Report: Estonian businesses have global potential in chip design, testing

Chip on an Estonian ID card. Photo is illustrative.
Chip on an Estonian ID card. Photo is illustrative. Source: Siim Lõvi/ERR

The need for chips will skyrocket in the coming decade, and experts are seeing opportunities opening up for Estonian businesses in chip design and verification as well as the testing of chip security, according to the latest report published by the Foresight Center on Tuesday.

The global market volume of chips and embedded systems is estimated at about €550 billion, and the sector is projected to increase to €1 trillion by 2030, the Foresight Center said in a press release regarding the publishing of its latest report, "Embedded systems and chip technologies: The state of play and prospects."

"It is not very likely that large chip plants will be established in Estonia, as this would involve large investment needs and high risk, but we have potential in small and serial chip production as well as in special solutions," said Uku Varblane, head of research at the think tank.

Varblane noted that Estonia's opportunities would be boosted by a breakthrough in freeware chips, as it is feasible for small companies to produce these.

In its brief report, the Foresight Center points out that it is economically realistic for Estonia to fulfill certain stages in the production of novel high-temperature semiconductor devices, e.g. base crystals.

"As technologies become simpler, it will be possible to begin to offer special solutions and small series," Varblane explained, adding that large international chip plants do not produce small series.

To date, the focus in chip technology development has been on the development of smaller and cheaper chips and faster chips with lower energy consumption. Experts participating in the study believe that constant development can be expected in chip technologies going forward as well, but not a revolution.

According to Startup Estonia data, tech companies operating in chip technologies include, for example, Selfdiagnostics (medical chip labs), Analoogdisaini AS (microcircuit development), LightCode Photonics (3D camera technology), Testonica (semiconductor device software testing), GScan (particle sensor technology) and Evikon (sensor devices).

Chips find application in nearly all areas of life, from security to healthcare, and the growing need for chips is further driven by the green and digital transition. In connection with their increasing complexity, chips are more and more labor-intensive to develop, and therefore a larger share of value creation has shifted from semiconductor production companies to their development companies. There are increasingly more companies in the sector that do not have their own production capacities, the think tank noted.

The recent report nonetheless pointed out that the production of embedded system components is not very likely in Estonia due to the large investment needs and high production risks involved.

"Embedded systems and chip technologies: The state of play and prospects" is a brief report that is part of the Foresight Center's "Green transition scenarios in Estonia" line of research. The report is based on the study "Alternative development trajectories to deep technologies and their significance for Estonia," which was commissioned by the Foresight Center and carried out by CIVITTA Estonia.

The Foresight Center is a think tank at the Chancellery of the Riigikogu that analyzes long-term developments in society and the economy. It conducts research aimed at analyzing long-term developments and discovering new trends in Estonian society.


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Editor: Aili Vahtla

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