Overview of the EU's Digital Compass Initiative

The world is changing, and digital technology is embedded in every industry’s strategy for transformation, from commercial automation, efficiency, and optimization to the simplification of healthcare and essential services. 

Conscious efforts have been made by nations and corporations to integrate digital transformation—the end goal being either profit or improvement of practice. Needless to say, without technology’s evolution, globalization would not be possible, nor the potential to develop commercially viable strategies for growing healthcare concerns, combating climate change, and delivering vital services to developing countries. 

No developmental conversation is had without mention of technology, and the current decade is more important than ever. This is further highlighted by the EU and its ‘Digital Decade,’ which sets out an overarching goal for digital transformation across its member states. While the Digital Compass is a means of modernizing the European economy and national services, the impacts may be felt among key players in the printed-circuit-board (PCB) market. 

EU Digital Decade: Sights on Technical Revolution by 2030

It is important to distinguish between the ‘Digital Decade’ and the ‘Digital Compass’. The Decade ends in 2030, but the rate of change will only increase in the following 10 years. 

The main pillars include skills, commerce, infrastructure, and public services. 

• IT Skills: Digital skills will only increase in importance in the coming years, which is why the EU has dedicated its efforts to driving up the percentage of technologically proficient employees in the workforce. This means working with leading technology providers to upskill the talent pool while also encouraging further input as educators of future generations. 
• Business Transformation: While organizations are largely on board with the fact that future commercial success depends on their ability to adopt new technologies, the infrastructure, services, and support must be in place for them to do so. 
• Digital Infrastructure: The landscape will evolve based on the infrastructure in place, and there is no surprise that the EU is consistently pushing for development in this area. As more and more countries house subsidiaries of globally-renowned businesses, physical networks must align with their demand for greater connectivity. 
• Public Services: Security and sustainability are two critical areas for innovation in the Digital Decade. Pressure on public services leaves a gaping hole in care and efficiency, which is to be filled with technology—for example, keycards, electronic devices, and other digital aids to simplify healthcare. 

EU Digital Compass Initiative: A Digital Transformation Strategy

The Digital Decade is centered around 5G and all underlying innovations that will improve connectivity. Seeing this through requires a clear strategy—cue the Digital Compass. The initiative comprises the roadmap for economic and social evolution, as well as the actions required to bring Europe into a fully digital era. 

The European Commission measures this using the Digital Economy and Society Index (DESI)—the collective indicators and measurements of Europe’s digital transformation. 

As such an influential organization in global trade, the goals set out by the European Commission will influence all industries globally as trade between nations, including non-EU countries, is impacted by the growing need for digital products and solutions. It is vital for companies in the printed circuit board (PCB) sphere to understand the ins and outs of the Digital Compass in order to navigate changes across member states. 

Energy Sector

European countries have struggled over the past few years to navigate the balance between a global pandemic, neighboring conflict, and the demand for clean energy. Influenced by such disruptions, the EU commits technology to the evolving energy sector to ensure the success of diversification. 

Since the Russia-Ukraine crisis ensued, Europe has since aimed to localize its energy production where possible, pumping €1 billion into data solutions through its Horizon 2020 program. But, in order to do so, countries are increasingly reliant on both connectivity and digital hardware to run modern energy infrastructure. 

Emerging eMobility

Europe is not shy of changes to its mobility network, and is even home to some of the most successful electric vehicle (EV) manufacturers in the world. The European EV market has seen more challenges from Chinese car makers—the likes of BYD and SAIC—which has only shifted the EU into a new gear and exacerbated the need for more and more technology skills in member states. 

Chip production, battery manufacturing, and other crucial innovations will be made in the coming years as a result of increased input from governments to bolster the price under-cutting from Chinese brands.

State of the EU Digital Compass

A report commissioned with the consulting firm EY outlines 5G progress as of March 2023, but one notable advancement in the distribution of 5G can be seen in 700 megahertz and 3.6 gigahertz bands now available across EU member states. However, the whitepaper also suggests that connectivity at 26 GHz lags behind the Commission’s expectations. 

In terms of technology adoption, DESI 2022 indicated more input into cloud computing, although a late measurement of this would likely see a greater focus on big data and artificial intelligence (AI). During the period of 2017 to 2022, Eastern European countries were seen to be underperforming, while Finland, Denmark, the Netherlands, and Sweden reap the benefits of an advanced digital economic status. 

As a result, the Digital Compass echoes the agenda of the previous year, which is largely centered around providing the public with access to digital technologies, delivering a network capable of supporting an ever more demanding digital landscape, and ensuring that innovation aligns with an upward trajectory for European economies. 

How Does the Digital Compass Impact Non-EU Countries?

Having recently seen a hard push for technical proficiency across Europe, it is clear that European nations attempt to achieve digital sovereignty by localizing modern sourcing, R&D, and manufacturing tasks, minimizing their reliance on external providers. 

Speculation over relationships between countries and their respective trades has grown as a result of exceptionally high trade tariffs—strategically segregating China from the market, resulting in challenges from both sides. This applies to electric vehicle (EV) imports, as well as some of the critical PCB parts providers in the world. 

Much of the PCB supply originates from China, which has served the country well for decades. However, the growth prospects for the EU—and a deepening alliance with the US—could present challenges for the world’s leading electronics economy. Firstly, Europe’s push for more independence will shape how the industry looks. Secondly, the EU-US Trade and Technology Council (TTC)—formed in 2021 for the two continents to align their approaches to global trade, and deepen transatlantic relationships. 

The long-term result of this, particularly as the States and the EU isolate Chinese supplies with increased trade tariffs, will be increased proficiency across European countries. The alliance in the West is forming as countries begin to think about the future, their potential to localize certain services in the event of global disruptions, and also to ensure that solutions fit with their sustainability agendas. 

As for future developments, the TTC will drive transatlantic cooperation on vital technologies for their respective futures: developments to AI, adoption of 6G, and sustained production and distribution of semiconductors and other crucial components. The TTC will be a major contributor to the success of the Digital Compass in light of trade pressure between Western countries and Chinese trade.