The report uses the following value-chain for HPC:
However, the "Chip manufacturers and system integrators" are excluded from the report
"Nevertheless, it is noted that they can play a substantial role in the procurement processes of large computing systems. There are only a few chip manufacturers operating worldwide. System integrators depend on buying their processors at competitive prices in order to be able to make competitive bids. Hence, chip manufacturers have the ability to influence the outcome of bidding processes by offering different prices to different system integrators for the same or similar types of chips/ processors in the same procurement process. With the tight integration of I/O fabrics to certain chip/processor models, dependency on the pricing dictated by the chip manufacturer is even more severe since other hardware components also need to be acquired from them (vendor lock-in)." At the time when the study for the report started, this may have been the case. With the current development into a wider choice of processors (AMD comeback, ARM based processors) and the EuroHPC/EPI support for Open Source based RISC-V, this seems no longer to be true.
ISVs are a focus of the report: A considerable number of European ISVs are industry leaders in simulation and modelling applications for HPC on a global scale, and generally focus on highly specialised niche segments. They are facing growing global competition in their niche markets from larger and less specialised providers expanding their presence into these new segments, the report says.
For HPC centres, the study focuses on Tier-0 and Tier-1 publicly funded centres. But also (smaller) commercial centres are discusses. However, Tier-2 and Tier-3 centres are not considered in scope of the project.
HPC intermediaries play, according to the report a critical role in connecting users of HPC services and HPC centres. HPC intermediaries are companies, RTOs, or specialised departments located at HPC centres which provide advisory or consultancy services in the field of HPC, enabling users of HPC services to receive an optimal return on investment in HPC. The report mainly focuses on intermediaries and intermediary services provided by HPC or research centres. Support by companies is hardly discussed. Fortissimo is for instance used as an example in many places of the report. And, although it is a good example, there are also examples of companies that could have been mentioned in addition.
HPC customers, both industrial and research are considered to be important by the report.
Thee authors of the report did interview a number of people in the field, and did madditional desk research. The findings are summarized in 8 key findings:
Finding 1: Demand for HPC capabilities is rapidly increasing in key sectors of the European economy, such as aerospace, automotive, energy, manufacturing and financial services, while Europes more "traditional" SMEs are lagging behind.
Finding 2: Fragmentation and limited coordination at the EU level has resulted in a suboptimal investment climate and an underinvestment in strategic HPC infrastructures in Europe.
Finding 3: Most European HPC centres are largely publicly financed and owned, and dedicated to research. More commercially oriented HPC centres and activities within public HPC centres are emerging, but are often hampered by rules and regulations.
Finding 4: Key Stakeholders (from HPC centres to HPC customers) in the European HPC ecosystem face different financial challenges that need tailored solutions.
Finding 5: HPC intermediaries represent a key link between HPC infrastructure and customers, able to further catalyse commercial exploitation by matching supply with demand.
Finding 6: Demand for HPC services among SMEs is not only constrained by the limited knowledge of the benefits of HPC, but also by a lack of finance to invest.
Finding 7: Independent Software Vendors (ISVs) are crucial actors in European HPC. However, ISVs have difficulties in accessing finance.
Finding 8: Private investors are already engaged in the financing of commercial HPC infrastructure (especially HPC centres), but not in public HPC infrastructure with limited bankability prospects.
The report looks into detail in the "financial supply side" of HPC. There are several categories of financial institutions with more or less experience in financing HPC.
Private financing institutions are generally interested in investing in the European HPC sector. The main barrier, the authors write, impeding a stronger involvement of commercial banks and equity investors in HPC is the lack of commercially viable business models in the market. If these are identified and meet certain requirements, lenders are generally open towards financing the sector.
Equity investors have the least difficulty in understanding innovative business models in the HPC market according to the report. They play an important role in fuelling the growth of smaller companies with a clear business case. Compared to the USA, however, the activities of private investors in Europe are modest in scale, the report says.
The majority of commercial banks apply a traditional due diligence approach. This approach can result in constrained access-to-finance for borrowers in the HPC sector due to the risk profile of these ventures. HPC players such as ISVs often face situations where either future markets are not yet sufficiently developed or sufficient collateral cannot be provided. The more general the tools developed by ISVs, the better chances there are on getting financing.
Investments in the HPC infrastructure are generally eligible for financing from national and/or regional promotional banks, and public financial institutions, which also offer crucial financing instruments for smaller volumes as well as risk-sharing instruments necessary for involving private investments.
Recommendation 1: Increase financial support from the public sector for strategic HPC infrastructure and services with an emphasis on improved coordination and a strong public value investment approach.
The study concludes that there is a lack of coordination of HPC investments in Europe, fragmentation of the sector, and substantial underinvestment in HPC infrastructure and services in Europe. This is particularly applicable to the case of exascale computing capacity, the report says.
A key finding from the study is that the financing of these large-scale facilities is challenging, since private investors will not invest in the required research and development of exascale computing, the report says, mainly due to the extremely high investment costs required, as well as the high level of uncertainty and the lack of assured revenues from these investments, until the technology becomes more established and can be directly applied to industrial and commercial applications. The required investments for European HPC infrastructure that can compete with the rest of the world requires substantial investment, estimated at EUR 500-700 million per investment cycle, which cannot be payed by any individual Member State the authors conclude. Hence, the study recommends improving the coordination and pooling of financing by setting up of a mechanism that enhances collaboration between the European Commission, Member States, regions and the private sector. In particular, the study recommends jointly developing a financing concept based on a PPP approach for HPC, as planned for the recently launched EuroHPC Joint Undertaking.
Recommendation 2: Strengthen the uptake by HPC users, in particular for commercial applications by industry, SMEs, and innovative companies and start-ups by strengthening the role of HPC intermediaries via public support.
The development of viable business models for HPC centres is largely dependent on increasing demand for such services by commercial users says the report. The HPC ecosystem generally is at a relatively early stage, as there is a lack of awareness of HPC's potential benefits among SMEs, while demand from innovative companies (such as companies using Artificial Intelligence) is emerging but still limited, the authors write. Of course, much has happened since the authors collected there information. Artificial Intelligence and Machine Learning companies today are now growing fast in number and size.
Recommendation 3: Support (mainly via public support) HPC stakeholders (in particular HPC centres and intermediaries) in developing more commercially oriented business models based on the provision of secure and flexible HPC services and infrastructure.
Viewed from a from a business perspective the European HPC ecosystem is still in an emerging phase. The authors consider the development of more commercially oriented business models to be an important step in order to access repayable capital and reduce dependence on public funding. In order to achieve this goal, it should be considered not only to promote demand for HPC infrastructure and services, but also to support HPC stakeholders, in particular HPC centres and intermediaries, in developing business models in order to capture and better link their offer with the existing and emerging demand for HPC services and infrastructure.
Recommendation 4: Adapt existing financial instruments
and explore the development of more dedicated financial instruments and blended instruments for the financing of HPC centres and to support the digitalisation of companies including HPC development and deployment.
In more detail the recommendation is to adapt existing financial instruments and strengthen their use and uptake. Explore the set-up of dedicated financial instruments for the take up of digital services including HPC as a service. Consider the use of blended financial instruments (i.e. combining private and public funding) for financing HPC centres.
Recommendation 5: Improve knowledge of, and access to, public financing instruments and financial advisory services for HPC stakeholders.
Currently there is a lack of knowledge and awareness of existing financial instruments among HPC stakeholders. They also have tge perception that the application process for these instruments is lengthy and cumbersome. A key objective should be to increase the use and uptake of existing financial instruments by HPC stakeholders.
The report is available from: