The projects submitted to the “Call for Expressions of Interest (Call)” help to form a more accurate picture of the current market, industry and technology conditions and the strategic goals of a company applying to a given IPCEI topic area.

The Ministry of Innovation and Technology expects project proposals from companies registered in Hungary in the following areas:

• Microelectronics, semiconductors, and sensors
• Renewable and "blue" hydrogen technologies and solutions

In the evaluation phase following the submission, an active dialogue takes place with the applicant consisting of hearings and evaluations. Additional documentation and detailed information will then be requested in order to pre-qualify the projects.

IPCEI on Microelectronics

The growing demand for microchips has caused a disruption in supply in some industrial segments. This was particularly noticeable during the pandemic. The disturbance in the value chains, for instance, in the automotive industry, has caused a significant shortage of supply. Anomalies like this have numerous causes. The growing demand for household and entertainment electronic products gives one explanation, but the list of causes includes, for example, how the relevant actors on the value chain have failed to submit their orders on time.

In addition to these short-term reasons, we should also set our sights on the near future when the explosive growth of Industry 4.0, digitization, IoT technologies and 5G systems is expected, which requires the rapid development of the microelectronics industry to serve consumer needs. To this end, European countries are making targeted efforts to promote the development of industrial and market actors to apply / implement the results of scientific and technological developments on an industrial scale in order to provide their citizens with sustainable, efficient, and environmentally friendly security of supply.

One of the main objectives The European Commission’s Digital Compass strategy focuses on European production of semiconductors, which aims to reach a global market cap of 20% by 2030. For the European Union, there is still room for improvement not only in manufacturing but also in design development; about 80% of these activities are conducted in the US. However, it is encouraging that 22 Member States have already joined last December's declaration on the promotion of semiconductor manufacturing.
Thus, after 2014, The European Commission, propositioned by the Internal Market Commissioner, once again announces the possibility for all Member States to join the IPCEI on Microelectronics.

This call aims to identify micro-electronics companies that plan to implement projects under the Microelectronics Innovation Partnership (IPCEI on Microelectronics).

The general aim of the IPCEI on Microelectronics is to ensure the supply of microelectronic components of the European market and to increase its sustainability by promoting the integration and production of solutions which support European industry in areas in which Europe is highly dependent. A further aim is of course to ensure the competitiveness of EU industry in the global market, including (but not limited to):

1. Development of microchips and processors for AI
2. Design of network and communication (5G, 6G, etc.) chips
3. European development and production of chips
4. Advanced encapsulation for heterogeneous integration
5. Semiconductor substrates for RF and power electronics

In addition to the conditions set out in the related communication from the commission (IPCEI Communication), participation in the IPCEI on Microelectronics II is subject to the following conditions:

• Applicants must be involved in the Strategic Value Chain (SVC) on microelectronics (from the raw materials needed for production to recycling)
• Projects suggested by Hungarian companies must be executed in Hungary. Research and development and the first phase of industrial development in the IPCEI framework are eligible for funding. First industrial development includes transition from pilot plants to large-scale facilities and the first applies to apparatus and equipment covering both the experimental and post-experimental phases. Mass production and commercial activity are not eligible for funding.

Background information on the IPCEI Call for Expression of Interest

“Important Projects of Common European Interest(IPCEI)” is a key strategic instrument for state aid (grant) ,in accordance with EU regulations, of strategically important projects based on transnational cooperation and serving the European common interest.

In essence, IPCEI project grants are funded from the national budget, but must be approved by the European Commission in advance. This allows for increased aid intensity, as up to 100% of the funding gap can be eligible for subsidization.

The objective of the investment program into the five future technologies (batteries, microelectronics, hydrogen, cloud, health) is to ensure the support of economic and social innovation in the long term, and for Hungary and the European Union to consolidate and develop their position along the strategic value chains, in accordance with the requirements of the power and ecological transitions and the resilience of the value chains.

IPCEI aims to support significant and large-scale, cross-sectoral and high-innovation, strategic projects across Member States that address significant scientific and socio-economic challenges at the European level. Given that they would not be feasible under other frameworks due to the increased technological and financial risks of the project, they require a joint, coordinated effort and transnational public and private investment from several Member States.

Based on the IPCEI communication, the prerequisites of eligibility for aid are the following:

• A stand-alone project, precisely defined in terms of project objectives and implementation conditions, including its participants and funding, or an integrated project that is a set of coherent projects, similar in structure and work program, with the same purpose;
• The project contributes in a clear and identifiable manner to one or more EU objectives, is essential for the European Research Area, the 2030 framework for climate and energy policy, the trans-European transport and energy networks, and for key EU initiatives and strategies, and has a significant impact on the Union's competitiveness and sustainable growth;
• The project serves a common European interest as part of a European value chain;
• The project involves several Member States and is co-financed by the beneficiary;
• The project must normally involve more than one Member State and its benefits must not be confined to the financing Member States but extend to a wide part of the Union;
• The benefits of the project must not be limited to the undertakings or to the sector concerned but must be of wider relevance and application to the European economy or society through positive spillover effects;
• The project complies with EU environmental, energy security and internal market standards;
• R & D&I projects must be of a major innovative nature or constitute an important added value in terms of R & D&I in the light of the state of the art in the sector concerned;
• Environmental, energy and transport projects should make a significant contribution to the internal market;
• It is not a prerequisite, but seen as a positive indicator in the assessment if the project allows the participation of a broad range of member states with the partners representing a variety of sectors, types, company sizes, etc.;
• The governance structure of the project involves the Commission — or any legal body to which the Commission has delegated its powers — and several Member States;
• The Commission and the Member States are involved in the creation of the project management structure;
• The project involves co-financing by a Union fund.

Compilation and submission of the preliminary application and the application
A preliminary application and a subsequent application must be submitted for each project.
For the assessment of the preliminary application, a 1–2-page presentation of the project proposal is needed, which includes:

• details of the applicant, industry, and field of activity;
• which of the 5 subject areas the application targets;
• market failure and problem raising;
• the solution offered;
• the cross-border elements of the project and its European significance.

The purpose of the preliminary application is required, as Hungarian companies are unfamiliar with IPCEI constructions and only projects belonging to the framework of the IPCEI will be subject to a deeper analysis. If the pre-application is approved by the Ministry of Innovation and Technology, the company must also submit its application.

The application must be comprehensive and contain the following:

• Introduction of the applicant(s):
• name of the company,
• address,
• type of organization (corporate group, mid-capitalization company, SME),
• description of activity,
• contact details (surname, first name, position, e-mail address, telephone number).
• General description of the project:
• name of the project,
• background information, introduction of user needs and target markets,
• presentation of the required work and use case,
• the current state of the technology, proof of the innovative nature of the application, meaning:
• tasks required to overcome identified barriers,
• the place of implementation of the project,
• the project's contribution to policy goals,
• potential partners and showcase of resources mobilized for the implementation of the project,
• if relevant, the partnership aspects of the project
• planned schedule - a brief presentation of the business strategy and a preliminary business model,
• presentation of the budget and financing plan,
• financing requirements,
• justification of the incentive nature of the requested State aid,
• Indication of applying for an IPCEI leadership role, or just direct partner participation,
• a description of the protection measures planned for the knowledge to be developed under the project but is not intended to be shared,
• presentation of the initiatives planned as a result of the project in the long term, including:
• the possible effects of the project on the company;
• the extent to which the project has a structuring role in the applicant's medium and long-term strategy.

In the case of IPCEI projects, the working languages are English and Hungarian, thus, applications must be submitted in both English and Hungarian. Applications must be submitted in an electronic format to ipcei@itm.gov.hu in until 15 August.

Incomplete applications not eligible for assessment will not be judged and must be resubmitted.

Types of applications / expected projects

This call for expression of interest serves to enable the state to identify those players and projects that address the objectives identified as a priority by the acceleration strategy. It expects significant, innovative projects of a size, at any stage of maturity, with or without a partnership, that will enable value creation at the Hungarian and / or European level.

In order for the authorities to be able to assess the interest expressed by the private actors, the applicants' proposals must meet the following expectations:

• The project

• must have an innovative aspect to ensure the long-term development and implementation of products, technological processes, or innovative services,
• it must be consolidated as a priority, linking the solution provider and the market, or at least present a sustainable economic model with identified markets;
• it should include the development of a competitive industrial offer with a significant innovative component.

• The applicant must carry out the project at a site in Hungary, enabling the development of an industrial supply with a high degree of immunity from extraterritorial regulations outside Europe which guarantees compliance with the GDPR.
• Applicant should focus on partnerships: they should identify Hungarian and European partners who can participate in a complementary or synergistic way in the activities of development during the project; in the case of academic actors, the project must be eligible for co-financing by one or more companies; however, it is also possible to present strictly individual projects.
• State aid can only be granted if the applicant can convincingly demonstrate that the project cannot be financed or implemented without state aid under market conditions. The applicant must demonstrate a funding gap that justifies the necessity and appropriateness of the state aid taking into account the technical and economic risk,
• The applicant must be able to demonstrate previous work in the relevant field and provide evidence that the project differs significantly from the technology’s "current advancement".
• The applicant must demonstrate the measures it has already taken or intends to take to ensure the protection of information not intended for sharing and knowledge mobilized under the project.
• Training (initial or further training) / competence development projects must demonstrate their ability to meet the labour market needs of the microelectronics sector.
• The applicant is obliged to pay full investment costs (CAPEX) in Hungary and is obliged to keep these investments in Hungary.

Projects in the mass production phase, with the exception of the first industrial deployment phase, and in the commercial use phase are not eligible.

Candidates applying for to participate as project leading companies in an IPCEI must explicitly indicate their intention. Unlike general state aid rules, the IPCEI framework allows Member States to cover R & D & I costs up to the first industrial deployment, which allows the development of new products or services with a strong innovation intensity or even the introduction of a fundamentally innovative manufacturing process.

For those applying as leading companies to an IPCEI, the following are of particular importance:

• The technical project must represent a technological breakthrough compared to the current technological advancement in the field and present solutions that contribute to the creation of a Hungarian and /or European value chain.
• The applicant must make dissemination commitments in the context of the financing of the work: the project must enable the knowledge acquired to be widely disseminated, regardless of whether it is protected by a title or intellectual property rights. Dissemination must take place throughout the European Union, beyond the project partners. The mechanisms for disseminating knowledge should be described in detail. Results protected by a title or intellectual property rights shall be disseminated under fair, reasonable and non-discriminatory conditions on market terms.
• The project will focus on R&D and may include the phase of the first industrial deployment of new technologies developed under the project (“the first industrial deployment refers to the expansion of experimental facilities or new equipment and facilities, and the testing phase includes the post-pilot phase, but not mass production or commercial activities. ").
• The project must be developed in partnership and demonstrate collective work with structures in other countries participating in the IPCEI. Projects may be financed by the Hungarian authorities only if at least one other EU Member State participates and if the scope of the project meets the criteria of article 3 of the Commission communication on the analysis of the compatibility with the internal market of State aid to promote the development of important projects of European interest. (EUHL 20.06.2014, C188 / 4).

It is important to emphasize, especially for candidates applying as leading companies for the IPCEI, that this role, if they are ultimately selected, also means accepting the significant restrictions that apply to them:

• organization, coordination, and management of the partner consortium (references in this area may be requested during the selection phase);
• participation in the creation of a joint program (the Chapeau text) under the supervision of the participating Member States, involving all selected companies from all Member States;
• drawing up a specific application with the participation of all participating Member States for authorization by the Commission as part of the notification procedure under Articles 107.3 (b) and 108 of the Treaty on the Functioning of the European Union (TFEU);
• submitting all documents in English (notification, then report).

Support framework - Legal basis

The legal basis for the grant is the European Commission's approval decision. 

Eligibility conditions

1. The application
• is sent in time, in electronic form, to the Ministry of Innovation and Technology e-mail address: ipcei@itm.gov.hu;
• the application must be submitted in full and in the required form (see: compiling and submitting the application).
2. The applicant
• The applicant can be:
• A business organization (including public-interest groups, corporate groups, associations, industrial or commercial institutions);
•  research institutes;
• a consortium of one or more companies and / or one or more research institutes
• The applicant must be connected to the microelectronics value chain in Hungary and Europe in an authentic, clear, and identifiable manner.
• Companies currently under founding procedures are also eligible, in which case the application must be submitted by prospective owners.
• The applicant must not be subject to any obligation to repay any aid based on a decision addressed to Hungary to recover aid deemed illegal and incompatible taken by the European Commission;
• The applicant must not be under scrutiny according to European regulations (GEBR, 651/2014);

Proposals that do not meet the eligibility criteria will be excluded from the selection process without the possibility of appeal.

3. Selection procedure and criteria

Eligible applications will be evaluated, and the best ones selected on the basis of the following criteria:

• relevance to general European Union objectives and expectations;
• socio-economic impact and expected benefits;
• the innovative nature and added value of the products or services developed;
• the ability to strengthen strategic autonomy in the most critical areas for sovereignty and European competitiveness;
• linking to the challenges of protecting the nation's scientific and technical potential;
• the quality and relevance of the proposed partnerships;
• the quality of the economic model, business and financing plan presented;
• environmental effects and, if any, positive effects from an ecological point of view;
• linking to the challenges of protecting the nation's scientific and technical potential.

In addition, for projects with a territorial component, the involvement and support of the local communities concerned is favoured during the selection process.

The National Research, Development and Innovation Office, in close co-operation with the Government, checks the eligibility of applications and carries out an examination of projects as part of the selection procedure. Regional public offices may also be involved to provide advice on expediency, especially for projects with a strong territorial dimension.

In the case of eligible projects, the examination will be carried out according to the technological, economic, policy, legal and expediency criteria of the applications in order to pre-screen the applications.

Based on the opinion of the committee, the Ministry of Innovation and Technology decides which applications are accepted. If necessary, applicants may be invited to a second hearing or may be asked questions in writing after the hearings.

Confidentiality and communication

The Ministry of Innovation and Technology will ensure that documents transmitted under the call comply with the strictest confidentiality obligations and will only be disclosed within the framework of MIT's expertise and management. All application materials must be treated with the utmost confidentiality.

The state reserves the right, if necessary, to provide information on the general goals, challenges, and results of the program, using anonymous examples and respecting trade secrets.

Finally, the beneficiaries of state aid under this IPCEI are subject to transparency and reporting obligations to the Government and the National Research, Development and Innovation Office, which are necessary for the ex-post evaluation of projects.

Contact and request for information

Ministry of Innovation and Technology and the National Research, Development and Innovation Office staff are available to assist applicants in preparing their applications.

For information on the administrative process (drawing up the application online tasks, the amount of state aid), please contact our colleagues by email at: ipcei@itm.gov.hu or by phone:

• Géza Kovács-Dobák +36 30 570-3274 
• Bence Volosinovszki +36 30 117-5695 
  

A Practical Guide to IPCEI Commission Notifications (HUN) - 2021.04.14. PDF (730 KB)