By Christoph Hammerschmidt

After a tough crisis year 2009, the “Silicon Saxony” high-tech cluster around Dresden (Germany) is about to get back on track. While the once world-leading photovoltaics industry is increasingly getting under pressure from Asia and some players remain skeptical whether the crisis now is really over, chip manufacturer Globalfoundries is emerging as ‘king of the hill’ in the region.

The economic crisis hit the chip industry in and around Dresden particularly hard when memory devices maker Qimonda AG had to file for insolvency about a year ago. The liquidation of Qimonda’s production line in Dresden triggered a wave of redundancies. But while the semiconductor industry in the region suffered from the downturn during the first half of 2009, the photovoltaics industry prospered, fueled by government programs aiming at fostering renewable energies.

One of the results of these programs was that Germany’s PV market became the world’s largest one (even though the country is not really known for an abundance of sunshine). Since there are technical similarities in producing chips and PV cells, the growing PV industry even was able to absorb a certain number of the engineers formerly working for Qimonda and other semiconductor companies in the region.

Now the situation has reversed again. The semiconductor industry is firing again on all cylinders, while the PV industry gets under heavy pressure.

For the semiconductor industry, it looks almost like the good old days are back again.

During the past quarter, the Saxon chip industry has grown in all segments, acknowledges Helmut Warnecke, board member of the Silicon Saxony industry association. “Just recently we adjusted our expectations upwards”, Warnecke said. For the time ahead, the chip industry expects a healthy growth of 17 percent as an average across all segments; for some specific segments the growth expectations even exceed 20 percent.

[Saxony's outlook is one of rising optimism and indications elsewhere that Eastern Europe's tech and innovation sectors may be witnessing the passing of the greatest global recession of modern times. For more on this see our timely interview: Czech Invest sees brightening FDI outlook. Editor]