Due to Nokia and the extensive ecosystem that grew around it, the electronics industry was Finland's export growth engine around the turn of the millennium. New impetus is needed now that this supporting pillar has crumbled.
The government has pinpointed sectors such as cleantech, the energy industry and health technology as drivers of Finland's growth. At the same time, systems in support of autonomous vehicles are being developed in many places in Finland. A test site has been launched in the Gulf of Bothnia, where robotic ships are being tested under the leadership of Rolls Royce.
Modern sensor technology, and smart devices and their back-end systems, are needed in all of these systems.
Jussi Paakkari, who leads VTT's Sensing and integration unit and its over 200 experts has a clear view of how Finland's electronics industry is gaining momentum from the IoT craze.
– IoT is based on a huge number of sensor solutions, which requires a wide range of electronics expertise. We have world-class expertise in sensor and measurement technology, microelectronics and their integration in printed electronics, for example, and in health technology. In addition to know-how, we now need means of increasing domestic production in the sector.
Bringing special production to Finland
Over the last few months, VTT has been preparing an initiative for the revival of Finland's electronics industry: the aim is to build and grow new industrial production in six special areas.
One of the goals of the initiative is to keep expertise in Finland, for the benefit of its society and well-being. The current situation is not fully supportive of this, which worries Paakkari.
– We do a lot of great product development for foreign companies. A good example of this is "lab on chip" product development, which has resulted in rapid tests for analysing the state of people's health. Similar opportunities are also available for Finnish companies to take advantage of, explains Paakkari.
Recent decades have seen the strong migration of the mass production of consumer electronics to China and elsewhere in Southeast Asia. Paakkari does not believe that this can be returned to Finland. We must therefore seek opportunities elsewhere.
– We are competitive in small production runs of special products, because special expertise is required for their manufacture. For example, material and machine adjustments during the roll process in printed electronics, and the testing of end products, are areas of technological expertise which few countries have.
Where is production located?
Paakkari believes that printed electronics is an area of strength that is worth investing in. At VTT, this has been developed alongside the Printocent industrial cluster in particular.
– Over the years, alongside our partner companies we have been demonstrating what kinds of solutions we can build in the printed and flexible electronics sector. When pilots are created and trial series are ready, the same question always arises: where will they be manufactured?
VTT has created numerous product innovations in the sector, alongside major international companies such as Pilkington, Kone, Nokia and GE Healthcare. These innovations have resulted in several products reaching the production stage.
– Big companies demand access to a reliable and standard production line – either their own or someone else's. Beginning mass production requires the development of production technology beyond the pilot, in order to begin large production runs.
Major opportunities in health technology
Healthcare electronics is another strong growth area. Applications of this technology highlight remote diagnostics in particular. For example chronically ill patients can measure quickly in their home environment their inflammation levels (CRP value) with a device developed by VTT. The measurements performed at home are useful when, for instance, assessing the need for visiting a doctor or monitoring the effect of antibiotics.
– Healthcare devices are one of the faster growing sectors in Finland's export industry. There is now a growing need to add diagnostics to products and support home testing.
There is also a production bottleneck in this area.
– If we make a disposable, home-care diagnostics product, we also need the capacity to produce it.
This is a contradictory situation, which exasperates Paakkari.
– We hold all the cards – outstanding expertise in antibodies, microfluidics and their productisation.
Speeding up production
The initiative to revamp the Finnish electronics sector has clear objectives in light of the above examples.
– We want to join forces around carefully targeted ecosystem projects, so that full advantage is taken of the related opportunities. We will extend the exploitation of technologies into new areas and ensure that Finland has the production capacity needed for new products. This is about accelerating product development and production.
In the coming months, VTT will chart key companies in six selected special sectors and seek to engage them in the process. At the same time, funding will be sought for all of them from both the private and public sector.
– When we are evaluating our goals alongside companies, we can also assess their opportunities for investing in new production and the extent to which they can commit their staff to such projects. VTT and universities are simultaneously resourcing this with staff and money. To use a slightly old-fashioned expression, we could say that we are building a middlesized technology programme here, says Paakkari.
Big investments and risks
Finland has technology expertise and the ability to productise and commercialise innovations. We now need financial support, since Tekes has been subjected to exceptionally large funding cuts.
No public money has been made avaiable for electronics industry research projects in several years. Led by Tekes, the last programme for the sector was the Electronics Miniaturisation Programme, which ended in 2005.
Tekes and the Academy of Finland are the primary sources of public funding. At the same time, VTT is investing in technologies it has selected, such as the building of a new production line for printed electronics.
Private equity investments in Finland have not been directed at production projects, but mainly at games, software development and services.
– The electronics industry has long product development processes and times to market. Its products are highly challenging and risky. This is a sector in which you cannot pilot something quickly and fail, but which needs years of R&D investments. Even then, a competitor can come along in five years with a better product.
However, the electronics industry does not require investments on the same scale as the metal and forest industry, for example. You can get moving quickly with a single production line for a new product. If it succeeds, the product concept can be duplicated.
Batting for Finland
Paakkari emphasises that keeping expertise in Finland is a key issue from the perspective of Finland's national economy and well-being.
– Instead of selling to foreign players the accumulated expertise and knowledge base Finland has, we need to engage in long-term domestic development and invest in it.
VTT aims to protect special areas of expertise in the electronics industry.
– We want to protect technology developed in Finland alongside our partners in such a manner that it is taken all the way to the end of the processing chain here, in Finland.
Ecosystem thinking suggests that production and further technological development will guarantee that VTT's work bears fruit for the Finnish people in the future.
– If we sell our technology abroad, we are also selling our own future. We cannot know how technological development will then continue and how it will affect our partners in the industry. If we want Finland to recover, we need the industry's production to move here, in addition to product development. We are very much batting for Finland in this regard, says Paakkari.
A powerful incubator
A total of 20 companies, employing 320 experts, have been created during this decade under the research projects of VTT's Sensing and integration unit. The companies' turnover was over EUR 35 million in 2016 and they have attracted funding of over EUR 50 million.
– We want to move these companies forward and support the commercialisation of technology, so that they grow and can create well-being in Finland, says Paakkari.
Helmee, in Tampere, is a good example of how a research innovation can be productised and commercialised to create a globally successful product. In just four years, VTT's machine vision innovation has developed into an export product bringing in millions of euros.
Machine vision is being widely applied to the needs of industry and research. The automotive and electronics industry are the key sectors in which it is used. Security solutions, such as surveillance and traffic cameras, are the largest application area in terms of the number of items.
In June 2016, Helmee built six quality control robots for a EUR 1.3 million deal with Sarrel, which makes chrome parts for the French automotive industry. In the late summer of 2016, the company announced a EUR 2.2 million distribution agreement with Jing Chi Engineering of Hong Kong. The firm's parent company, Jing mei Industrial, bought a million-euro stake in Helmee in the spring.