite rightly in my view - I do not speak
for the rest of the Committee - a role for it in bringing things together and
acting as this very, very strong broker, particularly in the plastic
electronics industry, which is an emerging technology with significant
potential, as we have seen. Clearly, you
have identified that there is a lack of joining-up, but what is it that is not
joined up?
Mr Biddle: One of the examples I can give is not in the plastic electronics
arena but it is something we are doing through our innovation platforms, and
that is to do with low-carbon vehicles.
We are working on an integrated delivery programme that tries to do
exactly that; recognising that there is a lot of good research going on in the
science base; recognising that there is a lot of business-applied research
going on; and also looking for businesses and venture capitalists to pull that
through. Sometimes, seeing the pathway
through that can be difficult for people trying to interact with organisations
like ours. We are trying to show that
there is a path there, so through that integrated delivery programme, which
admittedly is in the low-carbon vehicle space, we are trying to achieve that
joined-up approach which you mentioned.
Q47 Chairman: But you see that there is a need for that within plastic
electronics?
Mr Biddle: I think the need there is for us to connect and catalyse. I know it is the tag line for our strategy,
but we will look at investment decisions on a case-by-case basis with regard to
whether we may have competitions et cetera; but there are things we are
already doing. We need to be looking at
what we are already doing and how we can leverage that. Part of that £38 million I mentioned was
approved just last week, which is a large project totalling £12 million,
and it is an investment of over £6 million by ourselves, which is not something
that is currently public so I cannot announce it here, but the new investment
now is in something that is very, very exciting for this technology area. That is something that we will continue to be
interested in in the future.
Q48 Chairman: So you are excited by this!
Mr Biddle: I did pick up on that, whether we should be excited! I do think it is exciting. I think the UK has an opportunity within
this. One point I would like to make, if
possible, is that everyone always looks and says that we can do R&D in this
country, but we cannot do manufacturing, but I am all for "bigging up" the UK
and I think we should sing about ourselves a bit more. For example, in our high volume manufacturing
structure that we did recently we pointed out that by GBA the UK was the sixth largest
manufacturer in the world last year.
People forget that and say it has all gone, but if you accept that fact
and you do not fight for it then it is going to happen; and it is important
that we try and champion it and make sure that things can happen.
Chairman: Hallelujah!
Q49 Dr
Iddon: Mr Hauser, how important has venture
capital been in starting up the UK's plastic electronics industry?
Mr Hauser: I am only familiar with two companies that are Cambridge-based:
Cambridge Display Technology and Plastics Logic. In terms of the amount of capital we have
raised in the CDT, I think it was
in the order of £50 million - although this is a dollar-denominated industry so
if I make a mistake in dollars, please forgive me. We have raised about £100 million, $200
million for Plastic Logic.
Q50 Dr
Iddon: What made Plastic Logic, in your
estimation, such a good investment? Was
it people, invention or what?
Mr Hauser: Well, I am excited about this.
In fact, I am very excited!
Q51 Chairman: This is the theme now!
Mr Hauser: You have to be a believer and put your money where your mouth is in
this industry of venture capital. What I
see is that although it might not blow the silicon industry out of the water
tomorrow, the potential of plastic electronics is at least equal to the
potential of silicon technology, which has been around since the 1950s and so
has had sixty years to mature. We are
just at the very beginning of plastic electronics, but it is such a historic
and unusual event that practically 100 per cent of our electronics is made out
of a material called silicon and here we are at the threshold of a new material
that the world accepts is a very interesting new way of doing it, which is a
lot cheaper to produce and a lot more environmentally friendly, and addresses
new products. It reaches the parts that
silicon cannot reach and so you can make light, flexible e-readers out of it;
and silicon systems cannot do it because you need a glass substrate, which
makes the e-book brittle and too heavy.
If you want a reading experience that is akin to paper, where you hold
it in one hand and lean back and change hands and read it with the other, as we
do with paper, then at the moment this is not possible with the silicon-based
industry. I have a prototype in my
briefcase - but this is a public meeting and we are only launching the product
now so I cannot show it to you. I am
happy to show it to you afterwards, and I hope that you will be very excited
when you see it! It is the best quality
I have seen to finally replace paper.
Q52 Dr
Iddon: In your estimation, why could we not
keep Plastic Logic in this country and why did we lose them? The point has been made earlier that it was
better to lose them to Germany than to Asia, but why did we not spin them out
as a manufacturing company in Britain?
Mr Hauser: This is a very good point, and I have been asked this question many
times. The answer is that we did not
lose it to Dresden. The best way of thinking about it is in a
number of dimensions. First, where did
the £100 million end up that we spent on this?
The first £30 million or so was directly spent in Cambridge
on doing the R&D and employing the people - and there are about 100 PhD
level people employed in Cambridge. That is where a third of the money went. Two-thirds of the money is going to be spent
in the factory in Dresden
- but look at where that money went!
That money did not go to Germany;
that money went to the equipment that comes from Asia. As you rightly said, we have got to be very
grateful that we managed to get this into Europe
at all. When we looked for a site to put
our plastic electronics factory, we worked together with KPMG on 290 different
sites all over the world because, clearly, it is our fiduciary duty, as
investors, to find the best possible production site for this. Wales
was the closest in the UK,
and it made it up into the top six out of the 207, so that was not bad - but it
was a sad experience. The three final
sites were New York, where we got the best
subsidy and a free part of the East Fishkill,
which was the big IBM research
laboratory for silicon. We could have
had that one for free, and the politicians said we could have fantastic subsidies,
but we had to meet the Governor. I
said: "I do not want to meet the
Governor. Tell me the formula you use." That left Singapore, where there was a clear
formula: "You invest that much, employ that many people; this is the subsidy
you get." It was the same as Dresden: it was formulaic,
so we could make a business plan out of that rather than having to go and sidle
up to politicians. The final decision
for Dresden was
based on the following criteria - and then I will tell you how we almost came a
cropper. The first criterion was the
availability of highly qualified staff. Dresden was Silicon Saxony and that has 10,000 people
employed in large-scale manufacture for AMD
- the number two microprocessor in the world - 100 per cent of AMD's microprocessors come from Dresden.
They had shut down their Austrian facility because Dresden was so much better. There is a large Siemens factory that employs
over 5,000 people. So we had access to
the right people who knew about high-quality, high-yield manufacturing, which
is a skill honed over many years. The
biggest surprise to me - because if you had asked me whether we were going to
put this factory in Europe I would have said "absolutely no chance" when we
started this - but when we arrived in Dresden
we were met by the Burgermeister, the Mayor, and all his team. He said:
"We really want you here. We want
plastic electronics. It is a key
strategic imperative for us to have this here - what do you want?" I said:
"Well, in Singapore
they are going to build us a factory in six months; can you build us a factory
in six months?" He said: "Yes, sir.
What else do you want?" This is Germany; this is Europe. I said to him? "Show me the last factory that you built in
six months." He pointed out the window
and said: "See that building over there?"
I said "yes" - it was a huge thing.
He said: "This is the central
distribution hub for FedEx for the Eastern Bloc - we built that in four
months." I said: "Okay, how do you get planning
permission? If we try to build anything
in the UK
it takes a year before I get planning permission." He said:
"It is very simple, sir. We will
give you planning permission to dig a hole.
By the time you have dug the hole we will have all the other planning
permission."
Q53 Chairman: It is not like Harrogate - I will tell you that!
Mr Hauser: We signed this deal in May last year. They said:
"We will have the building built in six months. They had it built in six months. We have put all the equipment in and we are
switching on the factory in September.
At the moment we are a week ahead of schedule. This is unheard of in Europe. The last reason, it must be said, of course,
is that at that time it was the last year that they were a category 4 area in
Europe, so they could give us more subsidies than anywhere else in Europe.
Q54 Dr
Iddon:
That is an interesting story, and I am sure there are some lessons to be
learned there. It is a "can do"
attitude, obviously, and I appreciate that.
Are venture capital companies falling over themselves now to invest in
this area of manufacture?
Mr Hauser: No, it is still a big risk.
We have just managed to raise another $50 million, but it is still tough
because you have to be a believer in this new category of e-readers and e-books. We believe that it is going to be the I-pod
of text, but other people think that it might still take a few years yet.
Q55 Dr
Iddon: You are interested in manufacturing
devices. Would the venture capital
industry invest in fabulous production at the other end of the chain?
Mr Hauser: This is extremely; venture capital does not normally invest in
manufacturing; this is the one exception we have made because it is so state-of-the-art. We normally only invest in very knowledge-intensive
businesses, but here the factory is the first such factory in the world, so in
that sense it is very knowledge-intensive.
There was no factory that we could go to. As you rightly pointed out, what we would
really like to do is to have a fabulous model where we just go to somebody else
to have it manufactured, but that was not possible here. I should just add that we were lucky
that we finally ended up in Europe, because when we bought this equipment -
and, as I said, most of the capital went to Japanese tool manufacturers -
we asked them to deliver the tool to Dresden in
Europe, and they said: "Sorry, we do not
do Europe.
We do not have factories in Europe and
we do not have the CE mark." We actually
had to pay for the CE mark so that they would deliver it into Europe.
Q56 Dr
Iddon: Your three sites were Singapore,
Dresden and Wales. It seemed that one of
the important reasons you went to Dresden was the subsidy. Was that also available on the Welsh side?
Mr Hauser: It was, but not to the same extent.
Q57 Dr
Iddon: How big a role does subsidy play in
your decision-making?
Mr Hauser: In order of priority it was the availability of trained personnel,
and that was in place in Dresden. The speed of response and willingness to work
with us on a very, very tight timescale - again, Dresden won - and again the subsidy.
Q58 Mr
Cawsey: Fergus, this is mainly for you. I want to talk a little bit about the small
business research initiative. We talked
to Lord Sainsbury some time ago now, and this was part of his review. There was some concern that this initiative
is not as successful as its US counterpart, and his recommendation was that we
should make it more so. Why has it been
less successful in stimulating R&D than the American system?
Mr Harradence: I think that when Lord Sainsbury looked at this and wrote his
report maybe identified three reasons.
First, in the UK
the initiative is seen as a stand-alone initiative for commissioning research
across a whole range of areas - a lot of it policy-relevant. It is not seen, as
it is in the US,
as a process to facilitate and encourage technology development. That is the way that it is managed in the US,
and it is managed in a fairly rigid way in order to achieve that
objective. Second, the problem in the UK
is that there is no link between SBRI and other support mechanisms and other
programmes, and in particular no link at the end of the SBRI process to
standard government procurement procedures, which again is one of the big
strengths of the US system and one of the reasons that it is so successful in that
it helps companies develop, grow and attract investors, because there is the
prospect that if you develop the technology successfully a government body in
the US in a very large procurement project will purchase that technology, and
you effectively have first right on that.
Third, there is a lack of a quality control and auditing mechanism,
which meant that a lot of the projects that were tendered under SBRI
notionally, as part of the Departmental research budgets, were not technology-relevant,
unfocused; and there was no-one coral-ing these and auditing them and saying,
"Is this the right project; is this consistent with the overall objective of
the scheme?" - and, if not, refusing to advertise the product and make the
departments go away and do some more work on it.
Q59 Mr
Cawsey: If that is a good analysis of all
the reasons why, what are you doing now to make sure it is more like that?
Mr Harradence: We are essentially taking forward the implementation of the
recommendations that Lord Sainsbury made in his report. We have spent the last six months developing
a model for a reformed small business research initiative that we are intending
to pilot with the Ministry of Defence and Department of Health this year, and
hopefully the Department for Transport as well.
To give you an idea of what the reformed SBRI will look like, we are
trying to define a minimum SBRI budget of about £100 million per annum that
will be a formal budget, not simply a percentage of departmental external
research and development budgets that fluctuate, and are parcelled out into
different bits of the organisation.
Again, there is no central management and no consistency. We would like to see each department have an
individual budget with which it funds SBRI projects. Second, we want a more consistent structure
for the contracts, again modelled on the American SBRI approach where you have
phase 1 projects worth £50-100,000, which essentially support the feasibility
and proposals you receive from companies; and a second phase value of between
£250,000 to about £1 million, which enables you to take the development of the
technology forward if the results of the first stage are sufficiently
promising. Also, more transparent, open,
systematic process for tendering SBRI contracts through the Technology Strategy
Board and also through individual departmental websites with more regular
procedures, more consistent templates for advertising, better information and
consultative mechanisms with potential stakeholders or companies or academics
who can bring forward ideas under the programme and put in place an auditing
function which the TSB would manage, which will oversee the scheme and ensure
the departments are meeting their commitments.
Q60 Mr
Cawsey: Do we have any UK plastic
electronics companies that have benefited from the programme at the moment?
Mr Harradence: Not that I am aware of, and I would say it is unlikely because
there would be a lot of areas at the stage of development of plastic
electronics that are too early for SBRI.
SBRI is not intended and is not used in the US as a means of developing the
platform technology or doing some of the early stage research into potential
applications. Where it would add value
for plastic electronics and other technologies is the point at which someone
has an idea for how to use the technology in a particular way that would lead
to a specific application; and the aim of SBRI would be to fund development of
that with a view that at the end of that process they had achieved or were
close to achieving a commercial product.
Q61 Mr
Cawsey: To take the Chairman's theme, we
have all got to be excited about this today.
You presumably would say that the old scheme was not applicable yet but
the new one might be.
Mr Harradence: The old scheme could have been, but I think it unlikely it would
have been used in that way. I would hope
that the new scheme that we are developing, which will be more tightly focused
on R&D and technology development with a much tighter definition of R&D
for a start - we are not going to move to the - we are fairly used to the
Treasury definition they used in relation to the tax credit -----
Q62 Chairman: I find it quite strange that you have Amadeus Venture Capital
prepared to raise $200 million to invest in a technology, and yet a Government
scheme does not consider it worthwhile even looking at! I find that incredibly strange, in terms of
Plastic Logic.
Mr Harradence: I have not said that we would not consider it.
Q63 Chairman: You said you had not considered it.
Does that mean that Plastic Logic never came to you for support, because
this seems to be a classic case to fit into the UK SBRI programme, existing or
otherwise!
Mr Harradence: They may well have come for some form of support. I think it is unlikely they would have sought
support under the SBRI initiative.
Mr Hauser: Plastic Logic had government support from a number of government
schemes.
Q64 Chairman: Not SBRI?
Mr Hauser: Not SBRI.
Q65 Mr
Cawsey: The American programme provides 100
per cent funding to small businesses engaged in research that has the potential
for commercialisation. Would this be
what you could do in the UK, given the current state aid rules?
Mr Hauser: Yes.
Mr Harradence: The most fundamentally important point is that SBRI projects are
awarded as contracts not as grants, which means state rules are less applicable
in this area. Provided the contracts are
tendered on the basis of an open, competitive process that is consistent with
EU rules, and a market rate is being paid for the work done, the state aid
rules do not apply.
Q66 Mr
Cawsey: So you would consider 100 per cent!
Mr Harradence: That is the intention, yes.
Q67 Dr
Turner: Does it have implications for IP
ownership?
Mr Harradence: The intention is - this happens in the majority of cases at the
moment, but the intention of the reform scheme is that ownership of the IP will
be vested in the company that does the work.
There might be exceptional cases where a Government department chooses
to retain the IP, for example the defence sector or health technologies, but we
would envisage that in the vast majority of cases the IP will remain in the
companies that have the potential to exploit it.
Q68 Chairman: We understand that Cambridge Display Technologies received support
under the SBRI scheme. Can you confirm
that?
Mr Harradence: I cannot, but I can look into it.
Chairman: Thank you very much indeed.
Q69 Dr
Turner: I would specifically like to ask
Mike, whose board has made a significant investment in the plastic electronics
technology centre: does it worry you that Plastic Logic only estimate a 50 per
cent chance of success for the venture?
Mr Biddle: I think the important part of the PETeC initiative is it that it is
the whole of the UK, so obviously Plastic Logic were involved with it in the
early stages. The important thing is
that we work with the industry to make sure that they can make it work for
them. In fact, I have been part of some
very robust discussions in the technology industry advisory group to make sure
that industry gets what it needs out of that centre. What is very good is that the people running
PETeC are listening to that and building on the input they are getting.
Q70 Dr
Turner: Why do you think they were so
concerned?
Mr Biddle: I do not think that is for me to comment really; Hermann may have
some background on that. It is an
important intervention for the UK,
and it provides an open access facility.
There was mention earlier by Ian French that it was not going to do what
it needed to do, and it was going to be roll-to-roll. Roll-to-roll is one of the things that is on
the evolution map, but it is not where they are starting off; they are starting
on a sheet basis. Roll-to-roll is like a
traditional printing house, so if you want newspapers you use the big machines
and it flies through. It is almost like
the vision for plastic electronics where you can add - where it can be most
disruptive, but obviously there is an evolution path to that; you cannot just
turn that roll-to-roll machine on; there is a lot of engineering and a lot of
science that needs to happen first. This
is some of the stuff that the PETeC will be doing. They are getting in some of the equipment and
they are going to be honing some of the processes. This will then be something that different
companies can play into. I am aware of a
project that came in through our recent competition, and they are going to be
using that centre to make sure they do iron out some of these pre-production
issues because it is only when you turn the handle - and Richard made the
point, never underestimate the value of engineering and I absolutely agree with
that. It is when you turn the handle on
these things that you start to see where the genuine issues are, and then you
can address them.
Q71 Dr
Turner: Hermann, perhaps you could throw
some light on your concerns. There is
almost a suggestion that it is perhaps not quite the right model.
Mr Hauser: Stuart Evans produced the paper, and he has a more detailed
knowledge of this than I have. The point
about roll-to-roll is very different from the Plastic Logic approach, which his
much closer to a traditional LCD fab, albeit not on glass but on plastic. There is no doubt that the final vision is
roll-to-roll, and this would be the cheapest and highest-volume way of
producing plastic electronics. In that
sense, it is even one step further than Plastic Logic.
Q72 Dr
Turner: Do you think they would take too big
a risk, trying to run before they can walk?
Mr Hauser: Roll-to-roll is being pursued in a number of places all round the
world. It is not an exotic
technology. It is longer term. There is a big debate on whether or not this
is going to be the winning technology or not.
It might well be.
Mr Biddle: They are actually trying to walk first in that roll-to-roll is
something they are looking at, but it is not where they are starting from. They have a planned, phased programme. That is what they are looking to implement,
and it is sheet processing along the lines Hermann described.
Q73 Dr
Turner: Does the TSB have a role in
development PETeC's business strategy?
Mr Biddle: We do not define their business strategy; they create a business
plan and we look at that against the criteria I mentioned earlier, to see
whether it warrants investment. We
thought that by investing in the equipment - and the investment we have made is
specifically in capital equipment - it would provide the open access facility
the UK
needs. There was talk earlier about
whether it was in the right area; but there are important links between both
PETeC and the CIKC in Cambridge,
which is an EPSRC initiative. There are
also links through that technology industry advisory group and through the
knowledge-transfer network and UK Display and Lighting also into the Welsh
centre for printing and coating. We are
trying to make sure that we are investing in the right opportunities to make
things open for the entire UK
and try and join that up and make it clear where people can access it.
Q74 Dr
Turner: Logystx UK have told us that the
requirement for centres such as the PETeC and OMIC to become financially self-sustainable
over a five-year period is perhaps going to distract them from carrying out
their role of encouraging entrepreneurial activity in the rest of the UK
because they are going to be so concerned about their own survival. Do you see this as a problem?
Mr Biddle: It creates dynamic tension, if you will excuse the phrase, in that
obviously there is what they need to do for the entire UK and what they also
need to do to make sure they are available for the UK; but they also point out
that interacting with some of these companies across the world - because, at
the end of the day I am for the UK, and hopefully that came across earlier but
we are operating in a global supply chain.
Part of the interaction with the people, possibly in the Far East, is almost a badge of honour; if you cannot
interact with some of those people then maybe you have not got the right
technology! It is fine line for them to
walk, and they have addressed that in the business plan and are trying to walk
that line. I will just point to the fact
that through their advisory group, that is a sounding board for them to make
sure they walk that line correctly.
Mr Osgood: EPSRC is not directly involved in that funding, but the same issues
of our funding apply for example in relation to innovative knowledge centres,
which are for five years of funding initially; and there has to be the right
tension between opening up an opportunity and a large amount of funding, but
actually ensuring that things are delivered through that process. Many of our funding activities have - and we
are moving more towards that - longer/larger - those sorts of tensions in
giving people freedom to operate but actually having a requirement that they
are producing useful activities is one that is relevant in the science base as
well.
Q75 Dr
Turner: You do see the need to move to
longer-term funding in appropriate circumstances?
Mr Osgood: As a research council, we are encouraging our research community to
think beyond what is typically project-based funding, which is an RA - three
years' worth of project into something more ambitious, which may be typically 2
million or so over a longer period. We
have seen a growth in those programmes over the last few years and now we have
something like 120 programmes of value more than £2 million -----
Q76 Dr
Turner: ----- registered for much longer
than three years!
Mr Osgood: Yes, and they would be typically five to six years. We would see over time about a third of our
funding going into more of those longer-term ambitious projects.
Q77 Dr
Turner: Can you see a role for rolling
funding programmes when they could have a longer duration than that?
Mr Osgood: I could certainly see that we would have longer-term funding areas -
not necessarily the same programme, because the configuration may change over
time. In this area of plastic
electronics and its forebears, we have probably been providing university
funding for at least twenty years. In
the area of opto-electronics at Southampton,
we have been funding that group almost continuously for 35 years - different
projects, different emphases, different adjustments. Long-term funding is always available, but we
tend to put it into somewhat shorter but now slightly longer packets.
Q78 Dr
Gibson: I do not know whether you would
agree with me, but the success of most enterprises in this country and across
the world depends on bringing through young people not just to carry out the
ambitious, exciting programmes that you guys are talking to us about; but they
get involved and come up with the smart, crazy ideas that do make a
difference. Vince, what are you doing to
excite young people to come in and do PhDs and research fellowships? I know you have had partial success in the
sense that people from Cambridge have gone on into big companies and run
them. Are we doing much to get young
people coming in to this field, and how?
Mr Osgood: In general, I think the nature of the research itself brings people
in, and the fact that we have world-leading research groups in this country
draws people in, not just home-grown but people from around the world who want
to work with those research leaders that have been developed in the UK. We are certainly expanding our early-stage
career fellowships to enable younger people to take more control of their
research -----
Q79 Dr Gibson: How many have you got - tens or thousands?
Mr Osgood: Hundreds - not thousands but certainly hundreds. In this area we have something like 80 PhD
students both on research projects and through schemes at university, using our
money, deployed. There are a further 140
post-doctoral researchers on the research grants.
Dr Gibson: Can you give us a figure from the Council over the last five years
for how that has increased or decreased or whatever, and roughly what is it
worth in terms of research council investment?
Q80 Chairman: Can I ask a rider to that, Ian, in terms of information? Can you also let us know how many of these
are working in university labs or out in industry labs?
Mr Osgood: We have a number of schemes where we give the case awards to the industrial ----
Q81 Dr
Gibson: Case awards, yes.
Mr Osgood: There are industrial case awards, where the student spends a
proportion of their time - 30 per cent typically. We also have engineering doctorate programmes
where the research engineer will spend 70 per cent of their time working on an
industrial project in an industrial environment.
Q82 Dr
Gibson: Is that increasing too? I remember when case awards came in it was
quite an exciting idea. Are you
decreasing it or increasing it?
Mr Osgood: We are increasing both the level of industrial case and we are also
increasing the proportion of user-led research.
Q83 Dr
Gibson: Can you give us some figures on
that?
Mr Osgood: I can provide you with them.
Q84 Dr
Gibson: Are there any success stories to say
that because you had this programme a company of the stature of Amadeus arose
in the middle of Cambridge Research Park -----
Mr Osgood: Yes.
Q85 Dr
Gibson: You have one or two super heroes!
Mr Osgood: I have one or two examples.
We took part in an RCUK-led study by external consultants on the
economic impact of research council investments, and there was one particular
research engineer that they identified.
The capitalisation of his research work was to the value of £100
million.
Q86 Dr
Gibson: But I am looking at how many you found
and how many come through it and where they go on to. When you talk about funding these case
fellowships, what about the reports I have in front of me here of one company
that was refused a case fellowship, called UK Display and Lightings application:
on what basis was that turned down? How
do you make a decision whether one company is going to make it or not?
Mr Osgood: That was a highly competitive process this year. I do have the case in front of me. We had something like 80 industrial cases which
we reserved for working with agents - that is both the KTNs and RDAs. All the KTNs, of which UK Display and
Lighting were one, made a bid for proposals.
They were looked at competitively.
Some of the comments led to them not getting them.
Q87 Dr
Gibson:
Read them out. These are the
referees' reports. Go on, tell the
world.
Mr Osgood: They did not demonstrate any added value to -----
Q88 Chairman: They did not get money from the DTI either, so -----
Mr Osgood: Yes. They did not
demonstrate any added value to the student as a result of that award being
awarded through the KTN; so some of the other KTNs, for example, put in place
mentoring schemes for the individual students and gave them showcase
opportunities for working with members, so it was comparing one with the
other. In the electronics space the
electronics KTN received three, Fatonics(?) one, and Integrated Electronics and
Products two. So there are six in the
electronics space awarded through the KTNs, although none to UK Display
and Lighting; but we do have a pool of 30 awards and we are encouraging the
KTNs, particularly their innovative SMEs, to apply to the pool; so although the
KTN may not have received any indirectly, its member can be bidding against the
pool. Those decisions will be known next
week.
Q89 Dr
Gibson: Since you are so excited and passionate about this area, how far short do we fall in terms of the studentships that you
acknowledge are important for now and the next few years and the future? How far short are we in numbers? You are talking for the Department, I guess
as well. Are we three thousand short or
four thousand, because it often depends on numbers? I do not know if it does entirely, but are we
short, and do you ever get angry about it, that will curtail your success?
Mr Osgood: I do not get the feeling that we are short at the levels of
research of PhD students and RAs. I do
not think we have any evidence that we are short in this area.
Q90 Dr
Gibson: How do you make that judgment then -
one PhD student and -----
Mr Osgood: Total numbers come in through where the people are coming
from. There may be a shortage of
domestically produced PhDs in this area.
We do enable universities to apply for project students on the research
projects.
Q91 Dr
Gibson: Only universities?
Mr Osgood: Largely universities we fund, yes.
Any students that we fund directly like CASE have to be UK
nationals.
Q92 Dr
Gibson: Why is that then?
Mr Osgood: It is part of the general Government policy of -----
Q93 Dr
Gibson: I thought they liked foreign
students; they pay astronomical fees.
Mr Osgood: The universities certainly like foreign students, both at the
undergraduate level and the postgraduate level, but our funding is for UK
nationals.
Q94 Dr
Gibson: How many universities have we that
are engaged in these studentships, roughly?
I do not know how many universities there are now - they grow by the
day.
Mr Osgood: I was going to say that we support up to about a hundred. The vast majority of our funding, something
like 75 per cent - and this would relate to studentships and grants - go to the
top twenty, so it is concentrated in twenty, but it has spread and there are
some have a small number of students.
Q95 Dr
Gibson: What other sources of money could
there be to help studentships in this area?
Would regional development agencies put money in?
Mr Osgood: And we can encourage
them. Our arrangements for our own
studentships are such that if somebody else is prepared to pay up to 50 per
cent, effectively you can double the number of studentships. If we awarded a KTN three students a year and
they drew in other funding, they could double that and have six.
Q96 Dr
Gibson: How many are involved in that kind
of transaction, roughly? Is it on one
hand?
Mr Osgood: It is probably not more than two hands.
Q97 Dr
Gibson: It is not that many, so there is a
great opportunity to increase the numbers.
Mr Osgood: There is certainly an opportunity, and that applies equally to the
universities across the whole of their doctoral training accounts. It is something like 2,000 studentships, PhDs,
per year that we will support. Equally,
the universities can attract additional funding to make use of those and
potentially double them.
Q98 Dr
Gibson: As a research council man, then, do
you think universities have got the message about the importance of this field,
to the level you feel it is important for the nation?
Mr Osgood: It is certainly growing in importance and excitement. We have just had a call for doctoral training
centres, where we put more of our students into cohorts - so ten per year per
centre for up to five years - a totality of 50 PhD students. We had 280 outline bids last week. We have short-listed 90, with the intention
of funding 45, and a number of those are in this space. So, yes, I think universities are getting
excited and -----
Q99 Dr
Gibson: Is there any grade 5 assessment in
research in your programmes attached to any of this kind of work, do you
think? Can you point out any to me? You can point to Imperial for engineering
areas and so on. Can you do that
anywhere else, in terms of grade 5 plus?
Mr Osgood: Yes, Durham, Cambridge,
Manchester.
Q100 Dr
Gibson: So there are star outlets!
Mr Osgood: Yes. The ten most
concentrated universities that we fund in this particular space will be 5 and 5-star.
Q101 Dr
Gibson: Does the Government know this?
Mr Osgood: It is in our case - whether that has penetrated through or not -----
Dr Gibson: Whether they read it or not!
Thank you very much.
Q102 Dr
Iddon: Mr Hauser, one of the attractions of
Dresden, going back to that lovely city, was the availability of skills. What is it about the availability of skills
in Dresden; is it the fact that on reunification so many of the old industries
were destroyed and therefore there was huge unemployment at reunification, or
is the federal government of Saxony making a special effort to train skills for
the electronics industry that is clustering in Dresden? These will be different lower skills from
postgraduate skills that Dr Gibson has just been talking about?
Mr Hauser: The two main reasons were - one that I did not know was that Dresden was the micro-electronic centre of the Eastern
Bloc before the Iron Curtain came down, so all the D-rams, the microprocessors
that they were not able to import from the West because of the export
restrictions that we had came out of Dresden. They had tremendous expertise. They have a university that is the best
university in the Eastern Bloc on that, and arguably one of the best
universities in electronics in the world.
The Defraunhoffer Institute is associated with it, again producing very
high-quality people. In the end, our
main criterion was the availability of highly qualified operators of the
factory. My last comment on that really
is that once the factory is fully staffed and up and running, we will be
employing 140 highly skilled but comparatively lowly paid operators in Dresden,
whereas we will continue to employ a hundred PhD level people in Cambridge; so
our payroll in Cambridge is considerably higher than in Dresden.
Chairman: On that note, could I thank you very much indeed for being splendid
and very enthusiastic witnesses this morning.