Dresden, Germany - Infineon, GlobalFoundries and, until recently, Qimonda shaped the image of the Silicon Saxony area around Dresden. But these days the region, whose clusters of R&D institutes and high-tech universities have been fertile soil for startups, is expanding beyond its silicon roots.

Indeed, Silicon Saxony's diversified innovation and technology ecosystem has been a buffer against the worst of the semiconductor downturn and even the insolvency of DRAM maker Qimonda. Research institutes and startup companies focused on such topics as organic electronics and photovoltaics are driving innovation in the region and, to some extent, in global markets.

One of them is the Fraunhofer Institute for Photonic Microsystems (IPMS), part of the Fraunhofer research network, whose labs work to close the gap between basic research and product-oriented application development. With 240 researchers and engineers, IPMS is one of the top research institutes focusing on sensor and actuator systems. One target of its work is materials and production processes for organic electronics.

The institute runs a prototype production line that handles second-generation organic substrates for solar panels as well as organic LED panels. With a panel size of 370 mm × 470 mm, "we have a rather leading position," said Christian May, manager of IPMS' organic materials and systems business unit.

The market for small OLED displays is primarily the domain of Asian vendors, so the OLED research at IPMS instead is aimed at large displays and, in particular, lighting applications. OLEDs outperform solid-state LEDs for diffused lighting.

IPMS' OLED lighting researchers have achieved white-light efficiencies of up to 100 lumens/watt, 10 times higher than that of incandescent equivalents. Longevity remains an issue for OLED-based lighting, however, so broad commercial availability is not expected before 2015, though production could start as early as next year for niche applications. Recently the institute announced plans for a joint venture with Austria's Zumtobel Group that will work to commercialize the technology.

Moving from OLED technology to organic photovoltaics is not a big jump, and Heliatek GmbH, just around the corner from Fraunhofer IPMS, is dedicated to the latter. The Dresden Technical University spinoff has achieved efficiencies of somewhat better than 6 percent for its materials. While that figure pales beside the efficiency performance of silicon-based materials, Heliatek's filmy organic material can be used to produce transparent solar cells, suitable for use on building facades.

Asia is already highly competitive in this market, so Heliatek, with funding from BASF and Bosch, is focusing on developing a cost-effective roll-to-roll production process. "We have to be fast," a company spokesperson said. Commercial production is expected to launch in the first half.

Even closer to commercial production is Plastic Logic, which is in the home stretch on a planned rollout of an e-book reader by January. Plastic Logic's reader will let users manipulate the content to a certain extent by annotating, striking out or highlighting text.

Though still identified as a startup, Plastic Logic is already globalized: The executive management is based in Mountain View, Calif.; R&D in Cambridge, U.K.; and production and process development in Dresden. The investor list is a similarly global affair, including BASF, Intel and Siemens.

Plastic Logic will manufacture the flexible display backplane, a core element of the e-book reader, in Dresden. With its organic substrate, the backplane will be much cheaper than silicon alternatives, a company spokesperson said. Plastic Logic claims its coating and dry-patterning production processes are three years ahead of the competition.

Less than an hour's drive from Dresden lies Chemnitz, another town with an active tech community. Chemnitz boasts a long industrial tradition: Audi was started there in the first half of the 20th century, and almost 100 years earlier, Germany's first steam locomotive was built in Chemnitz.

Today, the city's engineers focus more on microelectronics. Chemnitz University of Technology and the Fraunhofer Entity for Electronic Nanosystems (ENAS), like their counterparts in Dresden, conduct basic research, foster startups launched by postgraduates and facilitate networking among entrepreneurs. A startup campus has been established within walking distance of the university and ENAS.

Among the companies populating the campus is Electronic Design Chemnitz, an eight-person startup that designs microelectromechanical system (MEMS) devices with signal preprocessing integrated on the die. With expertise in sensors for pressure, yaw rate and acceleration, as well as in on-chip analog/mixed signal preprocessing, EDC serves customers in the machine building, textile and automotive industries. Currently the small team is busy with a project that aims at a combination of MEMS and RFID technology; the target application will be an encapsulated liquid-level sensor powered through an RF field.

The company has a manufacturing agreement with XFab Silicon Foundries, based in nearby Erfurt, and also has relationships with LFoundry and Asian partners for production, said CEO Steffen Heinz. EDC launched in February 2008 and claims it is already profitable.

Another Chemnitz startup is university spinoff Lightweight Structures Engineering. LSE's unconventional field of expertise, at least for electronics engineers, is stitchwork: It uses carbon and polymer fibers to stitch what founder and CEO Holg Elsner calls "structurally integrated multifunctional components"-tiny mats that are both sensors and connecting elements. Applications include automotive systems. "With this technology, an OEM can integrate the functionality of, say, a switch into the boot [trunk] lid, to name just one example," explained Elsner. "Thus, car designers have a higher degree of creative freedom."

While Saxony is known for its excellence in R&D, volume production is another matter, as is so often the case in the semiconductor business. Nevertheless, some companies, notably in OLEDs and photovoltaics, also successfully manufacture in high-salary Germany.

A case in point is Plastic Logic. "We did worldwide studies" to decide where to locate manufacturing, its spokesperson said. "On our short list were upstate New York, Singapore and Dresden.

"We decided to go to Saxony because of the availability of qualified staff flexible enough to work under the demanding conditions of a startup."

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