Europe in the Intelligent Age 2025

Europe’s position in the advanced connectivity value chain FIGURE 7 ComponentsEquipment manufacturing SoftwareInfrastructure management and maintenance Connectivity services Sourcing required physical hardware (e.g. chipsets such as specialized system-on-a-chip (SOC) and application-specific integrated circuit (ASIC), antennas and connectors) Players range from chipset manufacturers to infrastructure cloud ecosystem providers Europe has limited presence in materials, chipsets (including SOC and ASIC), and other components – has significant dependency on Asia (including China) and the USManufacturing radio access network (RAN) and fibre equipment to be integrated within the network infrastructure Mainly three categories of players: RAN vendors, Open RAN vendors and fibre vendors Two out of three world leaders for telecommunications equipment and services are based in Europe (the two largest European companies had ~45% of global RAN market in 2023)² Cloud-native 5G is an area where Europe leads, has the potential to supply critical components globallyDevelop supporting software to be used in association with the technologies as well as operations support systems and business support systems Split of market between RAN vendors and software specialists Leading European players are mainly equipment manufacturers Specialized software players typically sit outside of Europe Infrastructure deployment of 5G networks and fibre roll-out and maintenance Players include telecom operators, tower companies, RAN vendors and systems integrators Generally limited innovation in this space Largely represented by local or regional players Mainly done by telecommunications operators or tower players selling infrastructure management and maintenance as a service Interconnecting new technology into existing networks Offers connectivity (e.g. internet or mobile network access) and value-added services (e.g. security and entertainment) to end users EU has 34 mobile network operators (MNOs) as against three in the US and four in China) – regulation prevents economies of scale Gaps in 5G coverage and fibre; 5G coverage is at 81%, lagging the US and China (both at >95%) MNOs in Europe face lower return on invested capital (ROIC) than those in the US, limiting their ability to invest in infrastructure and innovate (Europe’s capex in connectivity per capita is 40-45% of US and Japan levels in 2022) Leading Europe’s starting point LaggingKey value chain steps¹ Description Europe’s competitiveness Strategic focus area 1. Equipment manufacturing also includes development and standardization of connectivity technologies and software includes R&D in software development to be used with connectivity technologies 2. In these figures, RAN includes software and hardware for macro base stations and smaller cells. Services and solutions belonging to other network domains (e.g. transport and core networks) are not included Source: The Future of European Competitiveness,59 DigitalEurope: The EU’s critical tech gap,60 McKinsey Technology Trends Outlook 2024,61 expert interviews 4.2 Quantum technologies Europe’s starting point: Nascent technology, well positioned to lead Strategic posture: Create future global leadersWith an estimated market size of ~$0.1-0.5 trillion by 2040,62 there is a significant untapped potential across all three areas of quantum technology.63 Quantum computers will enable industries to solve complex statistical problems64 that are Europe in the Intelligent Age: From Ideas to Action 22