Fraunhofer Annual Report 2019

Annual Report 2019

Out future mission: Research for sustainable value creation
REPORT OF THE EXECUTIVE BOARD
The Executive Board
Management report 2019
Report of the Senate on the financial year 2019
Inside the Fraunhofer Senate
REVIEW OF FRAUNHOFER RESEARCH
Our future motivation – ethics and responsibility in applied research
New initiatives and infrastructures
Projects and results 2019
Awards 2019
Visions that will shape tomorrow’s world
People in research
Fraunhofer Institute spin-offs
FINANCIAL REPORT
Balance sheet at December 31, 2019
Income statement for the financial year 2019
Reconciliation between income statement and performance statement (cash-basis accounting) 2019
Performance statement for individual Fraunhofer entities
Excerpts from the notes to the financial statements 2019
Convenience translation of the German independent auditor’s report
SERVICE
Structure of the Fraunhofer-Gesellschaft
Members, constituent bodies, committees
Further initiatives and research infrastructures
Addresses in Germany
International addresses
Editorial notes

The Fraunhofer-Gesellschaft The Fraunhofer-Gesellschaft is the world’s leading applied research organization. In focusing on key tech- nologies for the future and their commercial exploitation by business and industry, Fraunhofer plays a pivotal role in the innovation process. Based in Germany, Fraunhofer is a pioneer and catalyst for groundbreaking develop- ments and a model of scientific excellence. As a source of inspirational ideas and sustainable scientific and technological solutions, Fraunhofer provides science and industry with a vital base and helps shape society both now and in the future. At the Fraunhofer-Gesellschaft, interdisciplinary research teams work with partners from industry and government to turn novel ideas into innovative tech- nologies, to coordinate and realize key research projects with a systematic relevance, and to strengthen the German and European economy with a commitment to value creation that is based on ethical values. International collaboration with outstanding research partners and companies from around the world brings Fraunhofer into direct contact with the key regions that drive scientific progress and economic development. Founded in 1949, the Fraunhofer-Gesellschaft currently operates 74 institutes and research institutions through- out Germany. The majority of the organization’s 28,000 employees are qualified scientists and engineers. They work with an annual research budget of 2.8 billion euros. Of this sum, 2.3 billion euros is generated through contract research. Around 70 percent of Fraunhofer’s contract research revenue is derived from industry contracts and from publicly funded research projects. The remaining 30 percent comes from the German federal and state governments in the form of base funding. This enables our institutes to work on solutions that are likely to become vital for industry and society in the coming years. Applied research also has a knock-on effect that is felt way beyond the direct benefits to the customer. Our institutes boost industry’s performance and efficiency, promote the acceptance of new technologies within society, and help train the future generation of scientists and engineers that the economy so urgently requires. We have a highly motivated staff, working at the cutting edge of research. They are the key factor for our success as a scientific organization. Fraunhofer offers its researchers the opportunity to undertake independent, creative and, at the same time, targeted work. We provide our employees with a chance to develop the professional and personal skills that will enable them to take up positions of responsibility within Fraunhofer itself or at universities, in industry and in society. Students who work on projects at Fraunhofer Institutes have excellent career prospects in industry on account of the practical training they enjoy and the early experience they acquire of dealing with contract partners. The Fraunhofer-Gesellschaft is a recognized non- profit organization. It takes its name from Joseph von Fraunhofer (1787–1826), the illustrious Munich researcher, inventor and entrepreneur. Figures as at January 2020 www.fraunhofer.de

Ladies and gentlemen, In 2019 – an anniversary year for the Fraunhofer-Gesellschaft – we once again returned an impressive performance, marked bynewrecordfigures.Ourtotalbusinessvolumeincreasedby 8percentto2.8billioneuros;contractresearchby6percent to2.3billioneuros.Attherootofoursustainedsuccessisthe expertiseandexceptionaldedicationofour28,000employees. Each day, they perform outstanding work at our 74 institutes andresearchinstitutions,beitinscientific,organizationalor administrativeareas.Letmetakethisopportunity,onbehalfof the entire Executive Board, to thank them all! Themottoforouranniversaryyearwas“70yearsofFraunhofer. 70yearsoffuture.#WHATSNEXT”.Underthisbanner,we celebrated at home – with our institutes – and away – with our partnersfrombusiness,politicsandcivilsociety.Ouranniversary was an opportunity not only to review past successes but also to look ahead to the future and to set out our goals for Germany andEurope.ItwasanoccasiontoshowcasetheFraunhofer- Gesellschaft as an innovative force, a strong partner and an agileplayer–onethatiseagertoseizenewopportunitiesand to support business and politics in their endeavors to tackle keysocialandeconomicchallenges. Asaleadingresearchorganization,Fraunhoferbearsanever- growing responsibility for developments in science, business, politicsandsociety.Itisachallengewearehappytoaccept. Wewillthereforecontinuetodoeverythinginourpowerto fulfillthestandardsthisrequiresintermsofscientificexcellence, ethicalconductandprofessionalintegrity.Ourunderstanding of corporate responsibility rests on a set of principles that are subjecttocontinuousreview.AtFraunhofer,corporaterespon- sibilitymeanshavinganHRpolicythatmeetsouremployees’ needsandoffersthemmotivation.Itmeansusingresources inawaythatisefficientandsustainable;andrespectingand deepeningethical,socialandenvironmentalnorms.

Ourdedicationandourwilltosucceedwillalsoguideusin thefightagainstthecoronavirus.TheExecutiveBoardandthe Presidential Council have resolved to launch a major program of action to confront these challenges and to boost our impact andpowerofinnovationeveninthesetimesofcrisis.Bycon- ducting precompetitive research in strategic areas, we will preparethegroundforanecessarysurgeininnovation.Our message to industry is therefore that Fraunhofer will continue tofacilitatevaluecreationandtherebysecureprosperity. Here,too,wewillcontinuetopursuerationalscientificinquiry and thereby help shape the future on behalf of Germany and Europe.Togetherwithourcustomers,ourpartnersandour entire workforce, we will do everything in our power to ensure that 2020 is also a resounding success! Yours sincerely, ReimundNeugebauer President of the Fraunhofer-Gesellschaft Withrespecttoequalopportunities,wemuststrivetoensure we make better use of the huge potential offered by expert femaleresearchers.Inthefaceoffierceglobalcompetition, thisisapooloftalentwecannotignore.Bythesametoken, asascientificbodycommittedtodeliveringresearchexcellence, we cannot afford to dispense with the expertise of researchers fromcountriesbeyondGermany.Ourgoalisthereforetoes- tablishEnglishasthesecondofficiallanguageatFraunhofer, thereby ensuring that we offer ideal conditions for these new membersofourworkforce. Aprimeobjectiveofourresearchistofacilitatethesustainable creationofvalue.Itisagoalwepursueinahostofprojects, such as our living laboratory for the generation, transport, storageanduseofrenewablehydrogen.Furtherexamples includetherecentestablishmentoftheFraunhoferResearch InstitutionforEnergyInfrastructuresandGeothermalSystems IEG, which incorporates the International Geothermal Centre Bochum(GZB),andoftheFraunhoferResearchInstitutionfor MaterialsRecyclingandResourceStrategiesIWKS.Meanwhile, the Fraunhofer-Zukunftsstiftung (Fraunhofer Future Foundation) will now focus on projects with a commitment to value creation that is based on ethical values, although commercial viability remainsakeyconsideration.Thecurrentannualreportincludes a section devoted to the topic of ethics and responsibility in thefieldofappliedresearch. The aim of the Fraunhofer Digital project is to progressively digitalizeandautomateourbusinessprocesses.Thiswillenable ustocreateanextremelyefficientsystemofadministration.At the same time, it will mean that we can put our own data to work in increasingly connected and intelligent applications that give us the leverage to exploit further business and innovation potential.Thisprojectisvitalforourfutureefficiency.Inthe future, we will have to hold our own in an extremely challenging environment, with increasingly rapid cycles of innovation and in globalcompetitionwithlargeandambitiouseconomicregions.

REPORT OF THE EXECUTIVE BOARD 8 The Executive Board 12 Management report 2019 38 ReportoftheSenateonthefinancialyear2019 40 InsidetheFraunhoferSenate REVIEW OF FRAUNHOFER RESEARCH 50 Ourfuturemotivation– ethics and responsibility in applied research 60 Newinitiativesandinfrastructures 74 Projects and results 2019 98 Awards2019 106 Visionsthatwillshapetomorrow’sworld 108 People in research 122 Fraunhofer Institute spin-offs FINANCIAL REPORT 128 BalancesheetatDecember31,2019 130 132 Reconciliationbetweenincomestatementandperformance Incomestatementforthefinancialyear2019 statement (cash-basis accounting) 2019 134 PerformancestatementforindividualFraunhoferentities 139 Excerptsfromthenotestothefinancialstatements2019 142 ConveniencetranslationoftheGermanindependentauditor’s report SERVICE 148 StructureoftheFraunhofer-Gesellschaft 150 Members, constituent bodies, committees Further initiatives and research infrastructures 152 158 AddressesinGermany 160 Internationaladdresses 162 Editorialnotes

THE EXECUTIVE BOARD Following senior roles in the mechanical engineering industry, Reimund Neugebauer established in 1991 what has since become the Fraunhofer Institute for Machine Tools and Forming Tech- nology IWU. In his 21 years as director, the institute grew to become an international center for manufacturing engineering. Over this period, he served in parallel as director of the Institute for Machine Tools and Production Processes at Chemnitz University of Technology. Prof. Dr. Neugebauer is a member of numerous national and international academies and associations. He has served as president of the Fraunhofer-Gesellschaft since 2012. Prof. Dr.-Ing. habil. Prof. E. h. Dr.-Ing. E. h. mult. Dr. h. c. mult. Reimund Neugebauer President of the Fraunhofer-Gesellschaft, Corporate Policy and Research Management 8

MANAGEMENT REPORT 2019 Strategy and operating environment ProfileoftheFraunhofer-Gesellschaft Creating opportunities through strategic initiatives Science policy framework Business report Total business volume Contract research Additional research funding Major infrastructure capital expenditure Financial and net asset position Shareholdings and spin-offs Internationalactivities Intellectual property activities Selected aspects of corporate responsibility Responsibilities of the Fraunhofer-Gesellschaft Extraordinary research projects and activities Employees Diversity Resources – mobility and waste management Risk situation and outlook Riskmanagementandidentifiedrisks Outlook 14 15 16 18 19 21 21 22 23 24 25 26 27 28 30 32 33 36 1212

R E P O R T O F T H E E X E C U T I V E B O A R D Fraunhofer-Gesellschaft – key data for 2019 (in € million) Total business volume Contract research Additional research funding Major infrastructure capital expenditure Business volume by budget Operating budget of which: personnel expenses of which: non-personnel expenses of which: transfer to reserves 1 Capital expenditure 2 Project revenue Contract research of which: industrial revenue of which: public-sector project revenue 3 Additional research funding Major infrastructure capital expenditure International project volume 4 Patent applications (number) Employees (number) 1 Special reserve for license-fee revenue. 2018 2551 2168 128 255 2551 2106 1362 698 46 445 1677 1486 723 763 60 131 293 612 2019 2760 2295 159 306 2760 2279 1479 769 31 481 1756 1549 724 825 79 128 296 623 Change +209 +127 +31 +51 +209 +173 +117 +71 –15 +36 +79 +63 +1 +62 +19 –3 +3 +11 26,648 27,988 +1340 +8% +6% +24% +20% +8% +8% +9% +10% –33% +8% +5% +4% +0% +8% +32% –2% +1% +2% +5% 2 Current capital expenditure for contract research, additional research funding, and major infrastructure capital expenditure. 3 Comprises German federal and state governments, EU and other revenue. 4 Excludeslicense-feerevenueandrevenuegeneratedbylegallyindependentinternationalFraunhoferaffiliatesthroughbusiness with third parties (2019: €29 million). 13

STRATEGY AND OPERATING ENVIRONMENT Profile of the Fraunhofer-Gesellschaft The Fraunhofer-Gesellschaft zur Förderung der angewandten Forschunge.V.(Fraunhofer)isanon-profitorganizationthat wasfoundedin1949.Itcarriesoutappliedresearchand developmentforthebenefitofindustryandsociety.The organization’s fields of research focus on people’s needs: health, security, communication, mobility, energy, and the The seven Fraunhofer Groups are a way for Fraunhofer Institutes that conduct contract research in related areas of technology to coordinate their R&D strategies: – Information and Communication Technology – Innovation Research – INNOVATION – Life Sciences – Light & Surfaces environment. – Materials and Components – MATERIALS – Microelectronics – Production In addition, institutes or departments of institutes with different areas of expertise work together in Fraunhofer Alliances in order to develop and market solutions for specificbusinesssectors. In the 70 years since the Fraunhofer-Gesellschaft was founded, the organization has grown from strength to strength on the back of its successful Fraunhofer funding model for applied research. The Fraunhofer-Gesellschaft has an undeniable impact,asconfirmedbythemanytestimonialsreceivedfrom a long list of notable scientists, policy-makers and business- people during the anniversary-year events. Together,the74FraunhoferInstitutesandResearchInstitutions in Germany employ around 28,000 people who generate an annual business volume of €2.8 billion. Contract research accounts for €2.3 billion of this total. Around 70 percent of Fraunhofer’s contract research revenue is derived from contracts with industry and publicly funded research projects, while the German federal and state governments contribute around 30 percent in the form of base funding for precom- petitive research. Atanorganization-widelevel,Fraunhoferidentifiesinno- vative areas of business and trending technologies with significantmarketpotentialand/orrelevancetosocietyand sets up in-house research programs to move them forward. Each Fraunhofer Institutedevelopsitsownfieldsofbusiness and core areas of expertise on the basis of its immediate marketenvironmentanditslinkswiththewiderscientific community.Althoughtheinstitutesoperateasseparateprofit centers, they are not autonomous legal entities. 14

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Creating opportunities through strategic initiatives implement best practices. The new process aligns research The Fraunhofer-Gesellschaft continues to pursue its strategy of quantitative growth without losing sight of quality. As the R&D portfolio grows in breadth and depth, there is an in- creasing need for structures to leverage synergies and avoid redundant efforts. In 2019, Fraunhofer created new instruments and processes at corporate level with this aim in mind. Similarly, theprocessesbywhichresearchfindingsaretransferredto industry are being more closely interlinked. objectives more closely with the overlying strategy, permits both top-down and bottom-up approaches, and is compatible with Fraunhofer-wide business activities. This approach to strategy planning gives the Fraunhofer Groups greater scope toleveragesynergiesandusetheirresourcesefficiently, allowing them to follow their own, coordinated strategies for specificresearchtopics. Since 2015, the High-Performance Centers have proved their worth as part of the national research transfer infra- The ten high-impact projects launched in 2018 as part of the Fraunhofer 2022 Agenda to promote excellence were reviewed in 2019 by the Executive Board and the Presidential structure in Germany. In these centers, Fraunhofer Institutes work together with universities, non-university research institutions and industrial partners. They serve as platforms Council. Completed projects such as the introduction of an in the innovation ecosystem, using a wide range of routes to international mobility program were removed from the agenda, whilethegoalsofsomeotherprojectsweremodified,asin the case of “gender-appropriate excellent careers,” which transfer knowledge on the basis of structured roadmaps for theirspecificregion.All16High-PerformanceCenterswere evaluated in 2019 and in all cases it was recommended that now places a stronger emphasis on appointing more women they should continue. An analysis of their results showed that, as institute directors. At the same time, new projects were added to the agenda, including the establishment of skills- based alliances (see below). The projects that form part of between them, the High-Performance Centers had generated €140millioninindustrialrevenueandledtomorethan300 contracts being placed with Fraunhofer by small and medium- the revised Fraunhofer 2022 Agenda are continually monitored sized enterprises (SMEs). by a foresight committee, the Future Commission, consisting of the members of the Fraunhofer Executive Board and eleven In 2019, at the request of the German Federal Ministry of institute directors. Our unique grasp of new technologies and excellent perform- ancearecurrentlybasedontheeffortsof74Fraunhofer Institutes and Research Institutions. Combining these efforts intoalliancesformedbyinstituteswithsimilarscientificex- pertise builds strong and internationally competitive centers Education and Research (BMBF), Fraunhofer developed an outline concept for a new Research Fab Battery Cells (FFB), to accelerate the transfer of new battery designs and innovative production methods to commercial use. The FFB forms part of a wider BMBF initiative in which funding for battery tech- nology research will be distributed to a number of different competence centers and clusters in Germany. Fraunhofer is of excellence and research portfolios. A standardized strategy set to play an active role in setting up and operating this planning process for the Fraunhofer Institutes has been in major project, for which the BMBF has earmarked a total of place for over 15 years, with the aim of strengthening each €500 million in funding. The state of North Rhine-Westphalia institute’s competitiveness. This process was comprehensively has agreed to provide a further €200 million for the con- reformed for the second time in 2019, to take account of struction of a building to house the new facility in Münster. changes in the domestic and international markets and 15

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 The Fraunhofer-Gesellschaft adapts its portfolio to the chang- ing needs of industry and society by expanding or reorienting the focus of its institutes and by founding new institutes or research institutions. For example, 2019 saw the creation of the Fraunhofer Research Institution for Energy Infra- structures and Geothermal Systems IEG. It resulted from the integration of the International Geothermal Centre The research transfer program, launched in collaboration with the Deutsche Forschungsgemeinschaft (DFG) to support trilateral projects involving Fraunhofer Institutes, industrial partners and universities, successfully moved on to the actual project phase in 2019. It gives companies the opportunitytoshareinthelatestbasicresearchfindingsat an early stage and develop them into applications with the Bochum (GZB) into the Fraunhofer-Gesellschaft, with the help of the Fraunhofer-Gesellschaft’s transfer experts. Each addition of two other locations, one in Cottbus focusing on project runs for a maximum of three years, during which the energy infrastructures and one in Jülich focusing on sector partners work together to build a demonstrator or prototype. coupling. These three locations form a bridge between the regions most affected by structural change in eastern and westernGermany.Onesignificantexampleofachangeof thematic focus is the renaming of the former Fraunhofer Links between Fraunhofer and universities or universities of applied science were further expanded in 2019. In total, Fraunhofer employees provided around 8900 hours of tuition Institute for Embedded Systems and Communication Tech- per week during semester time. Approximately three-quarters nologies ESK, which now operates under the name of Fraunhofer Institute for Cognitive Systems IKS. The new focus of research at Fraunhofer IKS is security and safety aspectsofartificialintelligence(“safeintelligence”). of these hours of tuition were delivered at universities, and one quarter at universities of applied science. At the beginning of 2018, Fraunhofer decided to introduce an SAP system consisting of an enterprise resource planning (ERP) module to Fraunhofer has also embraced the concept of lead markets, inwhichFraunhoferaddressestheresearchneedsofspecific sectors, aiming to boost their ability to compete on a global manage essential business processes and a business intelli- gence (BI) module allowing information and data sources to be shared throughout the Fraunhofer dataspace. The main reason for this move was to bring the Fraunhofer-Gesellschaft’s scale and achieve technological sovereignty in Germany and existing IT structures into line with those in the “outside world,” Europe. This is to be achieved in particular by refocusing the thus enabling it to deal with the exponential growth in avail- existing Fraunhofer Alliances, for instance by building up able data, interconnected systems, and IT-based collaboration the capacity of the Fraunhofer Energy Alliance and of the with customers. The go-live date for its organization-wide Fraunhofer Mobility working group which forms part of the introduction is early 2021. Fraunhofer Transport Alliance. 16

Science policy framework The Innovation Dialog is an independent group of govern- ment advisors consisting of high-ranking representatives of Through the person of its president, the Fraunhofer-Gesellschaft business, industry, science and society at large, who come is represented in the German federal government’s two most together to discuss issues of relevance to future innovation important advisory committees on research and innovation: policy. In January 2020, German Chancellor Angela Merkel the High-Tech Forum and the Innovation Dialog. and members of her cabinet met with the steering committee, The High-Tech Forum has been chaired jointly by Professor Neugebauer and Christian Luft, state secretary at the German of which Professor Neugebauer is a member, for the third Innovation Dialog in the 19th legislative period. The main topic of discussion was the innovation potential of second- Federal Ministry of Education and Research (BMBF), since the generation quantum technologies, which could lead to a beginning of 2019. This body is tasked with advising the breakthrough in novel, disruptive applications such as quantum government on how to implement and further develop its computing, quantum communication and quantum sensing. High-Tech Strategy 2025. The High-Tech Forum met three The agility of the innovation system was also discussed on the times in 2019 to discuss issues surrounding innovation policy, basis of the eponymous discussion paper. The next Innovation and published two discussion papers: one looks into possible Dialog meeting is scheduled for June 2020 and will focus on ways of reaching the 3.5-percent target, i.e. increasing R&D innovations for a green deal. Professor Neugebauer and three spending to 3.5 percent of GDP, while the other deals with the topic of social innovation; its authors advocate that social innovation should be seen as complementary to technological other members of the steering committee have been entrusted withcompilingmaterialforthisas-yetconfidentialcasefile. innovation, and they have made proposals for funding rele- vant research. The resulting recommendations for action will be discussed by the round table of state secretaries. Repre- Fraunhofer welcomes the promulgation of the German Act on Tax Incentives for Research and Development (FZulG). This puts an end to a debate that has been going on for more sentatives of the High-Tech Forum also attended an evening parliamentary session to answer questions directly posed by members of the Bundestag. Six key topics have been placed than a decade. The new law rightly ensures that funding for appliedresearchbenefitsthecontractingparty.Fraunhofer has lobbied intensively from the start for a law that makes this on the agenda for 2020: agility of the innovation system, possible. According to the provisions of the new law, which future forms of value creation, sustainability within the inno- came into force on January 1, 2020, all commercial enterprises vation system, innovation and skills, biology and digitalization, and open science and innovation. The Fraunhofer-Gesellschaft’s science policy department also provides support to the federal subject to corporation or income tax in Germany will be able toclaimtaxbenefitsnotonlyforin-houseR&Dbutalsofor research conducted under contract by external third parties. ministries with regard to governance of the missions with The new rules allow 60 percent of the amount paid to external which the High-Tech Forum is entrusted in connection with research service providers to be recognized as eligible personnel the High-Tech Strategy 2025. In a parallel research project, costs. Companies can claim 25 percent of these eligible costs the Fraunhofer Institute for Systems and Innovation Research as a reduction in corporation tax. The maximum amount of ISI studies indicators to measure the success of these missions. eligible research costs is limited to €2 million per year per company. Consequently, the maximal achievable tax savings per company amount to €500,000 per year. 17

BUSINESS REPORT Fraunhofer’s total business volume in € million Total business volume 2760 306 159 2551 255 128 2286 173 121 2115 2081 153 127 88 114 In business terms, 2019 was a successful year for Fraunhofer. The total business volume amounted to just short of €2.8 billion, having increased by a substantial 8 percent compared with the previous year. Contract research accounted for 83 percent of this sum, or around €2.3 billion, and represents the organi- zation’scoreactivity,aroundonethirdofwhichisfinanced by means of base funding provided by the federal and state governments. As of 2019, research of a long-term nature that 1835 1879 1992 2168 2295 falls outside the scope of this regular base funding is allocated to a new item, additional research funding, which amounted to €159 million in the reporting period. Major infrastructure capital expenditure amounted to €306 million. The three segments will be discussed in greater detail in the following 2015 2016 2017 2018 2019 sections. Major infrastructure capital expenditure Business volume is based on the performance statement, Additional research funding Contract research Total business volume 2019 by budget, in € million 481 31 769 2760 1479 Personnel expenses Non-personnel expenses Transfer to reserves Capital expenditure 18 which meets the requirements of the funding agencies. In the operating budget, personnel and non-personnel expenses are recognized according to general accounting practice along with the change in the special license-fee revenue reserve. As capital expenditure is recognized at the amount incurred at the time of purchase, depreciation, amortization and impair- ment losses are not included in the performance statement. Intotal,capitalexpenditureroseto€481million,anincrease of 8 percent. In 2019, the ratio of capital expenditure to total business volume was 18 percent, as in the previous year. The personnel expenses recognized in the operating budget rose by9percentto€1479million,anincreasethatwasdueto workforcegrowthof1340employees(up5.0percent)andto a 3.1-percent average wage increase granted as of April 1, 2019 under the collective wage agreement for the public sector. At €769 million, non-personnel expenses were around 10 percent higher than in the previous year. Reserves increased by €31 million.

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Contract research Revenue from contract research in € million Contract research is the mainstay of Fraunhofer’s business activities and, based on the Fraunhofer funding model, consists of three areas each contributing around one third totheorganization’sfinances: – Research directly contracted by industry – Publicly funded research projects – Precompetitive research funded with base funding Budgeted expenditure for the contract research segment grew by 6 percent in 2019 to reach €2295 million, of which theoperatingbudgetaccountedfor€2142millionandcapital expenditure for €153 million. The amount of base funding usedtofinanceprecompetitiveresearchincreasedby9percent to€746million.BasefundingisprovidedbytheBMBFand the state governments in a ratio of 90:10. New research insti- tutions generally receive initial funding from their host state duringtheirfirstfiveyears.Industrialrevenue,at€724million, was on a par with the previous year. Revenue from contracts with industry increased by 1 percent to €617 million, while license-fee revenue decreased by 2 percent to €107 million. Revenue from publicly funded projects continued to increase significantlyin2019.FundinggrantedbytheGermanFederal Ministry for Economic Affairs and Energy (BMWi) grew at a particularlyhighrate,increasingby28percentto€194million. Revenue from projects funded by the German Federal Ministry of Education and Research (BMBF) increased by 7 percent to €209 million, while funding by individual states also increased by 7 percent, to €161 million. Revenue from other public sources totaled €113 million, and includes funding by foundations, univer- sitiesandotherinstitutions.EUrevenueincreasedby4percentto €95 million. As a partner in the Horizon 2020 Research Frame- 1835 1879 1992 641 682 711 664 704 755 2295 2168 724 723 763 825 530 493 526 682 746 2015 2016 2017 2018 2019 Industrial revenue Revenue from publicly funded projects Base funding Revenue from publicly funded projects in € million (2019) 825 209 194 113 95 161 53 BMBF BMWi work Programme, Fraunhofer plays an active role in shap ing Other government agencies Federal states the European Research Area and ranks third among participating EU Other sources research organizations in terms of research funding granted. 19

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Funding ratio in % 70.7% 34.9% 25.5% 4.3% 68.3% 32.1% 26.9% 4.2% The Fraunhofer-Gesellschaft’s high external funding ratio is auniquefeatureoftheorganization’sfinancialstructure,and a key performance indicator in the world of contract research. It is calculated as the share of external funding in the operat- ing budget, including imputed write-downs on investments (excluding initial funding for newly founded facilities and excluding changes in reserves.) Due to sustained strong organic growth, project revenue accounted for a steadily increasing share of the operating budget up until 2017, whereas the 2015 2016 2017 2018 2019 proportion covered by base funding has tended to decline. Total project revenue 1 Industry Federal and state governments EU Thanks to an exceptional increase in base funding granted in 2017, with annual increments, and the strategic utilization of thesefinancialresources,thefundingmixreturnedasplanned to the level foreseen by the Fraunhofer funding model. The 1 Includes other sources of revenue, 2019: 5.1%. proportion of the operating budget for contract research International project volume in € million 26.9 percent. On the other hand, the share of industrial revenue in the overall budget decreased to 32.1 percent. covered by external sources has remained above two-thirds, at 68.3 percent. The strongest increase was in revenue from the federal and state governments, which rose to a share of 264 275 279 293 296 94 91 95 ners within Europe increased by 3 percent to €117 million, 2015 2016 2017 2018 2019 while that generated by customers and partners outside of Europedecreasedslightlyto€84million.Switzerland,at €28 million, remained the largest market outside of Germany, Customers and partners outside Europe followed by the USA (€26 million) and Austria (€20 million). Customers and partners in Europe The largest markets in Asia were China and Japan, with rev- Project funding, EU enues of €18 million and €17 million respectively. 20 87 88 98 114 84 117 65 94 72 97 105 106 The consistently high international project volume is an indicator of Fraunhofer’s success in the global research market. In 2019, revenue from international projects amounted to €296 million (excluding license-fee revenue) and represented 19 percent of total contract research project revenue. Some 32 percent of the international project volume came from EU-fundedprojects,40percentfromcustomersandpartners in Europe, and 28 percent from those outside Europe. The amount of project volume generated by customers and part-

Additional research funding budget of €12 million, funded by the BMBF and the state of In 2019, alongside the established, separate funding route for defense research, additional research funding was obtained forthefirsttimethroughtheNationalResearchCenterfor Applied Cybersecurity ATHENE and through the Research Fab Battery Cells (FFB). Hesse in a ratio of 70:30. An initial amount of €2 million was spent in 2019 on setting up the FFB (see Creating opportunities through strategic initiatives). This amount will increase substantially in the years to come. ATHENE is operated jointly by the Fraunhofer Institutes for Secure Information Technology SIT and for Computer Graphics Seven Fraunhofer Institutes address topics that fall within the sphere of interest of the German Federal Ministry of Defence Research IGD in collaboration with Technische Universität (BMVg). These activities, for which the BMVg provides base Darmstadt and Darmstadt University of Applied Sciences. Its research focuses on the protection of critical infrastructures such as power and transportation, and the security of IT funding and ongoing project funding, are grouped together under defense research. The objective of these R&D activities is to provide people, infrastructures and the environment with systems. An interdisciplinary approach is applied, combining the best possible protection against potential security threats IT and engineering with legal and business aspects, psychology of a military, technological, terrorist or criminal nature or re- and ethics. ATHENE was launched in 2019 with an operating sulting from natural disasters. Revenue from defense research grewby13percentin2019to€145million,mainlyasaresult of the substantial, 28-percent increase in project funding to Additional research funding in € million €77 million. At €68 million, the amount required from base 159 funding was on a level with the previous year. 127 114 121 128 64 49 57 60 2 12 77 63 65 64 68 68 2015 2016 2017 2018 2019 Project funding, FFB (BMBF) Base funding, ATHENE (BMBF and Hesse) Project funding, BMVg Base funding, BMVg Major infrastructure capital expenditure Major infrastructure capital expenditure comprises building projectsandthepurchaseofscientificinstrumentsandfur- niture to equip new facilities. This item also includes capital expenditure in connection with the Research Fab Micro- electronics Germany (FMD), a longer-term project involving 11 Fraunhofer Institutes and 2 Leibniz Institutes. Total major infrastructure capital expenditure in 2019 amounted to €306million,asignificantincreaseof20percent. The development of the FMD continues to progress, with capitalexpenditureof€84millionmatchedbythesame amount of project revenue. The BMBF has allocated a total 21

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 of €350 million in funding for the FMD, with Fraunhofer re- European Regional Development Fund (ERDF), which reduces ceiving €280 million and the two Leibniz Institutes €70 million. Through its microelectronics research, the FMD’s goal is to strengthen one of Germany’s key industries and help these the funding required from federal and state governments by anequivalentamount.Minorbuildingprojectsarefinanced from base funding in a ratio of 90:10. The funding required companies modernize their technical infrastructure. from the federal and state governments in 2019 totaled Capital expenditure on building projects and the equipping of new facilitiesrosesubstantiallyby34percentcompared with the previous year. The amount spent on building projects increased by €55 million to €187 million, of which €155 million €178 million. ERDF funds from the states accounted for €39 million of project revenue, while €5 million was accounted for by other revenue. related to major and €32 million to minor building projects. Financial and net asset position At €35 million, spending on equipment for new facilities was on a level with the previous year. Special funding for major At December 31, 2019, the Fraunhofer-Gesellschaft had total building projects (and related equipment) is provided by the assets of €3708 million, up €263 million or 8 percent year over federal and state governments in a ratio of 50:50. The state governments often provide additional funding from the year. Assets presented in the ordinary accounts comprised 99.6percentoftotalassets,withcapitalofthenon-profit organizationaccountingfortheremaining0.4percent. Major infrastructure capital expenditure in € million 306 255 153 35 118 88 26 62 173 48 27 98 89 34 132 84 35 187 Non-current assets accounted for 63 percent of assets and were €183 million higher at €2319 million. This increase was chieflyattributabletocapitalexpenditureonproperty,plant and equipment, which exceeded depreciation of those assets. Property, plant and equipment grew by €190 million to €2250 million. Current assets accounted for 35 percent of assets and were €91 million higher at €1309 million. The increase is principally due to a higher amount of unappropriated grants from the federal and state governments (base funding) and receivables in connection with project billing (including contracts). By contrast, cash and cash equivalents (including bank account balances) decreased by €71 million to €91 million. Of that 2015 2016 2017 2018 2019 amount, €50 million was carried forward under the terms of Research Fab Microelectronics Germany (FMD) Equipping of new facilities Building projects (major and minor) 22 the management statutes. The securities portfolio increased by€31millionand,at€415million,nearlycorrespondstothe license-fee revenue reserve.

Equity–whichcomprisesthenon-profitorganization’s capitalthatisnotfinancedbygovernmentgrants(€15million) and restricted reserves (€16,000) – decreased by a marginal amount. Economic equity also includes three kinds of special reserve recognized in the balance sheet: The special reserve agencies under base funding arrangements. The funding mix for contract research corresponds to the proven Fraunhofer funding model and is on a solid footing. for grants relating to non-current assets was €185 million Shareholdings and spin-offs higher at €2306 million. The special license-fee revenue reserve grewby€31millionto€416million.Thespecialreservefor the present value of deferred income from a patent deal came inat€64million.Thisreserveismatchedbyotherreceivablesof an equivalent amount on the assets side of the balance sheet. Thespecialreserveforgrantsusedtofinancecurrentassets is not included in economic equity and is used to account for At the reporting date, the Fraunhofer-Gesellschaft held equity investments in a total of 90 companies operating in a diverse range of sectors. The transfer of technology to industry formed thefocusofactivitiesat64ofthecompaniesintheinvest- ment portfolio, while a further 20 equity investments were of a strategic nature. Equity investments also include six related companies. There was considerable activity in Fraunhofer’s income not yet received, less expenses not yet paid, by the investment portfolio in 2019. Overall, the organization spent reporting date. This essentially corresponds to advance project financingandamountedto€265million(unchanged)atthe reporting date. Provisionsincreasedby€23millionto€197million,€42million of which was accounted for by provisions with maturities of some €3.1 million to acquire equity interests. The Fraunhofer- Gesellschaft added nine companies to its investment portfolio and divested its shares in nine others. The total carrying amount of equity investments (including shares in related companies) decreased to €8.6 million (2018: €9.3 million) Income from the divestiture of equity investments came to more than one year. In the case of pension and compensated €1.1 million. leave provisions, a corresponding amount of receivables from federal and state governments totaling €81 million was entered on the assets side of the balance sheet. Spin-offs are an integral part of Fraunhofer’s strategy for exploiting its industrial property rights. The Fraunhofer Venture department typically provides support to spin-off Liabilitiesroseby€26millionto€441million.Thisincrease is attributable mainly to an increase of €29 million in other founders during preparation for launch. In individual cases, Fraunhofer takes a minority share in the spin-off company as liabilities to €36 million, of which €22 million relates to taxes. part of the technology transfer process. In 2019, Fraunhofer There are no liabilities with maturities of more than one year. Venture provided support to 69 new spin-off projects; in Asabeneficiaryofpublicfunds,theFraunhofer-Gesellschaft is subject to budgetary constraints that prohibit it from making use of the capital markets or of lines of credit with banks. Nevertheless, the organization’s liquidity is guaranteed at all times as it can regularly call on cash payments from its funding total, 26 new businesses were spun off from the Fraunhofer- Gesellschaft. Fraunhofer’s goal is to increase not only the number of spin-offs but also their percentage contribution to industrial revenues. Our innovation hub AHEAD offers a comprehensive package of targeted measures and programs to help achieve this. 23

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 International activities The Fraunhofer-Gesellschaft’s internationalization strategy is basedontheprincipleofcreatingscientificvalueforFraunhofer and generating positive effects both for Germany, Europe and for the partner country in question. Working in collaboration withtheworld’sbestineveryfieldenablesFraunhoferto develop future-proof solutions and innovative responses to global challenges. Fraunhofer has developed various formats forgeneratingexcellentscientificcontentandcooperating with attractive international partners. The eight legally independent international Fraunhofer affiliates, as part of the international Fraunhofer network, re- present the most institutionalized form of such collaborations: – Fraunhofer USA, Inc. they operate in their respective countries and the Fraunhofer Institutes based in Germany. Besides project volume generated by the Fraunhofer-Gesellschaft with cus tomers outside Germany, the legally independent international Fraunhofer affiliatesgeneratedthird-partyrevenuesamountingto €28million,accordingtotheirpreliminaryfiguresfor2019. Of this amount, Fraunhofer USA, Inc. alone accounted for €12 million, followed by the Stiftelsen Fraunhofer Chalmers Centrum för Industrimatematik (in Sweden) and Fraunhofer AustriaResearchGmbH,eachwith€4million. The Fraunhofer Innovation Platforms (FIPs) – formerly called Fraunhofer Project Centers (FPCs) – are vehicles enabling Fraunhofer Institutes to collaborate with research organizationsoutsideGermanonaspecifictopicforalimited period of time. In each case, the partner organization sets up the FIP under its own legal sovereignty and cooperates closely – Fraunhofer Austria Research GmbH with a Fraunhofer Institute in Germany on the chosen topic. – Fraunhofer Italia Research Konsortial-GmbH This form of collaboration aims at joint research, joint projects – Fraunhofer UK Research Ltd. for customers, and participation in publicly funded projects. – Fundación Fraunhofer Chile Research In 2019, two new FIPs were launched in Shanghai. – Associação Fraunhofer Portugal Research – Stiftelsen Fraunhofer Chalmers Centrum för Industrimatematik (in Sweden) – Fraunhofer Singapore Research Ltd. TheselegallyindependentFraunhoferaffiliatesareconstituted under the laws of their country of domicile and operate the currently 15 Fraunhofer research centers outside Germany. The latter are closely linked with local universities as their institutionalized partners, enabling long-term research activities abroad.Astheirworkisnotprofit-oriented,theselegally independentFraunhoferaffiliatesgenerallyqualifyforbase fundingfromtheircountryofdomicile,andtheyarefinanced in line with the Fraunhofer funding model. As part of Fraunhofer’s internationalization strategy, these legally inde- pendentFraunhoferaffiliatesaretaskedwithpromoting two-wayscientificcollaborationbetweentheresearchcenters 24 Fraunhofer’s internal program ICON (International Co operation and Networking) enables strategic project-based partnerships with international universities and non-university research orga- nizations of excellence. In 2019, the ICON program was instru- mental in initiating three new partnerships with leading centers of excellence in Switzerland, the Netherlands, and Austria. The Fraunhofer International Mobility Program (FIM) was created to encourage international mobility and networking among Fraunhofer employees, and to support knowledge transfer. The novel aspect of this program is that it addresses all categories of employees (researchers, administrative staff and lab technicians) at all stages of their career. The program was successfully piloted in 2019, enabling Fraunhofer employees from Germany to spend time abroad at locations throughout the international Fraunhofer network.

Intellectual property activities The Fraunhofer-Gesellschaft remains the leader among German research institutions in terms of the annual number of invention disclosures, patent applications, and total industrial Toguaranteeacontinuousflowofrevenuefromtheexploita- tion of intellectual property rights, patents owned by different institutes are increasingly being grouped together in applica- tion-specificportfoliostocreateoffersforselectedcompanies. This approach creates new opportunities to generate income property rights. Its performance is outstanding even when from licensing agreements and R&D projects. compared with that of industrial research laboratories. Over the last ten years, Fraunhofer has always ranked among the GermanPatentandTradeMarkOffice’s10to20mostprolific patent applicants. Similar statistics compiled by the European PatentOffice(EPO)alsoplaceFraunhoferamongthemost active patent applicants. In 2019, employees of the Fraunhofer- Gesellschaft submitted 733 invention disclosure reports. They filed623patentapplicationsclaimingrightsofprioritywith therelevantpatentoffices,whichcorrespondstoarateof morethantwopatentsfiledperworkingday.Fraunhofer’s portfolio of active patent families, each of which comprises all active rights in different countries, rose to 7050. Patent applications claiming rights of priority 608 602 612 623 506 Fraunhofer generates revenue from the commercial exploita- tion of intellectual property (IP) rights not only with license fees, but also by utilizing patent pools. The most successful pools of this kind contain patents for audio and video encod- ing. The pools – which include not only standard-relevant Fraunhofer patents, but also those owned by parties in various other countries – are a vehicle for granting licenses worldwide, enabling Fraunhofer to commercialize patents in well over 100 countries. The income from these pools is reinvested in pre- competitive research and makes a lasting contribution to strengthening Germany’s position as a research hub. In 2019, Fraunhoferconcluded444newIPexploitationagreements, bringing the total number of active agreements at the end of theyearto2654.Duetotheexpiryofanumberoflicensed patents, license-fee revenue was slightly lower in 2019 than in the previous year, but still remained high at €107 million. 2015 2016 2017 2018 2019 25

SELECTED ASPECTS OF CORPORATE RESPONSIBILITY Responsibilities of the Fraunhofer-Gesellschaft by future generations. This necessarily involves abiding by strict ethical principles and answering fundamental questions, Thissectionformspartofournon-financialreportandprovides a condensed overview of selected aspects of the Fraunhofer- such as: What impact does technological progress have on social change? How can the emerging structural changes be Gesellschaft’s policy with regard to corporate responsibility. steered toward the creation of a sustainable economy that Fraunhofer sees corporate responsibility (CR) as an all- encompassing term that covers the economic, ecological and social aspects of its activities. The organization applies gives people a sense of worth and meaning? To what extent willartificialintelligenceandautomationchangethewayin which humans interact with machines? And how can digitali- zation help to create a new world of work in which everyone the principle of responsibility in its dealings with customers has the same opportunities? and partners, its employees, subcontractors and suppliers. Commitment to this principle is also expressed in the orien- tationofitsresearchtowardgeneratingbenefitsforsociety and promoting Germany’s and Europe’s industrial strength. The motto of this year’s annual report – “Our future motiva- tion – ethics and responsibility in applied research” – echoes the importance Fraunhofer places on ethical and responsible As the world’s leading applied research organization, the behavior. This is anchored in the organization’s structure, Fraunhofer-Gesellschaft delivers sustainable solutions to working methods and mission statement. The many and meet society’s future needs. diverse examples of Fraunhofer research reviewed in the annual The research community’s role in sustainable development includes creating a world in which ecology, economic consid- erations, and social equilibrium go hand in hand. These aims are anchored in the Fraunhofer Guiding Principles. Everyone who works for Fraunhofer is aware of this responsibility. It is report, and the presentation of the prizewinning elevator pitches on the subject of sustainable value creation, amply illustratethis.Sustainabilityisalsothethemeofthe01/2020 issue of the Fraunhofer magazine. Its content focuses on R&D projects that deal with the question of new concepts for the use of plastics. They range from the design of new materials not simply a question of technological innovation. The big and closed material cycles to new recycling processes. The issues facing modern-day society call for solutions that pay Fraunhofer-Gesellschaft publishes regular sustainability reports, equal attention to environmental, economic and social factors andthisequivocacyisreflectedinFraunhofer’ssystematic approach. detailing its goals, measures in place, and information on each area of corporate responsibility. The most recent corporate responsibility progress report, for 2018, was published in early Fraunhofer responds to the complexity of these issues with a number of strategic initiatives towards developing systemic solutions by means of interdisciplinary research collaboration. FraunhoferplaysasignificantroleintheGermanknowledge transfer ecosystem, hence its focus on delivering solutions not 2019. This report is supplemented by an annual statement concerning compliance with the German Sustainability Code (GSC). Having submitted a Communication on Engagement (CoE),Fraunhoferhasfurthermoreconfirmeditscommitment to supporting and implementing the ten principles of the UN Global Compact by renewing its membership to this interna- only to today’s problems but also to those that will be faced tional network in January 2019. 26

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Extraordinary research projects and activities The principles of sustainable development are also promoted at Fraunhofer by means of in-house activities and extraordinary research projects. The three following Fraunhofer projects are prime examples. The LamA project – charging points at the workplace – is one of the key climate protection research projects at Fraunhofer. Funded by the German Federal Ministry for Eco- nomic Affairs and Energy (BMWi), the purpose of this research Another internal project conducted in 2019 was a white spot analysis focusing on global sustainability as a driver of innovation. With reference to the UN’s Sustainable Develop- ment Goals (SDGs), this project examined Fraunhofer’s internal structures and programs to determine those with most rele- vancetothesegoals,andadditionallyidentifiedthecountries andareasoftechnologymostlikelytobenefitfromsustainable innovations.SignificantR&Dpotentialwasidentifiedinareas such as the closed-loop economy and improved transparency ofglobalsupplychains.Whitespotswerealsoidentifiedin projects designed to combat climate change and in technolo- project is to establish a charging infrastructure for electric gies being developed to enable third-world countries to meet vehicles. It forms part of the 2017–2022 Immediate Action SDGs such as “zero hunger.” Program for Clean Air, which addresses districts with high levels of NOx pollution. The objectives of the LamA project include promoting sustainable mobility, developing a smart energy management system for electromobility, analyzing In 2019, the Fraunhofer-Gesellschaft also set up its own citizen science network. The 13 participating Fraunhofer Institutes came together to discuss their experience of citizen science rebound effects, and facilitating transfer of research to projects on which they had worked in the past few years, in business and society, for example by means of acceptance andeffectivenessstudies.Thefirstchargingpointswere installed in November 2019. Ultimately there will be nearly different contexts and with different themes. The advantage of such projects is that they provide an opportunity to formu- late the requirements to be met by innovative products and 500 of them at a total of 38 Fraunhofer Institutes. A more services from the end user’s point of view. This in turn makes detailed description can be found in the section “Projects it possible for researchers to adapt solutions to pressing social and results 2019.” issues. On the other hand, citizen science raises the challenge of communicating with many more stakeholders than usual, and coordinating input from many more project participants. To answer these and other questions, the Fraunhofer citizen science network is compiling a set of guidelines that will be published as soon as it has been completed. The network’s next goals are to develop other resources to help with work on citizen science projects, including a platform enabling Fraunhofer researchers to share their experience. 27

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Employees Fraunhofer’s human resources policy is based on the mission- oriented approach of knowledge transfer, in which a career The Fraunhofer-Gesellschaft has always been conscious of with Fraunhofer prepares scientists for future roles in industry its responsibilities toward its employees, and continues to or business, unless they choose to remain in research. Empha- develop its image as an attractive employer. Key topics include staff training, incentives, equal opportunities, and employee health and safety. sis is given to personalized career planning. Career paths at Fraunhoferaredefinedintermsofskillsets,whichareinturn allocated to outline training and development plans. At year-end 2019, Fraunhofer had 27,988 employees, 19,936 of whom were research, technical or administrative staff To assist HR staff in the institutes with the task of support- ing employees with their career development, these staff (RTA staff), 7517 students, and 535 trainees. That corresponds toayear-over-yearincreaseof5.0percentor1340employees in 2019. In absolute terms, this was a higher rate of increase than in 2018, but slightly lower in relative terms (2018: 5.2 percent). Employees (number at year-end) 24,084 24,458 452 6554 472 6654 25,327 474 6888 26,648 27,988 510 7225 535 7517 17,078 17,332 17,965 18,913 19,936 2015 2016 2017 2018 2019 Trainees Students RTA staff, total 28 receive specialized training and have access to a growing range of tools and other resources. In 2019, we replaced the traditional staff reviews with more comprehensive career development reviews. This shifted the focus away from career paths based exclusively on aca- demicqualifications.Thismovewasaccompaniedbytheintro- duction of a wider range of e-learning options to complement face-to-face training. Another change was that trainees and dual students are now included in the career development process. HR staff are being trained to conduct assessment interviews with this group of people, and tools and resources havebeendesignedthatareadaptedtothespecificcircum- stances of trainees and dual students. The established professional development programs were continued in 2019, with targeted improvements. After a positive evaluation, the TALENTA program for female scientists andmanagershasbeenexpandedtoincludeaspecifically tailored mentoring program. The Young Research Class initia- tive, in which junior scientists collaborate on a yearly selected range of research topics, has been placed on a longer-term footingbyorganizingthefirstalumnimeetingofprevious participants. The Advanced Management Class initiative, which was launched in 2018 and addresses tier-2 and tier-3 managers, was continued in 2019. Its positive evaluation has encouraged Fraunhofer to establish this program as a permanentfixture.

Skillsets Outline training and development plans Academic qualifications Doctorates Funding requests and research proposals Published papers Speaking roles at conferences and membership of professional associations R&D business skills Knowledge of markets, customers and (industrial) competitors Marketing, communication, presentation and negotiation Project acquisition and management Entrepreneurial skills Customer-centric product development Marketing and sales Exploitation of business ideas and creation of business models Management skills HR management Leadershipofresearchteams/thematicresearchareas Supervision of junior scientists Fraunhofer maintains a close relationship to the university sector, grounded not least in the practice of sharing the withthem,theinstitutedirectors,andFraunhofer’sScientific and Technical Council and the organization’s general works responsibility – between Fraunhofer and the university in council, for application from 2020 onward. question – for appointing the institute director, who in turn is awarded a university chair. In accordance with this arrange- ment, Fraunhofer employees also have an opportunity to undertake a doctoral project at the university. Doctoral can- didates,whoareusuallyemployedasresearchfellows,profit from working in an environment that offers a blend of ap- plied basic research, contract research and further training. AtFraunhofer,theyalsobenefitfromfirst-classresearchfacili- ties and equipment and an open, all-round, creative working Percentage of research staff awarded a doctorate Average 2016 – 2019 Total Women Men 37.0 25.3 37.7 38.6 21.6 39.8 22.4 39.4 environment: in short, everything needed to successfully Other students complete a doctoral dissertation. Postdoctoral researchers 38.2 Doctoral candidates To provide the best possible support to the 22 or so percent This code of conduct includes an agreement as to the salient of researchers enrolled in a doctorate program at Fraunhofer each year, the guide “Doctoral candidates at Fraunhofer – Code of Conduct” was elaborated in 2019, in consultation aspects of each dissertation project, which must be signed by the doctoral candidate, their supervisor, and the director of the institute in question. 29

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Diversity Diversity management improves productivity by incorpo- rating multiple insights. Mixed teams are more creative, more innovative, and have a greater problem-solving capacity because they can take a wider view of user and application requirements in research and development. The aim of diver- sity management is to create a working environment in which Financial support is available to institutes planning to implement measures to promote diversity, as part of an organization-wide diversity program. In 2019, a total of 26 funding requests by Fraunhofer Institutes were accepted for a wide range of measures including allowing parents to bring their children intotheoffice,diversitytraining,afathers’workshop,anda gender-neutralrecruitmentprogram.Forthefirsttime,one of these accepted requests concerned the aspect of inter- every employee can participate on equal terms – irrespective nationalization, in the form of a training course to promote of their ethnic origin, gender, religion, ideology, physical or employees’ and managers’ intercultural understanding. other impairment, age or sexual identity. Biases can arise either consciously or unconsciously. They tend to manifest themselves in stereotyping or prejudices. To combat this problem, the subject of unconscious bias is a prime focus of measures to promote equal opportunities at Fraunhofer, and is regularly featured in training and awareness events, where the response has always been positive. In the future, such ad-hoc events will be supplemented by mandatory online training for employees and managers, and appropriate workshops and training modules will be included in The gender-appropriate design of buildings was another topic addressed in 2019 in the form of a checklist for the planning and execution of construction projects. It contains specificaspectsthatshouldbetakenintoconsiderationwhen constructing or renovating buildings. Fraunhofer is one of the firstorganizationsinGermanytoaddressthisissueinsucha multifaceted, structured approach. Fraunhofer awards the Fraunhofer FamilienLogo (Fraunhofer family logo) to institutes that excel in efforts to create a better Fraunhofer’s career development programs. work-life balance for their employees. In 2019, the logo became In keeping with recent legislation recognizing the rights of non-binary persons, Fraunhofer has revised its guidelines on the use of gender-neutral language to include recommen- dations on how to formulate communications in such a way as not to cause offense to people who do not wish to be identifiedasmaleorfemale. established as a seal of quality, with more and more eligible Fraunhofer Institutes using it in their public campaigns to recruit talent. Moreover, the contract with pme Familienservice was renewed in 2019. As well as providing assistance with child- care, care for the elderly, and life-stage coaching, the private company offers an extensive range of information material and training courses, which is also available online. 30

At the reporting date, people with disabilities accounted for 3.0 percent of the Fraunhofer workforce (2018: 2.8 percent). As regards the issue of inclusion, the focus of activities in 2020 will be on further consolidating the diversity funding To increase the proportion of female researchers, and espe- cially those in management positions, all Fraunhofer Groups have drawn up roadmaps for this specific issue and presented them to the Presidential Council. The roadmaps program and the guidelines for managers at Fraunhofer. Such were discussed extensively in the Fraunhofer Groups and at activities will include showcasing best practices, target- group-specificcommunications,andraisingawarenessof unconscious bias. all meetings of the Presidential Council. This shows once again how much importance is accorded to this issue within the Fraunhofer-Gesellschaft. At the behest of the president of the Fraunhofer-Gesellschaft, a recruitment committee has been set up to increase the number of women appointed as directors of a Fraunhofer Beyond that, Fraunhofer is aspiring to increase the ratio of women on its scientific advisory and supervisory boards. For example, the proportion of women holding seats on Institute. Its aim is to hire or promote at least ten women institute governing boards is to be raised from 19.5 percent scientists to posts as institute directors by the end of 2021, in 2019 to 30 percent by the end of 2020. In the Fraunhofer and thus increase their share in posts at this level. Fraunhofer Senate, the organization’s highest steering committee, women scouts for new talent by means of three strategies. One is currently account for 38.9 percent of the elected members. active sourcing, which means building up a talent pool on the basis of internal and external recommendations. The second is the use of mixed-membership talent-search committees, and the third is the use of specialized consulting agencies for the recruitment of top-level managers with experience in industrial or academic research. As the result of a nomination round in early 2019, seven women scientists were added to the pool of internal candidates for tenure-track appointments as associate or full professors (W2/W3 level). The available potential for future institute management posts is illustrated by two university appointments, several ongoing negotiations with universities,andtheacceptanceoffivecandidatesforsupport by the TALENTA excellence program. 31

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Resources – mobility and waste management CO2 emissions from business travel by Fraunhofer employees, in metric tons Fraunhofer researchers are often required to travel within Germany and internationally to attend conferences or visit customers. This can be essential for their work. Fraunhofer collects data annually on the CO2 emissions its employees generate through business trips by train and plane. Despite the increased number of employees and research projects, air travel and hence the associated amount of carbon emissions dipped steeply in 2019 to below the level recorded in 2017. 10,876 11,128 10,080 9295 9332 0 0 0 0 0 Instead, more people are traveling by train, as evidenced by 2015 2016 2017 2018 2019 the increase in total passenger-kilometers by 3.6 million to 35.8 million in 2019. This result partly derives from a resolution taken by the organization in April 2019 to reduce its CO2 emissions caused by air travel. The ultimate goal is to replace Air travel Rail travel: Carbon-neutral, owing to framework agreement between federal government and German air travel wherever possible by rail travel. Thanks to the Rail (Deutsche Bahn) framework agreement between the federal government and German Rail (Deutsche Bahn), all rail travel is carbon neutral. TheFraunhoferInstituteshaveappointedsiteofficerstohandle waste management at the individual locations and to docu- ment their activities in a waste register and corresponding yearly report. Actual totals are available only for 2018. In 2018, the Fraunhofer Institutes generated 5632 metric tons of non-hazardous waste and 818 metric tons of hazardous waste. This is 70 metric tons less than the amount of non- hazardous waste generated in 2017, but 200 metric tons more in the case of hazardous waste. This difference is explainable by the fact that some projects generate more hazardous waste than others, and the amount is not always predictable. And more especially by the fact that certain institutes are calledupontoworkonprojectsthatspecificallydealwiththe processing of hazardous waste. This means that the materials theyworkwithareclassifiedashazardouswaste,eventhough they were not produced as a result of research activities. Volume of waste produced by Fraunhofer Institutes, in metric tons 5702 5632 5255 4200 3274 432 369 607 614 818 2014 2015 2016 2017 2018 Non-hazardous waste Hazardous waste 32

RISK SITUATION AND OUTLOOK Risk management and identified risks There have been no fundamental changes in the risk situation compared with the previous year’s assessment – other than Risk management is a cyclic process in which risk assessment experts in the operating units carry out a yearly, systematic andstandardizedreview.Theidentifiedindividualrisksand proposed measures to counteract them are then summarized the consequences of the Covid-19 pulmonary disease caused and prioritized in an annual risk report presented to the by the SARS-CoV-2 virus. None of the newly or previously identifiedindividualrisksweredeemedcriticalatthetimethe risk report was compiled (January 2020). Executive Board, enabling individual risks of a similar nature to be evaluated collectively. Additionally, the central departments inform the Executive The possibility cannot be excluded that the Covid-19 pandemic Board of relevant risk-related developments – both routinely and measures to contain or combat the SARS-CoV-2 corona- and on an ad hoc basis – via the established reporting channels. virus may have a direct or indirect impact of certain types of risk, such as delayed delivery of purchased services, a decline in industrial revenue, capital market risks, and personnel risks. However, the full extent of the impact cannot be estimated at present. Fraunhofer is continuing to monitor the current situation with regard to the pandemic, adapting the measures already put in place as the situation evolves in order to protect the organization and its employees as best as it can. Fraunhofer understands risk to mean all internal and external events and developments that might jeopardize the organi- zation’s success. These include both risks that can be given a monetary value and those of a qualitative nature. Fraunhofer’s risk management system is designed to identify existing and potential risks at an early stage and to manage them by means of appropriate measures in such way that they either do not materialize at all or do not have consequences that could endanger Fraunhofer’s business success or jeop- ardizeitsabilitytofulfillitsmissioninaccordancewithits statutes. To achieve this objective, a risk management system hasbeensetupthatfitstherequirementsandstructureofthe Fraunhofer-Gesellschaft, is continuously improved, and which the Fraunhofer-Gesellschaft’s auditors have accepted as being adequate and suitable for the purpose. Cyclic risk management process Identification Monitoring Analysis and assessment Control Reporting Improvement/enhancementprocess 33

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 Fraunhoferclassifiesrisksaccordingtoanorganization-specific model which forms the basis for the annual risk assessment which in turn serves as input for the risk report presented to theExecutiveBoard.Thefirstlayerofthemodelconsiders fourmainareaofrisk:businessmodel,financing,resources and business operations. The second layer of the model assignsindividualrisksofspecificrelevancetoFraunhofer (currently 19) to these four main areas. Business model risk encompasses those types of risk that represent a threat to the continuation and evolution of the Fraunhofer funding model. Such risks may arise from external sources or from internal differences in the way the business or funding model is applied. Base funding by the federal and state governments is one of theFraunhofer-Gesellschaft’sthreemainsourcesoffinancial input. It is used principally as a means of driving qualitative growththroughtheestablishmentofnewfieldsofresearch. In order to maintain the share of base funding in the funding mix in the long term, Fraunhofer proactively manages its growth and lobbies the funding agencies to maintain its base funding at a level in keeping with its mission and in proportion to its performance, along with a business strategy appropriate to the research sector. The current management statutes enableFraunhofertoactflexibly,efficientlyandautonomously. If this option were curtailed, it would limit Fraunhofer’s liquidity and its ability to make provision for risks, and restrict itsflexibility. Financial risks may arise for the Fraunhofer-Gesellschaft from contingent liabilities and operational risks in connection with the legally independent international Fraunhofer affiliates. Onesuchlegallyindependentaffiliate,FraunhoferUSA,Inc., is currently engaged in legal action with a company in the Projects for building and equipping new facilities that are co-financedbythefederalandstategovernmentsandtheEU (ERDF) are subject to restrictions concerning how long the funds are made available. If projects encounter lengthy delays, that may result in the late payment, or even forfeiture, of the United States for the alleged infringement of intellectual funds. Fraunhofer has a construction controlling unit in place property rights. to closely monitor the progress of projects to build and equip new facilities and constantly looks for ways to expedite such A key issue in the context of financial risks is that of con- taining risks that might compromise Fraunhofer’s access to projects. Furthermore, Fraunhofer strives to ensure uniform andflexiblefundingconditionsforbuildingprojects. research funding or the organization’s solvency. Resource risk encompasses those types of risk that may affect the availability of material and immaterial resources needed to successfully carry out research activities. 34

R E P O R T O F T H E E X E C U T I V E B O A R D Management report 2019 The ability to protect intellectual property (IP) by means of laws, directives and other enforceable rules plays a crucial Outlook role in Fraunhofer’s success and is the prerequisite for the commercializationofresearchfindings.Possiblechangesin the IP policies of standards developing organizations (SDOs) At the time this management report was compiled, it was not possible to predict the economic impact of the public health crisis brought about by the spread of the SARS-CoV-2 virus may also affect the patents underlying their standards. and the associated Covid-19 respiratory disease. As a cautious Fraunhofer therefore monitors initiatives stemming from estimate, Fraunhofer reckons that its total business volume in the regulatory environment and assesses them for possible negative impact on the conditions governing the protection and exploitation of IP rights. Fraunhofer is exposed to capital market risk insofar as it invests part of its capital and reserves with a view to earning areturn.TheFraunhofer-Gesellschaft’sfinancialinvestments are managed by a special investment fund under German investment law and limited partners interests. The organization pursuesawidelydiversifiedinvestmentpolicyand,inview of the uncertainty prevailing in the money and capital markets, 2020 will recede to a level between €2.5 billion and €2.9 billion. ThethreepillarsonwhichtheFraunhofer-Gesellschaft’sfinan- cial resources are based, namely base funding, public-sector project funding, and contract research, assure the organiza- tion’sfinancialstabilityevenintimesofeconomicuncertainty. In 2020, the Fraunhofer-Gesellschaft will continue to support Germany’sindustrialbasewithR&Dservicesinallmajorfields of science and technology as well as conducting applied research on issues of relevance to society as a whole. The diversity of thematic areas is growing at the same pace as keeps a constant watch on the risk situation. technological progress, also in response to topical issues. Operational business risk comprises those types of risk that may arise from processes used in research and administration, orfromtheexecutionofspecificresearchprojects. Institute for Molecular Biology and Applied Ecology IME in the Exscalate4CoV(E4C)consortium,inwhich18partnersfrom seven European countries are collaborating in the search for One notable example is the recent inclusion of the Fraunhofer drugs to combat the new SARS-CoV-2 coronavirus. Fraunhofer Through its contract research projects with German and inter- IME works at the interface between biology and information national business partners, Fraunhofer is exposed to liability science, delivering solutions of great value to the health and and performance risks such as product liability and warranty. wellbeing of all citizens. In the case of international business partners, Fraunhofer faces the additional challenge of having to deal with jurisdictions in other countries. It manages these risks by including suitable liability restriction clauses in its standard terms and conditions of business and in its standard contracts, by engaging specialized attorneys, and through a multi-tier approval process based on competent legal advice. 36

Dynamic and market-oriented development of the R&D port- Fraunhofer has also set itself the goal of enabling ordinary folio is an essential element of Fraunhofer’s success. The citizens to take part in its research. In 2020, with the support Fraunhofer Group for Innovation Research – INNOVATION carried out a foresight process with the dual purpose of systematically discussing new technologies and identifying of experienced Fraunhofer researchers, the organization intends to set up its own citizen science network to develop solutions that better meet the needs of the end users and social trends and how they interrelate with developments in promote the wider acceptance of research projects in which the spheres of technology and business. The outcome of the general public is invited to participate. this process was a list of 51 rapidly evolving areas of interest to applied research, which will serve as the basis for further With its dynamic research portfolio and stable funding model, discussions in 2020 as to their possible inclusion in the Fraunhofer is exceptionally well placed to tackle today’s tech- Fraunhofer portfolio. Fraunhofer’s internal Corporate Responsibility (CR) Board selected three of these thematic areas for implementation in 2020 and assigned this task to the appropriate internal departments. They are: reducing the level of CO2 emissions generated by the Fraunhofer-Gesellschaft, translating the reflectioncriteriaforresponsibleresearchandinnovationinto operational imperatives, and providing funding for R&D projects based on ideas with as-yet undetermined market prospects. nological and social challenges and, going forward, will con- tinue to position itself as an innovation partner and provider of impulses for industry, the public sector and society. The Executive Board would like to thank the organization‘s members, patrons, friends and, most of all, the staff of the Fraunhofer-Gesellschaft for their support, dedication and hard work in 2019. Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V. Fraunhofer’s voluntary commitment to the Joint Initiative for Research and Innovation for the period from 2021 to 2025 includes the goal of adding some 700 small and medium- sized enterprises (SMEs) to its customer base each year. To do so will involve expanding the existing network of High- The Executive Board Prof. Dr.-Ing. Reimund Neugebauer Prof. Dr. rer. nat. Ralf B. Wehrspohn Prof. Dr. rer. publ. ass. iur. Alexander Kurz Performance Centers and opening up other lead markets by Dipl.-Kfm. Andreas Meuer means of concerted action and initiatives such as widening the scope of the Fraunhofer Alliances. 37

REPORT OF THE SENATE ON THE FINANCIAL YEAR 2019 The Fraunhofer-Gesellschaft continued its successful perform- ance in 2019. The creation of new research units and new research structures has further strengthened its role as a driving force and engine of innovation in the race to conquer the big technical challenges of now and the future. To this end, Fraunhofer has expanded research capacity in the key areas of energy technology, resource conservation and digi- talization. The total volume of business increased by a further 10 percent in response to the growing demand for innovative research that seeks to combine commercial success with the pursuit of sustainability. The Fraunhofer-Gesellschaft returned a solid balance sheet for2019.Onceagain,thefinancialstatementsreceivedan unqualifiedauditcertificatefromtheindependentauditors. In2019,theSenatefulfilledthedutieswithwhichitisentrusted under the statute of the Fraunhofer-Gesellschaft. It convened twiceinthecourseofthefinancialyear:onMay8,atthe Nemetschek building in Munich; and on October 23, at the Fraunhofer Forum in Berlin. 38

The main decisions taken in accordance with the statute – The Senate followed the recommendation of the Senate concerned the structure of the Fraunhofer-Gesellschaft and committee for the election and reelection of Executive the composition of its Executive Board: Board members in electing Prof. Dr. Ralf Boris Wehrspohn – The Senate unanimously approved – subject initially to the release of funds by the parliamentary budget committee of the German Bundestag – the establishment of the to the position of Executive Vice President, Technology Marketing and Business Models, for the period from October1,2019toSeptember30,2024. Fraunhofer Research Institution for Energy Infrastructures – The Senate elected Prof. Dr. Birgit Spanner-Ulmer and and Geothermal Systems IEG, as of December 1, 2019, and the incorporation of the International Geothermal Oliver Zipse to the position of deputy chairs of the Senate forathree-yearperiodofoffice,asofJanuary1,2020. Centre Bochum (GZB) – by way of singular succession to the Fraunhofer-Gesellschaft – as part of Fraunhofer IEG, as of January 1, 2020. In addition, I would like to express thanks for my reelection – asofMay8,2019–forwhatisnowmythirdperiodofoffice as Senate chairman and for the trust you have thereby placed – The Senate unanimously approved the conveyance of the in me. Fraunhofer Project Group for Materials Recycling and Resource Strategies IWKS, with its locations in Alzenau On behalf of the Senate, I would like to warmly thank the Ex- (Bavaria) and Hanau (Hesse), into the independent Fraunhofer Research Institution for Materials Recycling and Resource Strategies IWKS, as of January 1, 2020. The Senate unan- imously approved the appointment of Prof. Dr. Anke Weidenkaff as director of this newly established Fraunhofer Research Institution. – The Senate also approved the establishment of the Research Fab Battery Cells (FFB) in Münster, as of January 1, 2020. This new facility forms a branch of the Fraunhofer Institute for Production Technology IPT in Aachen. ecutive Board and all employees of the Fraunhofer-Gesellschaft fortheirdedicationandsuccessfulworkinthefinancialyear 2019. Prof. Dr.-Ing. Heinz Jörg Fuhrmann Chairman of the Senate of the Fraunhofer-Gesellschaft 39

INSIDE THE FRAUNHOFER SENATE DR. OLIVER BLUME Oliver Blume has served as chairman of the executive board Born in Braunschweig, Oliver Blume studied mechanical of Porsche AG since 2015. He was also made a member of the engineering. He joined Audi AG on an international trainee board of management of Volkswagen AG in 2018, with program and went on to work in a variety of roles for the responsibility for group production and the sport and luxury automaker in Ingolstadt, including head of body construction brand group. Sport and luxury are two features that have for the Audi A3. He was awarded a doctorate in vehicle engi- been expertly married – under Blume’s chairmanship – in the projecttobuildthefirstall-electricPorscheTaycan.Launched on schedule in 2019, the new Taycan is spearheading a tech- neering by Tongji University, Shanghai, in 2001. Before joining Porsche, he worked at both Seat and Volkswagen. Following his appointment to the executive board of Porsche AG, he was nology drive at the Volkswagen Group and offers a stark initially responsible for production and logistics: He was made lesson in how German automakers are meeting the challenges chairman in 2015. of electromobility and digitalization. “The automotive industry is an important part of society. It’s our responsibility to act sustainably – right across the board: economically, ecologically and socially.” Porsche knows how to combine advanced technology and businessefficiencywithasustainableproductionphilosophy. In its bid to become a zero-impact company, Porsche is now manufacturingthecompany’sfirsteverelectricsportscarina carbon-neutral process at its Zuffenhausen plant. Meanwhile, thenon-profitFerryPorscheFoundationwassetupinearly 2019 to provide support for social, educational and cultural projects. For Blume, taking on responsibility for society and creating sustainable value are key planks of the company ethos. The largest restructuring exercise in the company’s history includes the creation of a battery-charging infrastructure for electric vehicles. Ionity, a joint venture with BMW, Daimler, Ford and fellow Volkswagen Group member Audi, aims to installatotalof400rapid-chargingstationsalongmajor European highways by the end of 2020. 40

SABINE HEROLD Sabine Herold is managing partner of the high-tech industrial DELO is based in Windach, near Munich. It is a world market adhesives manufacturer DELO, which was founded in 1961. leader for a host of applications that rely on specialist adhesives She has occupied a variety of roles on key policymaking bodies and light-based curing technology. Adhesives from DELO are in German business. These include membership of the steering to be found in debit, credit and SIM cards, for example, and in committee for the Innovation Dialog of the German govern- sensors for cars and cell phones. Over the years, the company ment, a seat on the SME advisory board to the German Federal Ministry for Economic Affairs and Energy, and currently as member of the board of trustees of the ifo Institute. In has received an impressive array of awards, including the InnovationspreisderdeutschenWirtschaftin2014andthe n-tv Hidden Champion Award in 2016. In 2019, the company 2019, Herold served as a member of the founding commission broke the world record for the heaviest weight lifted with the for the Agency for Breakthrough Innovations. aid of an adhesive and was also named one of Germany’s best Herold comes from a family of lawyers in Fulda. At high school, employers. she majored in math and chemistry, before going on to study Sabine Herold is a member of the presidential board of the BDI chemical engineering at Friedrich-Alexander-Universität (FAU) inErlangen.Itwasaqualificationthatopenedmanydoors, particularly to major corporations. She knew, however, that – Federation of German Industries and of the German chemical industry association Verband der Chemischen Industrie (VCI). She holds the Bavarian State Medal for Outstanding Services she would be able to achieve more in a small organization and to German Industry and was awarded the Cross of Merit of therefore opted to join DELO, which only had 30 employees the Federal Republic of Germany in 2009. in 1989. She started work as an applications engineer. In 1997, she and her husband headed a management buyout of the company. Today, the family concern has 780 employees and “At DELO, 10 percent of capital expenditure goes toward posts annual revenues of 156 million euros. digitalization. That works out at 5500 euros for each employee every year. I’m worried that there’s not much major investment in Germany right now. Policymakers need to create a more favorable climate. The tax incentives for research in 2020 are a start. But that will only work if they don’t involve too much red tape.” 43

DR. ROLAND BUSCH Dr. Roland Busch has been a member of the Fraunhofer Senate Busch sits on the supervisory board of a number of companies. since January 1, 2020. Busch was born in Erlangen and is a Siemensmantothecore.Hisfirstjobafterjoiningthecom- panyin1994wasasprojectleaderatthecentraldepartment of research and development in Erlangen. He then held posts in Regensburg and Shanghai, where he managed a variety of development projects in fuel cell technology, infotainment, automotive solutions, and local public transit and trans- portation systems. As an executive, he has been responsible These include OSRAM GmbH, Atos SE and the European Business School of Management Technology, in Berlin. He is a member of the board of governors at RWTH Aachen Univer- sity, of the university council of Friedrich-Alexander-Universität Erlangen-Nürnberg and of the management board of Platt- formIndustrie4.0,afederalgovernmentinitiative. for process, information and quality management, and for “In the age of digitalization, research and development needs to be fast and open. But above all it requires a clear technological focus. If not, it will struggle to meet the fast-changing requirements of the digital age.” corporate strategy. Busch holds a doctorate in physics and is chief technology officeratSiemensAG.Hewasalsoappointeddeputychief executiveofficerofthemanagingboardonOctober1,2019. In this capacity, he is responsible for implementation of the Vision 2020+ strategy at Siemens. One of the key tasks currently facing the company is industrial digitalization. Busch’sresponsibilitiesinthefieldsofcorporatetechnology and corporate development cover the following company activities: the Internet of Things (IoT), strategy, operations, sustainability, portfolio companies and global business services. He is also chair of the supervisory board at Siemens Mobility GmbHandheadofnext47,Siemens’acceleratorunitfor start-ups. As of December 2019, he is also responsible for labor relations. 45

R E P O R T O F T H E E X E C U T I V E B O A R D Inside the Fraunhofer Senate NATALIE MEKELBURGER NatalieMekelburgerispresidentandchiefexecutiveofficerof the independent, family-operated company Coroplast Fritz Mekelburger regards herself as an out-and-out entrepreneur. In 2017, she was voted businesswoman of the year in the Müller GmbH & Co. KG. She is a member of the third family generation to run the company. In 1928, Fritz Müller, her great-uncle, founded the company, then known as Manufaktur für Elektroisoliermaterialien. Ninety years later, it has become a global player and technological leader for industrial adhesive tapes and wire harnesses, including high-voltage electrical distribution systems for electric vehicles. In the period since Mekelburgerjoinedthefamilycompanyin1994,revenues have more than tripled, rising to 500 million euros in 2018. category for industry by the auditors and consultants EY. After gainingherdegreeinbusinessadministration,shefirstworked for a management consulting company, before joining Coro- plast as head of marketing and sales. She has been president andchiefexecutiveofficerofthecompanysince2006.In2017 and 2018, Coroplast called in Porsche Consulting to help develop a new corporate structure to meet the challenges of the future. This was in response to strong growth coupled with market volatility and political and social uncertainty. Coroplast products are used in a host of sectors, including automation systems, medical engineering, machinery and “We need to stay responsive and move with the new plant engineering, furniture manufacture, white goods and trends in mobility, whatever they may be. If we can do the construction industry. One of Coroplast’s largest customers that over the next 10 to 15 years, then we will have is now the automotive industry. Mekelburger forecasts a challenging business climate for the company: “Trade wars and new policies in response to the climate debate are two of the big factors creating turmoil in the automotive industry. We are also seeing new market players and new types of mobility emerge.” achieved a lot. But it also means focusing on the customer andstayingflexible.” 46

OUR FUTURE MOTIVATION – ETHICS AND RESPONSIBILITY IN APPLIED RESEARCH T h e e t hi c s and t h e co ndu c t of ins t i tu t i o ns ha s b e co m e a ke y to p i c of pu b li c and p o li t i c a l d e b ate. I n tur n, Fraunh ofe r ha s fo und i t s e l f in cre a sing l y und e r t h e s p ot li g ht . T his a ls o s te ms fro m t h e re mar ka b l e t rans fo r mat i o n t hat t h e Fraunh ofe r- G e s e lls chaf t ha s und e rg o n e sin ce i t b e gan li fe o n M arch 26, 19 49. In the early days, Fraunhofer comprised but a small number of Creating value and prosperity volunteer staff, who had set themselves the goal of raising the funding required to build up a body of applied research in Germany, with a focus on innovation. While Fraunhofer has Asanon-profitresearchorganization,ourprimarygoalisnot to pursue our own enrichment but rather to enable value crea- preserved its German roots, it has also become very active on tion and thereby help generate prosperity for Germany and the international level. Today, it has a workforce of 28,000 Europe. By working to develop promising new technologies, employees, all of whom are dedicated to developing technology thatbenefitsbusinessandsociety. Fraunhofer makes a substantive contribution to our project partners’ commercial success and to the competitiveness of This extraordinary success story is punctuated by some major milestones in applied research. Each of them has had, in one form or another, a lasting impact on practically everyone’s life, and each one remains indelibly associated with the name of Fraunhofer. A prime example is the mp3 coding system for musicfiles,whichreducesdatastoragerequirementstoless than 10 percent. It revolutionized the music industry and can industry as a whole. Investment in applied research has a sig- nificantimpactonGermany’seconomicpower.Alongside suchquantifiablemicroeconomicandmacroeconomiceffects, theFraunhofer-Gesellschaftalsohasinfluenceasaresultofits strategic involvement in questions of an overarching social and politicalsignificance.Thisparticipationobligesustomaintain aproperlyscientificdistanceandtoensurethatourinput remains purely factual. In addition, we must remain unbiased now be found in literally billions of media players. Another is with respect to the results of our work and ensure that our the white LED, which has not only transformed display systems research and development activities follow a path endorsed by but also created a host of new applications for the lighting society. If applied research is to be more than merely relevant to the market and its needs – if it is also to contribute to society’s well-being – then it requires a set of guiding principles thatarebasedonclearlydefinedvalues. industry. These and other innovations, along with our growing stature as a research organization, have brought Fraunhofer increasing renownwithinthescientificcommunityandinthepolitical and public realms. This in turn has generated certain ex- pectations regarding our ethical conduct and professional integrity. We are therefore obliged to ensure that our structure, our working methods and our mission conform to these standards. 51

R E V I E W O F F R A U N H O F E R R E S E A R C H Our future motivation – ethics and responsibility in applied research Sustainability, environmental protection, decarbonization coupling in the energy system; delivers solutions for sustainable mobility, industrial manufacturing and the circular economy; and provides a bridge between the electricity, gas and heating As a German research organization and a key member of the grids. It is therefore an increasingly important technology for European research community, the Fraunhofer-Gesellschaft the major industrial and emerging nations. With countries acknowledges its commitment to the principles of sustainability around the world preparing to ramp up this market, Fraunhofer and thereby to the United Nations’ Sustainable Development Goals.Ourfieldsofresearchandareasofexpertiseareintended to meet the current and future requirements of our customers in industry and the public sector. Our research is geared to- is poised to play a leading role as a key R&D partner in the development of the hydrogen economy. wards society’s needs in the areas of health, security, commu- Data sovereignty and data security nications, mobility, energy and the environment. The work we do has therefore a major impact on people’s lives. As such, The Fraunhofer-Gesellschaft is playing a proactive role in the we enjoy the trust of government, business and the public. This is what commits us to generating knowledge, ideas and solutions that serve people’s needs. Our ongoing research overlapping areas of data sovereignty and data security – afieldofmajorimportancetoahostofsectors.Throughits involvement in the International Data Spaces initiative, effort helps ensure that Germany can maintain its strong posi- Fraunhofer is a key member of GAIA-X, a project of the German tion in key areas of technology such as the materials sciences federal government. The primary purpose of GAIA-X is to and intelligent, connected manufacturing. provide safe storage of so-called data at rest, whereas IDS By adopting a strategic position from the outset, Fraunhofer elements form key planks of a European data sovereignty has risen to become a world leader in the technology required for a carbon-neutral economy. At Fraunhofer, we ensure a productive crossover between all of our cutting-edge research initiative, which would enable Europe to pursue its own sov- ereignstrategyinthefieldofdataprotection,therebymarking a milestone for European business and society. will create the framework for so-called data in use. These two in wind power, solar cells, energy generation and storage, power grids, electromobility, and information and communi- cations technology. This boosts our ability to react quickly to Technological change requires structural change developments in domestic and international industrial policy and to shape the transition to a new energy system. Digitalization and the transition to a new energy economy are two areas that illustrate the impact and penetration that certain Fraunhofer is also a reliable and agile partner to the public sectorandindustryinareasoftechnologiesthatwillfirst become relevant in the short to medium term and are therefore key technologies will have in the future. Sector coupling, for example, or data-driven health care will both require more than just an evolution of current systems. Both will require a still at early stages of development. This includes hydrogen radical paradigm shift. The profound structural changes to technology, which many regard as providing the key to a industry brought about by digitalization will also be felt on decarbonized economy. This because hydrogen enables sector varying scales at the local and regional level – as will the coming 52

transition to new systems of energy and transport. This will Foresight and future technology ask big questions of German and European industry. In response, companies will need to respond with innovative To mark its 70th anniversary, Fraunhofer carried out an exten- products, innovative processes and innovative business sive foresight study to chart the broad spectrum of emerging models, while also being expected to meet ambitious climate trends in applied research. Unsurprisingly, the three key tech- targets. For energy-intensive industries, such changes entail major risks. Yet they also present an opportunity to help realizethefirstexampleofasustainableindustrialeconomy. Now set in motion, this transformation will have a major nologies with relevance to all business sectors were microelec- tronics,nanoelectronicsandartificialintelligence(AI).All three should therefore be promoted as much as possible by government,research-fundingbodiesandthescientificcom- munity. At the same time, the corporate sector needs to revise impact on traditional lifestyles and patterns of consumption. its attitude towards innovation. If not, the declining level of In the process, entire regions will be able to act as living labo- innovative breakthroughs by German SMEs will compromise ratories and show how the milestones to climate neutrality can be achieved by encouraging industry to adapt to the futureinaprofitablewayandalsobyinvolvingthepublicat large. Regions affected by the phaseout of coal, in particular, their strong market position. Fraunhofer’s Research Fab Micro- electronicsGermany(FMD)providesstreamlinedaccessto next-generation technology for small and medium-sized companies. In so doing, it eases the industrial transfer of new now face acute challenges. These range from strengthening developments such as multifunctional, energy-saving sensor the local economy and creating good jobs to climate pro- technology, communications systems and power electronics. tection. Fraunhofer is on hand here to form a link between policymakers,industryandthescientificcommunity. At the same time, structural change can also bring new opportunities,notleastwhenflankedbypoliticalmeasures that build on training and modern technology in order to Many of our institutes are also involved in developing key technologies for AI, cognitive systems and machine learning. These projects cover a wide variety of applications tailored to our customers’ concrete requirements. The Fraunhofer foresight study also showed that new tech- make a region more attractive and innovative. This marks a nologies such as climate engineering, human-computer inter- shift away from a backward-looking debate and focuses action and the reprogramming of human cells require proper instead on how we intend to live and work in the future. It governance. Based on extensive input from stakeholders in also entails an investigation of the technological developments government, business and society, this will ensure that all the that will impact industry and policymaking in years to come. legal and ethical issues receive due consideration at an early Given such changes, how best can we maintain our competi- stage of development. Quantum technologies, meanwhile, tiveness and thereby our prosperity? look set to become a real game changer. This could well lead togroundbreakingdevelopmentsinahostoffields.Possible applications range from quantum optics for the enhanced diagnosis of disease to quantum computers for solving extremely complex optimization problems in areas such as connectedtrafficsystems,medicaldiagnosticsandthesimu- lation of properties of new materials. 53

R E V I E W O F F R A U N H O F E R R E S E A R C H Our future motivation – ethics and responsibility in applied research Refocusing on systems research Corporate governance and the Fraunhofer Future Foundation These new technologies look set to penetrate society to a radical degree and unleash major transformation. In view of In 2017, the Executive Board set up a Future Commission to this, we need to revise our understanding of the role of the collectively drive forward a process of organizational change. engineering sciences and our responsibilities in this respect. As definedinourmissionstatement,theFraunhofer-Gesellschaft pursuesappliedresearchforthebenefitofsocietyandto strengthen the German and European economy. In recent After two years of work, the commission submitted its rec- ommendationsattheendof2019.ThePresidentialCouncil will decide in 2020 which structural changes are to be imple- mented. One thing is already clear: the primary purpose of years, there has been a perceptible shift in focus within this reorganization will be to strengthen our leadership role in key very broad mandate. Technology is and will remain the prime technologies with a major innovation potential for German instrument for tackling the challenges facing society. None- industry. The introduction of new incentives, such as the theless, we should also favor an approach that is more clearly focusedonsolvingspecificproblemsandthatisgeared towardsclearlyidentifiedsocialneeds.Innovationonlyad- dresses part of the problem. The introduction of new technol- ogy is only truly effective when accompanied by policymaking andmodificationstosocialbehavior.Thisisthelessonofthe ongoing transition to sustainable systems of energy and mobility, sustainable agriculture, and the circular economy. creation of virtual institutes within the Fraunhofer organization, will not only help counteract a natural silo mentality but also have a profound and positive impact on corporate governance. For example, it will require less effort to establish initiatives and consortia involving different institutes and research bodies. This in turn will expedite the process and make it more flexible–thusensuringthatfulladvantageisextractedfrom Fraunhofer’s concentrated fund of expertise. In addition, we plan to make our research services more easily and quickly Increasingly, Fraunhofer’s role must be to initiate or promote accessible tor our customers. collaboration between relevant stakeholders from industry, science, government and research funding. Fraunhofer has already proved a key partner in areas of regulation and standardization – including efforts to achieve technological sovereignty for Europe. This shift towards systems research meansmorethaneverthatFraunhofermustbuildflexible networks in order to connect its expertise and capacity within itsownorganizationandwithinthewiderscientificcommunity. At the same time, we intend to shift the focus of the non- profitFraunhofer-Zukunftsstiftung(FraunhoferFutureFounda- tion).Inthefuture,fundingwillbegearedtowardsaformof value creation based on ethical principles. It will also, however, continue to focus on commercial viability and on the idea that the supported projects should contribute to solving the global challenges facing society. In addition, the provision of funding on a smaller scale will help establish an attractive portfolio for future fundraising activities. 54

Research guidelines, ethics committee and code of conduct As a systems research provider and organization committed to shaping the future, Fraunhofer has long encouraged a greater The obligations of Fraunhofer researchers in terms of respon- sible and ethical behavior have been enshrined in the Fraunhofer Code of Conduct since 2015. Researchers are individually responsibleforaddressingethicalissueswithintheirownfield of research and for exploring the interrelationships between responsibility with regard to research freedom and the risks technical, social, economic and ecological systems and their this entails. The more technology impinges on our world, the likely consequences in the future. greater our responsibility for it – not least when that technology may have an incalculable impact on civilization. In elaborating a set of values as our guide, we too must therefore ask more closely about the goals and principles that underlie socially soundactivityinthefieldsoftechnologyandbusiness.Arapid growth in knowledge has rolled back the boundaries of what Prospectiveresponsibilitycanbeexercisedinavarietyof ways – for example, by promoting an interdisciplinary and interculturaldebatewithinthescientificcommunityaboutthe consequences of biological transformation or the blurring of boundaries between humans and machines. Similarly, by is technologically feasible. As a consequence, Fraunhofer providing clear information on the current state of a technology employees are increasingly confronted by ethical questions. In 2014, we therefore established a Fraunhofer-wide ethics consultancy service. This was followed in 2019 by an ethics and its development prospects, scientists can help the state fulfillitsdutyofcaretowardscitizens.Thisalreadyhappens with regard to autonomous systems in security environments, committee, which convenes on an ad hoc basis. for example, or robotics in the care industry, and big data in Neither of these bodies is concerned with making decisions or passing judgments. Instead, their job is to evaluate and to the health sector. When it comes to introducing new applica- tionsinthefieldsofmedicalengineeringorinformationand communication technology, our participation in standardization substantiate ethical positions by means of reasoned arguments processes means we play a decisive role in establishing quality based on normative principles. As evidenced by society’s standards and ensuring that such systems feature embedded changing attitudes toward the use of substances such as ethics. Our scientists are therefore involved in various ways to alcohol, or advances in reproductive medicine, moral concepts aresubjecttogradualmodification.Furthermore,ourexperi- ence with the democratization of IT shows that future abuses help expound and update the relevant legal and political provisions in line with ethical considerations. and misuses are not always evident at the development stage. Owing to the progressive globalization of research, there is Sometimes, the scale of the impact and the need for regu- now an increased risk that research involving sensitive ethical lation only becomes apparent once the technology is in place. issues may be conducted by Fraunhofer entities outside of the Norms of a technical-ethical nature are formulated within an EU and in a manner that would not be ethically acceptable in existing economic order and within a complex system of Europe or Germany. Here, observance of, and compliance with, causal relations between policymakers, lawmakers, regulatory foreign trade regulations is a priority for Fraunhofer. Similarly, authorities and society itself. Research organizations operate withinthissystem.Aspartofit,theyareexpected,firstand foremost, to assume a prospective responsibility for what any research project involving the participation of Fraunhofer Institutes is governed by basic principles such as respect for human dignity, solidarity, autonomy, participation, freedom might happen in the future. of opinion, democracy, data protection and informational 55

R E V I E W O F F R A U N H O F E R R E S E A R C H Our future motivation – ethics and responsibility in applied research self-determination. Asia is currently a growth region for Trust is founded on scientific integrity Fraunhofer, and our cooperation with Chinese partners has been the cause of some controversy in recent times. Here, too, Fraunhofer scientists work hard to maintain the trust we enjoy Fraunhofer has its own digital auditing processes to ensure thatourinternationalactivitiesdonotconflictwithourvalues and interests. Firing enthusiasm for technological progress By seeking to anticipate risks, we also help ensure that new technologies are not regarded as dangerous even before they enter into use. We advocate adopting an open and positive attitudetowardsfuturetechnologies.Ifpeopleregardartificial intelligence, for example, as essentially unmanageable and share a fear that it could spin out of control, then we might end up missing out on major developments. in government, business and society – and to cultivate the good relations we have with our customers, funding bodies andpartners.Thistrustisrootedintheproperscientificcare we exercise in experimentation and publication – including, ofcourse,fullcompliancewiththerulesofgoodscientific practice. Rules and procedures for the institutes and research institutions of the Fraunhofer-Gesellschaft were enshrined someyearsagointhe“FraunhoferPolicyzurUmsetzung wissenschaftlicherIntegrität”(Fraunhoferpolicytoassure scientificintegrity).In2019,theDeutscheForschungsgemein- schaft(DFG)issuednew“Guidelinesforsafeguardinggood research practice.” These focus less on infringements and prosecution,andmoreonpromotingscientificintegrityand professional ethics among scientists. Fraunhofer is to issue an organizational directive governing the mandatory adoption of The establishment of our FUTURAS IN RES series of science the updated DFG guidelines. conferences has created a platform for an interdisciplinary discussion of the opportunities and risks associated with future technologies. Fraunhofer Institutes also participate in many Prevention of corruption other congresses, symposia and debates. Our contributions are designed to address people’s concerns about new tech- nology and raise questions about what the future might hold. How,forexample,willartificialintelligenceimpacteveryday living? And how can we improve people’s lives and society as a whole? Yet it will take more than a communications campaign to get industry and society fully involved. Technological Asabeneficiaryofpublicfunding,theFraunhofer-Gesellschaft has a special responsibility to behave in an exemplary manner in its business dealings. This means not only complying with laws and statutory regulations but also negotiating on fair termsandfulfillingcontractualobligations.Inadditionto being bound by special regulations, Fraunhofer is also subject progress has to be accepted throughout all layers of society. Our job is therefore to conduct intensive research on the securityaspectsofAI.Atthesametime,weaimtofireyoung people with enthusiasm for new technology. For only then to regular audits by the German Federal Court of Auditors, the localtaxofficeandexternalauditors.Fraunhoferregulations are available for consultation throughout the organization. We also hold regular training sessions and events to raise aware- can we ensure that they will produce new business ideas, ness on issues such as compliance, the prevention of corruption, innovative start-ups and cutting-edge research – and thereby help generate future prosperity. and data protection. Our internal audit department performs auditsonspecifictopics. 56

In particular, Fraunhofer executives are responsible for ensuring At Fraunhofer, we need to ask ourselves how best to handle the success of our organization and for contributing to a the most important asset in our organization – our know-how – positive working environment. They have an exemplary role toplayinpreventingcorruption,ensuringscientificintegrity, dealingproperlywithcustomers,maintainingconfidentiality and conserving resources in the workplace. In addition, the Fraunhofer Code of Conduct sets out the Executive Board’s and how to convert that into sustainable value as productively as possible. Our New Work@Fraunhofer project has investi- gated working practices within the Fraunhofer-Gesellschaft anddefinedtherequisitemeasuresaswellasdescribedthe challenges ahead. Follow-up pilot projects will now implement basic expectations regarding the conduct of every employee, pioneering concepts for new working practices as well as regardless of their position within the organization. investigate their scope and limitations. New Work: Creating modern, attractive workplaces Equal opportunities and diversity Digitalization and wide-ranging social and economic pressures The purpose of diversity management at Fraunhofer is to have brought major changes to the world of work across all create a working environment in which every employee can sectors of the economy. The climate debate, for example, has participate in equal measure, irrespective of ethnic origin, plunged us into a profound discussion of values and systems. gender, religion, ideology, physical or other impairment, age Global systems of value creation and key technological trans- formations have wrought major changes to the economy. At the same time, we face radical social changes. or sexual identity. This creates a diverse culture that can bring additionalbenefits.Forexample,mixedteamstendtoperform well on account of their greater creativity and ability to inno- vate and solve problems. By the same token, decisions made Fraunhofer’s mission is to deliver applied research and promote innovation.Werepresentthespiritofopenscientificinquiry. In line with our statutes, our job is to make a vital contribution by mixed teams are, as a rule, more workable and acceptable. Finally,whenaresearchanddevelopmentteamreflects different perspectives, it is easier to take account of differing to the economy and the society of our country. Together with ourCorporateResponsibility(CR)Board,wehavebeenlooking at key issues regarding responsible research and gender equal- ity. At present, this includes an initiative aimed at achieving climate neutrality for the entire Fraunhofer-Gesellschaft. Our needs and modes of application. The growing international competition for outstanding re- searchersandtopscientifictalentmeansthatFraunhoferis now obliged to look upon all capable and motivated workers employees say that the values and objectives embodied in this as potential employees. As a prospective employer, we must work are a key source of motivation in the workplace. Being partofFraunhofermeansworkinginafieldthatcanbesubject to rapid change – and therefore being able to meet the challenge to adapt. But it also means having a say in how that work is done – not only its substance and focus, but also the time and the place at which that work is done, the people with whom it is done and the way in which it is organized. ensure that all our job offers are as attractive as possible for potential employees. 57

R E V I E W O F F R A U N H O F E R R E S E A R C H Our future motivation – ethics and responsibility in applied research Communications Technologicalinnovationmustbeflankedbyapublicdiscussion of the accompanying opportunities and risks. This in turn requires that the underlying research be explained in an intelli- giblewayanditsbenefitstosocietymadeclear.Itisonlyby recognizing and understanding the structural changes brought aboutbynewtechnologythatwecanthenactivelyinfluence its impact on the economic, social, political and cultural level. Recent years have seen a burgeoning discussion about the workdoneinthescientificcommunity.Inturn,sciencecom- munication has become a well-established discipline within German science. Indeed, it has been made part of the German federalgovernment’sPactforResearchandInnovationandis now a prerequisite for many research-funding decisions. The Fraunhofer-Gesellschaft employs communications to presentnewresearchfindings,situatetechnologicaldevelop- ments within a broader context and inform the general public aboutnewscientifictrends.Westrivetoexplaincomplex scientifictopicsclearlyandcomprehensiblyandintermsof their potential applications. Our job is to provide information andclarification,andtohelpgenerateacceptancefor,and reduce anxiety about, new technology. By responding quickly andflexiblytoinquiriesfromthepublicandthemedia,andby providing diverse publications and platforms for dialog, we are able to meet our obligations in this vital sphere while also reflectingcurrentdigitaltrendsincommunication.Forexample, theimpactofdigitalizationandartificialintelligenceonsociety has been subject to critical debate. As a research organization with experience in the domains of science and business, it is our duty to promote an objective discussion based on a balanced For a research organization that seeks to have a positive impact presentation of the facts, including the necessity for such on people’s lives, it is vital that we maintain an open dialog technology and the opportunities it brings. with the general public. All innovation implies change. In a democracy, however, this can only be achieved with society’s consent. One of our tasks is therefore to communicate the results of our research to the general public in an intelligible wayandtohighlightthebenefitsofthescientificworkwedo. Onlyinthiswaywillpeoplebeabletojudgethescientific work we do and the results we achieve. And only then will interestedpartiesbeabletoinfluencetheprocessofstructural change brought about by new technology. Communication in all its forms has therefore a decisive and indispensable role to play in the implementation and effectiveness of research and development. PolicymakingontheGermanandtheEuropeanlevelisofvital importance here. This is where decisions are made that will determine the future direction of research and how it is funded. Given its focus on applied research with a direct impact on the economy, society and the environment, the Fraunhofer- Gesellschaft has an important advisory role to play – one that it exercises with proper care. For example, we seek to initiate discussions with relevant experts and decision-makers. 58

As political and social debate becomes increasingly polarized, there is less and less scope for discussions that are aimed at achieving consensus. At such times, politically neutral organi- zations like Fraunhofer have a natural role to play: to contribute, as best we can, to promoting an objective dialog and creating a constructive climate of debate. It is our responsibility not only to lead a productive discussion but also to contribute, as effectively as we can, to ensuring the well-being and prosperity of Germany and of Europe. We do this in the knowledge that, by and large, it is prosperous societies that have the opportunity and the endurance required to guide sociopolitical debate to a meaningful consensus without fear for their own economic well-being. In such questions, we remain, as ever, rigorously committed to party-political neutrality. And, as always, our objectives are wholly geared toward people’s well-being and that of society as a whole. Given our mission to have a direct and positive impact on science, industry, working methods and lifestyles, the Fraunhofer-Gesellschaft has a special role to play in Germany and Europe. As the world’s leading organization for applied research, we fully acknowledge the responsibility that this entails. Prof. Dr.-Ing. Reimund Neugebauer PresidentoftheFraunhofer-Gesellschaft 59

NEW INITIATIVES AND INFRASTRUCTURES The Fraunhofer 2022 Agenda was launched in 2017. It provides Fraunhofer with a road map that guides it toward future goals. Along this route, our priorities are to deliver sustainable scientificexcellence–rightfromprecompetitiveresearchtoindustrialtransfer–andtoexploit synergiessoastosecureresearchcontractsinsystemicallyimportantfields.Furtherkey objectivesoftheFraunhofer2022Agendaaretoattainscientificleadershipinvitalareasof research and to spearhead the response to the challenges facing society. Among these challenges are climate protection and the transition to sustainable energy and mobility systems, the development of a hydrogen industry, the establishment of a circular economy, and the digitalization of industry. Last but not least, Fraunhofer will also focus on maintaining the competitiveness of the German and European economies. In the years 2018 and 2019, the Fraunhofer 2022 Agenda team instituted a Future Commission, the purpose of which was to review the components of the Fraunhofer portfolio. As of 2020, the results of this process are now being implemented. For example, we are reorganizing our KeyStrategicInitiatives(KSIs)intoanevenmoreeffectiveformat.Atthesametime,weare restructuring our range of services so as to underscore our achievements in transferring new technology to industry. Finally, we are reorganizing and reconstituting the Fraunhofer Groups soastopreserveandstrengthentheirscientificeminenceintheirrespectiveareasofexpertise. Ad hoc initiatives Research Fab Battery Cells (FFB) Fraunhofer opened a new research facility for battery cell production in Münster in October 2019. It forms part of the Battery Research Factory umbrella program of the German Federal MinistryofEducationandResearch(BMBF)andisscheduledtoreceiveatotalof700million eurosinfundingoverthecomingyears.ThenewfacilityreflectsGermany’sgrowingimportance as a location for battery technology and production. In addition to stepping up the already outstanding research being conducted in Germany into the mass production of battery cells, FFB will also reinforce the supply industry by providing, for example, new materials for battery cells,productiontechnologyformore-efficientbatteries,andmeasurementsystemsforquality assurance.Thisnewfacility,abranchoftheFraunhoferInstituteforProductionTechnologyIPT, will work with partners and customers to develop new battery concepts and corresponding production processes. This will boost innovation and commercialization, thereby reducing the risks involved in transferring new design concepts and production systems to mass production. FFB is collaborating closely with the University of Münster, RWTH Aachen University and with various other partners and customers. 60

Next-generation computing Smart Ocean research initiative New and increasingly powerful processors and systems are The ability to exploit the seas is of vital importance to Germany required for the further digitalization of society and industry. Technologiessuchascloudcomputing,artificialintelligence and machine learning all generate and process huge amounts and Europe – as is the need to respect and protect the marine ecosystem. The race to develop new technology is accelerating all the time. On the basis of such developments, novel tech- of data – so-called big data. The same is true of highly niques for tapping this potential are now being rolled out complex applications such as Industrie 4.0 and autonomous vehicles. Here, standard computers are too weak and too slow – and consume too much energy – to handle the volume of worldwide. Once again, the emphasis must be on respecting theecologicalsignificanceoftheworld’soceans.Astheplace where land and sea meet, coastal regions are a key locus for data produced by these new technologies. At the same time, investigating the interaction between these two economic we need ways of ensuring data sovereignty for applications in cloud computing, big data and 5G connectivity. This ranges from standardization work – spearheaded, for example, by the “Trustworthy electronics – made in Germany” initiative – to the development of a European system-on-chip security architecture and a European production chain for semicon- spheres. In consultation with the state of Mecklenburg-West PomeraniaandthecitystateofHamburg,Fraunhoferisnow expanding its research activities at locations in Rostock and Hamburg. Here, our Smart Ocean program will strategically reinforceGermany’scapabilitiesinthefieldofmaritimetech- nology. ductor manufacturing. Next-generation computing aims to develop methods of pro- cessinghugevolumesofdataquickly,securelyandefficiently in terms of energy consumption. Fraunhofer’s contribution, We are also expanding research at the Fraunhofer Center for Maritime Logistics and Services CML at our location in Hamburg. These activities will focus on innovations for port systems, shipping, shipbuilding and maritime logistics. Their which is being spearheaded by the Fraunhofer Group for purpose is to deliver new technology and know-how that will Microelectronics and the Fraunhofer ICT Group, is to link strengthen the maritime economy as a whole. Research will trusted computing with neuromorphic and quantum computer be conducted in the following areas: green shipping, zero- systems. This work is expected to spawn new developments emissions cargo handling, innovative vessel design for ship- across a host of sectors that form the backbone of European building, and seamless logistics in port. Many of the key industry, including communications technology, production technologies required to achieve systematic improvements in and automation systems, automotive technology, robotics, the maritime economy rely on digitalization. Fraunhofer is health care, commerce, banking and insurance. The Research FabMicroelectronicsGermany(FMD)isprovidingthetechnol- ogy base and a joint research platform for this work. The creation of a new Fraunhofer Cluster of Excellence will lead therefore seeking to combine existing knowledge of maritime processesatthePortofHamburgwiththetwonewtechnol- ogiesofdigitalizationandartificialintelligence–andthereby develop smart and secure processes with real-time capability. to the establishment of a national infrastructure of living labs. Initial projects to foster strategic cooperation with European research partners CEA-LETI and IMEC were launched in 2019. The infrastructure for this will be conveniently located right nexttothePortofHamburg,Germany’slargestseaport. 61

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures 1 The Ocean Technology Campus is currently under develop- New institutes and research institutions ment at the Fraunhofer location in Rostock. It will comprise anewinstitutebuilding,locatedinRostock’sfishingport,and the Digital Ocean Lab, an undersea test site built on an arti- ficialreefoffthecoastofNienhagen.Undertheleadershipof the Fraunhofer Institute for Computer Graphics Research IGD, Fraunhofer Institute for Large Structures in Production Engineering IGP The creation of this new institute, based in Rostock, is the this new facility will investigate and develop marine systems culmination of 20 years of successful research by its pred- and deep-sea technology in the waters of the Baltic. This ecessors. Founded in 2000 as a Fraunhofer Application Center, lighthouse project involves the participation of the City of it became an independent Fraunhofer Research Institution in Rostock, Rostock Business, the state government of Mecklen- burg-WestPomeraniaandpartnersfromindustry.The Fraunhofer-Gesellschaft has put together a research group 2017. With its interdisciplinary approach to production engi- neering, it has over the years been able to build up a broad customer base in sectors such as shipbuilding, the maritime comprising the Fraunhofer Institutes for Computer Graphics ResearchIGD,forLargeStructuresinProductionEngineering IGP,forOptronics,SystemTechnologiesandImageExploita- tion IOSB and for Ceramic Technologies and Systems IKTS. This will develop and trial marine-capable systems and tech- nology for applications including cable tracking, maintenance industry, steel construction, aircraft construction, wind power systems, energy and environmental technology, and rail and commercial vehicle manufacturing – all areas in which special demandsaremadeofmaterials.Itbecameafullyfledged FraunhoferInstitutein2020.FraunhoferIGPcelebratedthe acquisition of this new status in May 2020 – at a topping out of offshore structures, and the detection and disposal of ceremony for a new institute building. abandoned munitions. This new institute building will accommodate further research inthefieldofWerft4.0–thedigitalizedshipyard.Fraunhofer IGPistheonlyFraunhoferInstituteinMecklenburg-West Pomeraniaandspecializesinthefieldsofproductionengi- neering, production processes and underwater materials. As one of the institutes participating in the Ocean Technology Campus, it is currently working on OWSplus – Floating Off- shore Wind Solutions, a regional growth core funded by the GermanFederalMinistryofEducationandResearch(BMBF). Here, project partners are developing solutions for the next evolution in renewable power generation. 62

2 Fraunhofer Institute for Cognitive Systems IKS 2 Fraunhofer Research Institution for Energy Infrastructures and Geothermal Systems IEG 1 The newly founded Fraunhofer Institute for Cognitive Systems IKS incorporates the former Fraunhofer Institute for Embedded In early 2019, the federal government commission on growth, Systems and Communication Technologies ESK. It forms part oftheArtificial/MachineIntelligencenetworkofthestateof Bavaria and works to develop safe and reliable cognitive systems,devicesandmachines.Inaddingartificialintelligence to Germany’s rich engineering tradition, it aims to deliver a structural change and employment agreed to a phaseout of coal-firedpowergeneration.Inthefuture,theGermanenergy system will supply largely carbon-free power. This change of strategyreflectsnotonlyclimateprotectionconcernsbutalso imperatives regarding security of supply, industrial competitive- product that combines intelligence and quality. AI in secure ness and social sustainability. In order to accelerate the tran- systems must be both intelligible and robust. To achieve this, sition to a sustainable energy system, the Fraunhofer Research researchers draw on their expertise in designing and con- structingflexiblearchitecturesthatarehighlyconnectedand extremely reliable. Conventional systems are used to monitor AI’s susceptibility to error. For cost reasons, such systems have to remain dynamic. Risk analysis is therefore used to decide in anyonesituationhowsecuritymethodsshouldbemodified. Institution for Energy Infrastructures and Geothermal Systems IEG was established at the beginning of 2020. This incorporates theInternationalGeothermalCentreBochum(GZB)along with two newly created branches: one in Cottbus, focusing on energy infrastructures; and one in Jülich, focusing on sector coupling. These three locations form a link between the regions most affected by structural change in both eastern and western AsakeymemberoftheArtificial/MachineIntelligencenetwork of the state of Bavaria, Fraunhofer IKS maintains close links to the Technical University of Munich and to Ludwig-Maximilians- Germany. Fraunhofer IEG will also conduct research at branch labsinWeisweiler,nearAachen,andinZittau.Inorderto achieve the transition to a sustainable energy system, it will Universität München. In line with its AI strategy, the Bavarian be necessary to couple infrastructure in the electricity, district state government plans to construct a new building for heating and transport sectors. Only then does it become more Fraunhofer IKS on the research campus in Garching, near feasible to incorporate renewables in the energy mix and Munich. In parallel, the Fraunhofer Institute for Applied and thereby reduce carbon emissions. In particular, geothermal Integrated Security AISEC is to expand research activities in thefieldofcognitivesecurity,andtheFraunhoferInstitutefor IntegratedCircuitsIISinthefieldofAIfordigitalsignalpro- cessing. Finally, blockchain research conducted by project energy has the potential to play a key role in the future energy system. This is because it can be used to top up the energy supply to district heating networks. groups at the Fraunhofer Institute for Applied Information Technology FIT in Augsburg and Bayreuth is to be expanded, FraunhoferIEGwillfocusonthefollowingfields:energy system infrastructure and sector coupling, heat mining and and the Fraunhofer Institute for Transportation and Infra- heat storage, borehole systems, geo-resources and develop- structure Systems IVI is to coordinate the establishment of an ment of the requisite technology, energy systems, and carbon Application Center for Connected Mobility and Infrastructure in Ingolstadt. sequestration. The International Geothermal Centre Bochum (GZB)formsakeypartofFraunhoferIEG.Atthesametime, 63

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures the branch lab in Aachen will conduct R&D in the use of biogenic materials, magnetic materials, energy materials and geo-resources and thermal and material-based energy storage systems. A large-scale lab to be established at the RWE power plant in Weisweiler will investigate deep-geothermal technol- recycling analytics. The Alzenau location is to step up activities inthefieldsofdigitalizationandresourcemanagement,includ- ing the economic and ecological aspects of a circular economy. ogy for the generation of heat, refrigeration and electricity. The Hanau location is cooperating with regional partners from And the Open District Hub Research Center in Jülich will develop systems for sector coupling on the level of individual neighborhoods. A further branch lab of Fraunhofer IEG is being established in Cottbus, in the Lausitz region of eastern Germany.Thiswillfocusonenergyinfrastructureand,specifi- cally, supply and distribution systems for district heating and gas.TogetherwiththebranchlabinZittau,theCottbus facility will investigate and develop the infrastructure required to couple district heating, electricity, gas and transport. Contributingitsextensiveexperienceandscientificexpertise in the design and operation of large power plants will be the Brandenburg University of Technology Cottbus-Senftenberg. ThebranchlabinZittau,meanwhile,willcollaboratewiththe UniversityofAppliedSciencesinZittau/Görlitz.Thiswork will focus on energy technology and production systems for industry to develop the use of recycled materials for applica- tionsinthefieldofelectromobility,includingbatteries,fuel cells, lightweight parts, electric motors and power electronics. Initiatives in artificial intelligence KI.NRW, an AI competence platform KI.NRW is an initiative launched by the state of North Rhine- Westphaliainthefieldofartificialintelligence.Itspurposeis to promote close collaboration between business, trade unionsandthescientificcommunity.Theinitiativehasalready launchedanumberofflagshipprojectstosupportthetransfer of new technology from research to industry. It is currently thermodynamic conversion systems. establishing test environments to enable exploratory investi- Fraunhofer Research Institution for Materials Recycling and Resource Strategies IWKS gation of the following areas: mobility, manufacturing, the circular economy, medical engineering and digital farming. KI.NRW is also collaborating with the European initiative AI4EU –AEuropeanAIOn-DemandPlatformandEcosystem,which involves the participation of THALES. In parallel, its Data Science TheformerFraunhoferProjectGroupforMaterialsRecycling and Resource Strategies IWKS was established eight years Learning Laboratory is focusing on developing AI skills in the business sector, in the areas of training and continuing edu- ago under the aegis of the Fraunhofer Institute for Silicate Research ISC. Following a Senate decision of November 2019, this has become the Fraunhofer Research Institution for Materials Recycling and Resource Strategies IWKS as of 2020. FraunhoferisdelightedtohavesecuredtheservicesofProf. Dr.AnkeWeidenkaff,formerlyofETHZurich,asdirectorof Fraunhofer IWKS. She was appointed in April 2019. Fraunhofer IWKS employs around 90 people at its two locations in Alzenau(Bavaria)andHanau(Hesse).Workfocusesonthe followingfields:materialflowmanagement,urbanmining, cation, and in society at large. Meanwhile, KI.NRW has already producedthefirsteverpan-Europeaninspectioncatalogfor thecertificationofAIapplications.Thisenablesaprofessional andneutralevaluationofAIapplicationsandcertifiesnotonly that they are technical reliable but also that they utilize AI in a responsible way. The catalog was produced in cooperation withGermany’sFederalOfficeforInformationSecurity(BSI) and drawn up by a team of researchers from the Universities of Bonn and Cologne and from the Fraunhofer Institute for Intelligent Analysis and Information Systems IAIS. 64

A number of stakeholders in the International Data Spaces initiative are located in North Rhine-Westphalia. The aim of Center for Explainable and Efficient AI Technologies – CEE AI this initiative is to establish a secure data space that will enable companies to retain control of their data assets. There is also important cooperation in this area with the Competence Center MachineLearningRhine-Ruhr(ML2R),ledbyTUDortmund University and Fraunhofer IAIS. ML2R is one of four national nodes for advanced research and technology transfer in the area of machine learning. TheCenterforExplainableandEfficientAITechnologies–CEE AI was established in 2019, initially in a virtual form. It focuses ontwofields:explainableAI,withanemphasisonknowledge engineering;andefficientAI,withanemphasisonhigh- performancecomputing,bigdataandefficientincorporation of AI algorithms in company hardware systems. Fraunhofer Center for Cognitive Production Systems (CPS) ThecreationoftheFraunhoferCenterforCognitiveProduction Systems(CPS)hasprovidedtheChemnitzandDresdenregion with an interdisciplinary platform that marries mechanical As a regional hub for this kind of research, the CEE AI will help strengthen the mechanical engineering and microelec- tronics sectors, for example, both of which are strongly repre- sented in Dresden. The CEE AI is a joint venture of TU Dresden and the Fraunhofer-Gesellschaft. TU Dresden is represented by the Center for Tactile Internet, a TU Dresden cluster of excellence, and by other professorial chairs. Fraunhofer is and production engineering with microelectronics and IT. By represented by the Fraunhofer Institutes for Intelligent Analysis combining traditional with innovative production processes, it aims to keep pace with the structural change now taking hold in the value chains of international manufacturing. SMEs, in particular, will welcome the combined offer of technological and Information Systems IAIS, for Machine Tools and Forming TechnologyIWU,forIntegratedCircuitsIIS(DivisionEngi- neeringofAdaptiveSystemsEAS)andforTransportationand Infrastructure Systems IVI. and systems-related expertise, comprising AI tools and AI algorithms. This will help them develop new services and business models, thereby strengthening Saxony’s standing as a technology location. Research and Innovation Center for Cognitive Service Systems (KODIS) Flexible process chains are one of the key drivers of the paradigm shift in manufacturing. This requires the use of, for example, smart microsystems for production machinery and plant.OneofthetasksofFraunhoferCPSwillbetoconnect such systems, create digital twins, and utilize cognitive sys- tems to manage and control these smart processes. The new center is located at the Fraunhofer Institute for Machine Tools The Research and Innovation Center for Cognitive Service Systems(KODIS)islocatedontheBildungscampusHeilbronn. It was established by the Fraunhofer Institute for Industrial EngineeringIAOwiththefinancialsupportoftheDieter Schwarz Stiftung. In developing data-based business models thatprovidecustomerswithindividualbenefitsandadded value, the new center is seeking to respond to the impact that and Forming Technology IWU in Chemnitz and Dresden. digitalization and AI processes will have on value chains. KODIS focuses on not only established service sectors such as commerce, logistics and the energy industry but also on production-related services. The aim is to provide the region’s 65

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures 1 high proportion of small and medium-sized enterprises as well asfamily-owned/owner-operatedcompanieswitheasyaccess to solutions for dealing with data and AI processes. In addition, a Collaborative Service System Engineering and Simulation Lab (CS3-Lab)istoestablished.Forthispurpose,high-performance computer infrastructures and visualization technologies are priate training for their employees. To be able to exploit the disruptivepotentialofAIandprofitfromitseconomicbenefits, companiesfirstneedtobuildupbroadtechnicalandhuman resources. The Fraunhofer AI Learning Lab employs a three- pronged approach: research, training and implementation. To this end, three research labs will be created: one for big data, being developed in Heilbronn and Stuttgart. These will be used one for predictive maintenance and one for AI on the edge. In to analyze, simulate and develop the processes and decision- parallel, the new facility will progressively establish a further- making patterns required for complex service systems. The Technical University of Munich and Heilbronn University of Applied Sciences are involved in this project. Advanced AI Center for Learning Systems The Fraunhofer Institutes for Industrial Engineering IAO and forManufacturingEngineeringandAutomationIPAhave established an Advanced AI Center for Learning Systems. Created with the help of public funding, this new facility will provide a focal point for applied AI research for small and training program with courses ranging from the already existing qualificationofBasicDataScientisttothenewqualification of Senior Data Scientist AI. The AI further training center is being established with the help of funding from the AI lab competition organized by the German Federal Ministry of EducationandResearch(BMBF).Itinvolvestheparticipation of the Fraunhofer Institutes for Intelligent Analysis and Infor- mationSystemsIAIS,forAlgorithmsandScientificComputing SCAI, for Applied Information Technology FIT, and the Fraunhofer Academy. medium-sized enterprises. The center joined the Cyber Valley “What’s the IQ of AI?” – FUTURAS IN RES 1 project at the end of 2019. This is Europe’s largest research collaborationinthefieldofAI.Itsfoundingpartnersinclude Amazon, automotive companies, the state of Baden-Württem- berg,theMaxPlanckSociety(MaxPlanckInstituteforIntelli- gentSystems)andtheUniversitiesofStuttgartandTübingen. TheCyberValleyprojectalsobenefitsfromthesupportof renowned foundations. AI Learning Lab for SMEs ThesecondeditionoftheFUTURASINRESseriesofscientific conferences brought together 320 high-ranking experts and guests from science, industry and other areas of the economy. Inatotaloffivesessionsfeaturingkeynoteaddresses,panel discussions and live polls, the conference looked at the latest developments in AI and considered the changes and improve- ments it might bring in the future. All in all, some 30 speakers from Germany, the USA, Switzerland, France and countries in Asia offered insights into the current state of research and technology. In 2020, FUTURAS IN RES will focus on the topic Three Fraunhofer Institutes in Bonn have joined forces with of quantum technology. the Fraunhofer Academy to set up an AI further training center at Schloss Birlinghoven campus. The purpose of the AILearningLabistoprovide,firstandforemost,smalland medium-sized enterprises with assistance in developing and implementing their own AI use cases, together with appro- 66

2 Initiatives to promote data sovereignty Given the relevance of these joint developments – and their International Data Spaces, German Edge Cloud, GAIA-X, European data sovereignty initiative 2 advanced technological maturity – Fraunhofer and German Edge Cloud GmbH were also able to play a key role in design- ing GAIA-X. This proposed solution to ensure data sovereignty and data availability for Europe was unveiled at a Digital Smart manufacturing presents companies with huge chal- Summit held by the German federal government in Dortmund lenges, not least the question of how to manage data-driven at the end of 2019. Together with European partners, repre- production processes in real time. In response, Fraunhofer has sentatives from federal government, industry and science are teamed up with partners from industry to develop smart working to create a secure and connected data infrastructure solutions for this sector. These partners include the start-up that guarantees digital sovereignty and fosters digital inno- company German Edge Cloud GmbH, which is part of the vation on the basis of interoperability. This project provides a Friedhelm Loh Group and has given its name to the project. Theideaistocombinethebenefitsofcloudcomputingwith those of edge computing. While cloud computing delivers platform for an open and transparent digital ecosystem in which data and services can be made available, merged and securely shared, thereby enabling a ready commercialization maximum scalability in computing and data storage, edge of digital services. GAIA-X is also intended to form the nucleus computing enables local processing of large volumes of data inrealtime.Thefirstfruitsofthisprojectweredeliveredin 2019 with the market launch of the industrial edge cloud of a European data sovereignty initiative. As such, it will enhance control over data storage and data use through the future addition of trustworthy hardware and physically secure appliance ONCITE. Key to this development is a software communications based on quantum technology. architecture developed by Fraunhofer for the International DataSpaces(IDS)project,whichwasfundedbytheGerman Federal Ministry of Education and Research. This creates a secure data space enabling users to retain control over data From brown coal to blockchain in the Rhineland storage and data transfer with partners. In a project funded by the state government of North Rhine- Currently preparing for launch is a follow-on project by the name of Fraunhofer Edge Cloud. Some 20 Fraunhofer Institutes Westphalia, Fraunhofer has established a Blockchain Living Lab intheformerRhinelandcoalfields.InauguratedinSeptember 2019, the lab is to test practical blockchain applications and are to build a unique network of living labs for edge cloud relevant business models for areas of business common to the computing, thereby creating an attractive platform for further collaboration with industry. A common feature of the German Edge Cloud and the Fraunhofer Edge Cloud is that all the Rhineland: energy, logistics, supply chain management, public services,financialservicesandIndustrie4.0.Inaddition,the lab will trial and validate new technologies and business models nodes for both will be paired with local 5G campus networks. in partnership with relevant stakeholders in North Rhine- Local nodes will therefore be able to exploit this forthcoming standard for cellular networks and thereby provide real-time solutions for mobile applications on company sites. Westphalia. The project consortium comprises the Fraunhofer InstitutesforAppliedInformationTechnologyFIT(Bonn),for MaterialFlowandLogisticsIML(Dortmund)andforTechnol- ogical Trend Analysis INT along with RWTH Aachen University, Ruhr University Bochum, the University of Applied Sciences Gelsenkirchen and the company regioiT GmbH. 67

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures 1 Initiatives to promote quantum technologies 1 Quantum photonics labs (QPL) Germanyoccupiesastrongpositioninthefieldofquantum physicsandfirst-generationquantumtechnologies.Applica- tions here include laser devices, quantum computers and MRI appliances. The second quantum revolution will exploit quantum effects to deliver novel imaging techniques and In 2018, the German federal government launched a frame- work program to take quantum technology from the basics to market launch. This program includes a joint strategic initiative bytheFederalMinistryofEducationandResearch(BMBF) and the Fraunhofer-Gesellschaft on quantum imaging and sensor systems capable of rendering physical data to a reso- quantum sensing. A total of 11 Fraunhofer research units are lution and clarity never before achieved. It should bring major changes or even disruptive innovations to a whole range of areas, including medical engineering – e.g., surgical navigation participating. The aim is to increase research knowledge in thisfieldandtodevelopappliedtechnologyforthepurpose of close collaboration with industry. In line with the federal systems and enhanced diagnostic systems – and semicon- ductor manufacture. The advent of quantum communications andquantumcomputingwillradicallyadvanceartificial intelligence, machine learning and data encryption as well render IT applications invulnerable to eavesdropping. A national Fraunhofer competence network for quantum computing A consortium comprising the following members is to establish a national Fraunhofer competence network for quantum computing: the Fraunhofer Institutes for Applied and Integrated Security AISEC, for Open Communication Systems FOKUS, for Intelligent Analysis and Information SystemsIAIS,forAppliedSolidStatePhysicsIAF,forIndustrial MathematicsITWM,forAlgorithmsandScientificComputing SCAI and for Secure Information Technology SIT. This con- sortium will bring together the disciplines of quantum com- puting,artificialintelligenceandITsecurity.Togetherwith IBM,itwillalsooperatethefirstcommercialquantum computer in Germany, as an open research platform for business-relevant questions. program, work commenced in May 2019 to establish a set of quantumphotonicslabs(QPL)attheFraunhoferInstitutefor AppliedOpticsandPrecisionEngineeringIOFinJena.Thiswill create a transfer center for universal applications of quantum- opticaltechnology.Thisnewcenterwillfocusonfindingnew ways for industry to make use of quantum light sources and other key components of this technology. It offers a prime example of how to meet the strategic goal of creating a na- tional infrastructure of application laboratories – for, and in collaboration with, partners from industry and research. It was theQPLinitiative,alongwithFraunhoferIOF’sparticipationin the Thuringian Innovation Center for Quantum Optics and Sensors(InQuoSens),thatpromptedtheBMBFtoentrust Fraunhofer IOF with the task of coordinating QuNET, a major initiative to create a quantum communications network that is immune to eavesdropping. QuNET The purpose of QuNET is to enable secure communications between government organizations. The seven-year project provides a central platform for the creation of a German quantum communications infrastructure and marks a major step towards development of the quantum internet. On the European level, the German federal government and QuNET 68

consortium partners are seeking to create a secure European tested to ensure they are workable and can be incorporated data space. QuNET will lay the foundations for establishing a unifiedandsecureinformationandcommunicationsinfra- structure for Europe. The long-term plan is to link this quan- in existing systems. In QuantumRISC, a project led by the Fraunhofer Institute for Secure Information Technology SIT, partners from industry and science are investigating how tum-based communications infrastructure with the Internation- embedded systems, especially in autonomous vehicles, can al Data Spaces project in order to attain the highest level of data sovereignty and data security for European data space. The project is being led by the Fraunhofer Institute for AppliedOpticsandPrecisionEngineeringIOF(Jena)andby the Fraunhofer Institute for Telecommunications, Heinrich- Hertz-Institut,HHI(Berlin),inpartnershipwiththeGerman AerospaceCenter(DLR)andtheMaxPlanckInstituteforthe ScienceofLight(Erlangen).Italsoinvolvesindustrypartners from the following sectors: telecommunications, security, best be protected against such attacks. For this purpose, the consortiumpartnersaredevelopingspecialPQCmethodsthat combine stringent security with minimal energy consumption and data-storage requirements. Initiatives for the hydrogen economy Hydrogen technology has a key role to play on the road to a carbon-neutral economy. It can deliver solutions that pave the satellite operation, and systems and component design. This way for further development of renewable energy, climate- cooperation will ensure rapid transfer of the technology developedfortheQuNETproject.Theprojectofficiallybegan infall2019andcomprisesthreephases.Researcherswillfirst develop the hardware components and then establish the neutral industrial processes and sustainable mobility. For Germany, hydrogen technology offers the chance to maintain a manufacturing industry and to develop new export oppor- tunities. In 2019, Fraunhofer established a Hydrogen Network, technological foundations for multi-user operation in hetero- which enables us to respond rapidly to the needs of industry geneous networks. In the third phase, they will work with industry and Germany’s federal network providers to establish a quantum-based network for government agencies. This will and society. This network pools the experience and expertise of22institutes(asatDecember31,2019)alongtheentire value chain of the hydrogen economy. A number of Fraunhofer take the form of a quantum-safe pilot link between federal Institutes have launched projects designed to demonstrate agencies. QuantumRISC the viability of this technology. Others are members of con- sortia or other ventures such as the living labs funded by the German Federal Ministry for Economic Affairs and Energy (BMWi)orregionalinitiativesestablishedtocombatthe impact of structural change. The Hydrogen Network has The advent of quantum computers will make it easier to also produced a hydrogen road map for Germany as a dis- crack current encryption methods than is now the case with cussion paper for the German federal government’s national conventional computers. This will therefore necessitate the hydrogen strategy. development of new forms of data security that are proof against such attacks. Germany is one of the world’s leading locationsinthenewresearchfieldofpost-quantumcryptog- raphy(PQC).AllnewlydevelopedPQCmethodsmustbe 69

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures HyFab – research project to develop production-ready fuel cell applications Go Beyond 4.0 – conserving resources and cutting costs, from unique items to mass production 1 In order to meet climate-protection targets, we also need to In order to meet the demand for increasingly customized reform the transportation sector. As a potential source of products, sectors such as automotive or aircraft construction power for electric vehicles, the hydrogen-powered fuel cell are going to need new modes of production. Digital printing offers an alternative or supplement to battery technology. To and laser processing techniques geared up for mass production achieve the volumes required, it will be necessary to upscale will enable the manufacture of increasingly customized variants current production capacity by around three orders of of series products all the way down to unique items. Thanks magnitude. The Baden-Württemberg State Ministry of the to a combination of conventional and digitally controlled Environment has therefore provided 7.9 million euros to fund manufacturing methods, this will also conserve resources, cut further research into fuel cell production. The HyFab project willdefinetherequisitequalityspecificationsateachstageof the process chain and develop training courses and work- costs and increase the rate of production. Using digital printing and laser processing techniques, a shops in order to expedite the transfer of know-how to indus- Fraunhofer consortium has been able to produce printed try. The two project partners are the Center for Solar Energy andHydrogenResearchBaden-Württemberg(ZSW),whichis coordinating the project, and the Fraunhofer Institute for Solar Energy Systems ISE. They will consult with a steering group from industry. In enabling machinery and plant manufacturers tobenefitfromjointandcontractresearch,andqualityas- surance, the HyFab project will help smooth the transition to future mass production. Lighthouse projects circuits and sensor components incorporated within complete parts. In the case of a car door, for example, this obviates the needtofitacabletree.Here,thecopperwiringtopowerthe small motors for the side windows is applied directly to the door – including a covering of insulation material – by means of an industrial robot. For an aerospace project, engineers incorporatedsensorsandotherelementswithinthefiber- reinforced composite material used to make an aircraft wing. This included sensors to record variables such as temperature or deformation; signaling circuits; and even heated wires to keep the wing free of ice without the need for chemical de-icing. In order to test their electronic reliability, the ele- Lighthouse projects are strategic initiatives that mark out specificfieldsofresearchwithinouroverallportfolio.Our institutes pool their expertise in one or more of these research fieldsinordertorollbackthefrontiersoftechnologyandtake on the challenges currently facing society and the economy. Eachofthesescientificconsortiaworksforaroundfouryears in order to develop fundamentally new technological ap- ments were placed in a shaker and subjected to forces many times greater than gravity. The Go Beyond 4.0 project was launched at the end of 2016 and involves the participation of the Fraunhofer Institutes for Electronic Nano Systems ENAS, for Manufacturing Technology and Advanced Materials IFAM, forLaserTechnologyILT,forAppliedOpticsandPrecision Engineering IOF, for Silicate Research ISC and for Machine proaches that will help to preserve Germany and Europe’s Tools and Forming Technology IWU. In 2020, it is focusing on innovative edge. process stability and product reliability. 70

1 Electrocaloric heat pumps – climate-friendly and no harmful refrigerants MaNiTU – solar cells with extremely high conversion efficiency According to the German Environment Agency, over half the MaNiTU is another lighthouse project that aims to ease the energy consumed in Germany goes on either heating or transition to a new energy economy. In order to achieve climate refrigeration. This means that the transition to a sustainable targets, the proportion of power generated by photovoltaic energy system can only succeed if a technology can be found systems will have to increase worldwide. A consortium of six that requires less energy and is less harmful to the climate than the majority of the current generation of compressor systems. The refrigerants in these systems are bad for the environmentandhumanhealth.Theyposeafirehazardand are frequently ineffective. Moreover, the compressors them- selves are often noisy. The ElKaWe lighthouse project focuses on the electrocaloric effect,awell-knownphenomenonfirstdescribedinthe 1950s. A consortium of six Fraunhofer Institutes is investiga- Fraunhofer Institutes is therefore seeking to exploit a paradigm shiftinmaterialsandtechnologysoastoimprovetheefficiency of photovoltaic cells – together with the associated power-gen- eration costs – and also reduce their environmental footprint. It is hoped that this will help regain some of the market share lost to Asia. The consortium is working to develop tandem solar cells that do not require the use of problematic materials. Tan- demsolarcellsarehighlyefficientonaccountoftheirabilityto exploit a larger proportion of the spectrum of sunlight. This will mean that now negligible surfaces such as car roofs will become ting the development of ceramic and polymer-based electro- attractive for the generation of solar power. In a lab environ- caloric materials from cheap and harmless starting materials. These will provide the basis for an entirely new and much moreefficienttypeofheatpump/refrigerationsystem,without the need for compressors and ozone-depleting refrigerants. Researchersarehopingtosubstantiallyboosttheefficiencyof the heat pipe used for this purpose. If all goes to plan, they ment, researchers have already achieved impressive improve- mentsinefficiencywithperovskitesolarcells.Thebigdrawback with this emerging technology is that the materials conven- tionally used for sunlight absorption and for contact and passi- vationlayers–inparticular,lead–failtofulfillsustainability, market acceptability and market access criteria. Fraunhofer will have a demonstrator with an output of 100 watts and a researchers are therefore using techniques from the materials temperature range of 30 degrees Kelvin within the space sciences in order to identify and design new and nonhazardous of four years. The project involves the participation of the FraunhoferInstitutesforPhysicalMeasurementTechniques IPM,forCeramicTechnologiesandSystemsIKTS,forApplied SolidStatePhysicsIAF,forAppliedPolymerResearchIAP,for Structural Durability and System Reliability LBF and for Organic Electronics,ElectronBeamandPlasmaTechnologyFEP. absorber materials. Further objectives include minimal environmental impact, low costs and long-term stability. The project involves the participation of the Fraunhofer Insti- tutes for Solar Energy Systems ISE, for Silicate Research ISC, for Mechanics of Materials IWM, for Surface Engineering and Thin Films IST and for Microstructure of Materials and Systems IMWS along with the Fraunhofer Research Institution for Materials Recycling and Resource Strategies IWKS. This con- sortium brings together Fraunhofer expertise in the theoretical and experimental material sciences and in the technological, commercial and environmental aspects of solar cell technology. 71

R E V I E W O F F R A U N H O F E R R E S E A R C H New initiatives and infrastructures SWAP – hierarchical swarms for enhanced production National centers If digital manufacturing, with its reliance on connected logistics ATHENE 1 and cyberphysical systems, is to become more effective than conventional manufacturing, then it will need to move beyond a traditional production environment in which goods are made atassemblystationsinapredefinedsequenceofprocesses. The trend towards greater customization, driven by increased digitalization,necessitatesahighdegreeofflexibilityinpro- ductioncapacity.TheconsortiumbehindtheSWAPlighthouse projectisworkingtocreateanautonomousandhighlyflexible production environment based on the model of a hierarchical The National Research Center for Applied Cybersecurity ATHENE(formerlyCRISP)isEurope’slargestresearchcenter for cybersecurity and data privacy. ATHENE represents a uniqueformofcollaborationinthefieldofuniversityand non-university research. It investigates key issues in relation to cybersecurity and the protection of data privacy – and provides corresponding support for business, the public sector, company founders and start-ups. ATHENE is a research facility swarm. This means organizing mobile manufacturing units, established by the Fraunhofer-Gesellschaft. It involves the machine tools, production machinery and transport vehicles insuchawayastocreateaflexibleproductionenvironment that can adapt the process chain to new requirements and autonomouslyfindthemostefficientusageofproduction capacity. The institutes participating in the project are seeking to identify agile manufacturing approaches that can be adapted to a range of operational issues. participation of the Fraunhofer Institutes for Secure Information Technology SIT and for Computer Graphics Research IGD along with the Technical University of Darmstadt and Darmstadt University of Applied Sciences. ATHENE is located in Darmstadt and is funded by the German Federal Ministry of Education andResearch(BMBF)andtheHessianStateMinistryforHigher Education,ResearchandtheArts(HMWK). Fraunhofer researchers are also seeking to combine swarm intelligence with federated learning. In this approach, data stored on local edge nodes is used to create global AI models that make the swarm as a whole more dynamic. Using this kindofknowledge-based,preventivecontrol(learningfrom similarscenarios),itispossibletobuildresilientanddynamic infrastructures that deliver high productivity and greater scope for customization. The project involves the participation of theFraunhoferInstitutesforAppliedOpticsandPrecision Engineering IOF, for Factory Operation and Automation IFF, for Intelligent Analysis and Information Systems IAIS, for Laser TechnologyILT,forMaterialFlowandLogisticsIML,forPhysical MeasurementTechniquesIPM,forManufacturingEngineering andAutomationIPA,forMaterialandBeamTechnologyIWS and for Machine Tools and Forming Technology IWU. ROBDEKON – robotic systems for decontamination in hazardous environments Remediationofoldlandfillsites,sortingtoxicwaste,disman- tling nuclear facilities – despite stringent safety precautions, such tasks expose people to substantial hazards. An alternative is to let robots and autonomous machinery take on this work. Opened in June 2019, ROBDEKON is one of two competence centersinaFederalMinistryofEducationandResearch(BMBF) program of research in civil security. The center has already demonstrated several scenarios, including excavation work performed by a computer-controlled mini-excavator. In another application, a robot picks up a piece of plant, inspects it from various angles, cleans it and then places it ready for disposal. 72

1 The ROBDEKON project is coordinated by the Fraunhofer Institute for Optronics, System Technologies and Image Ex- ploitation IOSB in Karlsruhe. Further research partners are the KarlsruheInstituteofTechnology(KIT),theFZIResearchCenter for Information Technology, also located in Karlsruhe, the GermanResearchCenterforArtificialIntelligence(DFKI)and a number of industrial companies. ROBEKON provides consul- tation on all issues regarding decontamination with robots. German Rescue Robotics Center (A-DRZ) TheGermanRescueRoboticsCenter(A-DRZ)commenced operation in 2019. Located in Dortmund, it is the second of two competence centers in the Federal Ministry of Education andResearch(BMBF)programentitledResearchforCivil Security. The new facility also features a living lab, located on theformerindustrialsiteofPhönix-WestinDortmund,which will trial the use of robots in support of emergency personnel in hazardous rescue operations. Four emergency scenarios will beinvestigated:fire,collapseandburial,detectionofhaz- ardoussubstances,andflooding.Theestablishmentofthe newcentermarksthefirsttimeeverinGermanythatresearch, industry and the emergency services have collaborated to develop autonomous robots for use in rescue operations. A robotics task force to act on the national and international level is also being established. With its experience in organizing international robotics competitions, the Fraunhofer Institute forCommunication,InformationProcessingandErgonomics FKIE is ideally placed to assist the new center in developing new scenarios to develop a requirements analysis for robotic systemsandtodeterminetheirperformancespecifications. 73

PROJECTS AND RESULTS 2019 Joseph von Fraunhofer Prize Dental glass-ceramic: high-strength and quick to use 1 When a dental prosthesis becomes necessary, patients and dentists want a product that is colorfast and strong – and that can be individually customized very quickly. Dr. Bernhard DurschangandDr.JörnProbstfromtheFraunhoferInstitute for Silicate Research ISC developed the material, manufacturing process and pilot production line for such a dental prosthesis made from novel glass-ceramics in just under four years. The project encompassed everything from the inceptive idea to materialdevelopmenttotheCI-certifiedproductionsystem– observing all necessary quality management requirements for medical devices. Fraunhofer ISC contributed two success factors to the breakthrough of the innovative dental restoration materials:scientificexcellenceinthedevelopmentofnew glass materials and engineering innovation in building a glass-melting and casting facility for the production of dental glass-ceramic blocks. This new development offers several advantages over conven- tional dental ceramics. The color and translucence of the dental prosthesis permit an ideal match with the patient’s teeth – and can be changed so quickly and individually that patients can wait right in the dentist’s chair. Despite the higher glassy phase content, these newly developed glass-ceramics proved to be at least on a par in terms of chemical stability, and even markedly superior in their mechanical properties, makingthematerialsuitableformodificationstomolars,as well.Thefirstinnovativeglass-ceramics,marketedbyDeguDent and VITA under the product names Celtra® Duo, Celtra®Press and Suprinity®,havebeeninuseinmanydentists’offices since 2013. HEALTH AND ENVIRONMENT 74

1 Alternatives for antibiotic resistances Less and better fat for foodstuffs Today, some 700,000 people worldwide die from multidrug- resistant pathogens each year. The latest report on the anti- Oneineveryfivedeathsworldwideisreportedlyconnectedto inadequate and unbalanced nutrition. This is the conclusion biotic resistance situation, from spring 2019, commissioned by reached by a spring 2019 study conducted by “The Lancet”, the United Nations and the World Health Organization, warns one of the world’s oldest medical journals. Sandwich spreads of the consequences in the decades ahead if countries do not often contain the ecologically and nutritionally problematic palm fat. The saturated fatty acids it contains can raise blood lipids, cholesterol and, ultimately, the risk of coronary heart disease.Asalternatives,theFraunhoferInstituteforProcess EngineeringandPackagingIVVisdevelopingingredientswith high-qualitypolyunsaturatedoilsfromrapeseedandsunflower seeds. Before these can be used as fat substitutes, properties such as melting behavior and viscosity have to be adjusted, as these aspects are also very important in ensuring customer acceptance. To this end, the development team at Fraunhofer IVVcrystallizestheoilstoadjustthetextureinaspecificway, enabling them to obtain a more desirable fatty acid mixture without changing the total fat content. Another Fraunhofer IVV project is aimed at reducing fat, for instanceinsaucesandincreamfillingsforbakedgoods.Both of these initiatives are projects within the EIT Food innovation community, in which 50 leading companies, universities andscientificpartnersareworkingtotransformthefood value chain. take action. Back in 2015, Germany’s federal cabinet approved a national antibiotics resistance strategy coordinated by several federal ministries. One approach consists in supplementing conven- tional antibiotic therapy in patient care with the bacteriophage treatment that is still widespread in Eastern Europe today. This treatmentinvolvesbacterialvirusesthathighlyspecificallyde- tect, infect and destroy strains of a particular bacterial species. Unlike antibiotics, phages can mutate, which means that, like their hosts – the bacteria – they are adaptable. As active pharmaceuticalagents,theymustbehighlyspecificagainst the respective bacterial species and be approved as drugs. The biotechnology team at the Fraunhofer Institute for Toxi- cology and Experimental Medicine ITEM is involved in research projects in various consortia. Two of them were launched in 2019. With funding from the German Federal Joint Committee’s innovationfund,amedical-scientificteambeganmanufac- turing individually matched phage preparations for hospital pharmacies. These preparations are used on arms and legs to treat surgical wounds infected with multidrug-resistant pathogens. Together with a drug manufacturer, the team is developing an inhalation cocktail from three bacteriophage strains against MRSA, a multidrug-resistant staphylococcus bacterium. Since this dreaded “hospital germ” is frequently found on healthy people, clinical interventions harbor a high riskofinfection.Pretreatmentwithbacteriophagescould preventthis.TheLeibniz-InstitutDSMZ–GermanCollection of Microorganisms and Cell Cultures GmbH is a cooperation partner in both projects. 75

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 1 Keeping carbon in the cycle 1 By 2030, Germany aims to reduce its greenhouse gas emissions by more than half and to bring fewer fossil-based materials into the production cycle. At the same time, it expects the economy to continue to safeguard jobs and prosperity. This poses major challenges for energy-intensive key industries works there. The Carbon2Chem® lab in Oberhausen, which has around 500 square meters of lab space, is jointly operated by the Fraunhofer Institute for Environmental, Safety and EnergyTechnologyUMSICHTandtheMaxPlanckInstitutefor Chemical Energy Conversion. such as steel and chemicals. Carbon2Chem® is a pioneer Wastewater without microplastics project for the circular carbon economy, and is funded by the GermanFederalMinistryofEducationandResearch(BMBF). In a public-private partnership, the steel and chemical indus- Microplastics are everywhere. Wastewater treatment plants are facing the challenge of separating the tiny particles out of tries are collaborating with the energy industry and research organizationstoimplementaflexiblecarboncaptureand utilization(CCU)conceptforcarbon-basedindustries.Itis expected that innovations from the concept’s six sub-projects will help cut annual CO2 emissions in the German industrial and manufacturing sectors by 10 percent. wastewater safely and without blockages. That is why the SimConDrillprojectisaimedatcreatingadurablefilterthat robustlyandefficientlyseparatesmicroplasticsfromwaste- water.Itisbasedonanalreadypatentedcyclonefilter developed by mid-size company Georg Klass Filtertechnik and lined with special metal foils. The project partners use One of these sub-projects involves manufacturing basic chem- icals or synthetic fuel from the steel mill gas produced during steelmaking. For methanol, for example, carbon monoxide, carbon dioxide and hydrogen are required. Currently, the carbon stems primarily from fossil sources. In a pilot plant at the Carbon2Chem® lab in Oberhausen, preparations have been underway since 2019 to implement industrial-scale production of methanol from steel mill gas. To do this, new requirements have to be taken into account through the composition, purity and temporal availability of steel mill gases. It is being tested, for instance, whether available cata- lystsfunctionstablyunderthegivenconditions.Process simulations enable production to be optimized, also taking acceptable investments in upstream gas cleaning into account. Starting in 2020, plans foresee the relocation of the pilot innovative laser technology to drill holes with a pore diameter of less than a hundredth of a millimeter, which allows for efficientfilteringofparticlesassmallas10micrometers,even with large quantities of water. Tomanagethegreatflowofwater,itisnecessarytoachieve as high a porosity as possible – that is, to provide as much filterareawithdrillholesaspossible.Tothisend,theresearchers at the Fraunhofer Institute for Laser Technology ILT are con- tributingtheirexpertiseinvariousareas.Ultrashort-pulse(USP) lasers are particularly suited for the tiny pore diameters. Ex- pertswillfirstdevelopthedrillingprocessinthelabandthen scale it to the LaserJob GmbH laser system. In advance realistic testing of the process parameters, material processing with USPissupportedbyprocesssimulationincombinationwith optimization software from OptiY GmbH. Finally, for quality plant from Oberhausen to Duisburg, to the Carbon2Chem® assurance, the specialists at Fraunhofer ILT and Lunovu GmbH “Technikum,” where it is expected to produce up to 75 liters monitor the drilling process: the characteristic radiation – of raw methanol daily from steel mill gases from the steel- known as process radiation – enables them to ascertain 76

2 whether all holes really are properly drilled through. A micro- plasticsfilterlikethiscouldalsobeusedforcleaningballast water, for mobile applications in sewer cleaning vehicles or for private households. The SimConDrill project, funded by the GermanFederalMinistryofEducationandResearch(BMBF) initiative for SMEs, was launched in 2019 and is set to run for two and a half years. Catalysts for the climate 2 To turn CO2 into a usable source of carbon for chemistry, the Fraunhofer Institute for Interfacial Engineering and Biotech- nology IGB has developed a variety of materials, components and concepts: a patented catalyst synthesis and high-through- put screening for catalyst materials, electrochemical cells in which CO2 is reduced with a catalyst on a porous gas-diffusion electrode,andcombined(electro-)chemical-biotechnological processes. The most-produced organic feedstock, ethylene, has already been successfully manufactured from CO2. An electrochemical demonstrator with a 130-square-centimeter electrode area accomplishes this in a single process step. Methanol, too, has been obtained from CO2 and electrolyti- cally produced hydrogen. This platform chemical is becoming increasingly important for sector coupling, whether as a fuel additive for combustion engines or as an energy carrier in fuel cells. A patented method enables the researchers to assemble catalysts for synthesis from a wide array of elements and to optimize them using high-throughput screening. Copper proved to be a promising material for methanol synthesis. To increase value added, in a subsequent biotechnological fermentation, methanol can be transformed into more valuable chemicals that could otherwise only be obtained through complex, multi- stage syntheses. Starting in 2020, an electrolysis platform sited at the Leuna chemical complex and jointly operated by the Fraunhofer CenterforChemical-BiotechnologicalProcessesCBPandthe Fraunhofer Institute for Microstructure of Materials and Systems IMWS will facilitate electrochemical synthesis on a near-industrial scale. The SynLink project is aimed at showing that renewable energy can be used to manufacture – through adsorptionfromtheair–firstsyngasand,ultimately,methanol and fuels from H2O and CO2. Funding is provided by the Ger- manFederalMinistryforEconomicAffairsandEnergy(BMWi). 77

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 1 COMMUNICATION AND KNOWLEDGE Joseph von Fraunhofer Prize The fiber-optic expansion challenge: Fast Internet, planned in just days 1 The German federal government plans to roll out gigabit net- works nationwide by the end of 2025. Such a plan can only berealizedbyexpandingexistingfiber-opticnetworks.The cable route planning processes this entails are highly complex and nearly impossible to manage with conventional methods, so Deutsche Telekom AG commissioned the Fraunhofer InstituteforPhysicalMeasurementTechniquesIPMtodevelop an application. A survey vehicle gathers geo-mapping data, and cloud-based software is used to automate, interpret and classifythatdata.Toachievethis,Prof.Dr.AlexanderReiterer, DominikStörkandDr.KatharinaWäschlerealizedforthefirst timeanefficientandmorereliabledigitalprocesswithoptical measurement technology and automated data analysis. A laser scanner captures a “preview” of entire streets, for which stacked 3D objects, such as a house wall behind a tree, must also be reliably resolved. In addition, data is fed into a color camera. The cloud-based software analyzes the two- and three-dimensional data fully automatically using deep-learning methods in a deep neural network. More than 30 object classes were used to train the algorithm, including vehicles, curbs, manhole covers, signs and trees. The software recog- nizesapplication-specificobjectsandincorporatestheir information in digital planning maps. This revolutionary tool can be used anywhere objects and surfacesneedtobecapturedandidentifiedwithcentimeter accuracy.Withit,DeutscheTelekomcannotonlyplanfiber- optic cable routes up to 70 times faster than is currently pos- sible, it can do so fully automatically and with a far greater level of detail. Soon, more than 1800 civil engineering companies in Germany will use the data generated by the Fraunhoferprocesschaintoexpandthefiber-opticnetwork. 78

2 Quantum magnetometry for medicine 2 German-made voice assistants Thedevelopmentoftheworld’sfirstlaserthresholdmagne- tometer is set to open new doors for research. It would enable themeasurementofminimalmagneticfieldsgenerated,for example, by heart and brain waves or in neural networks. MCG(magnetocardiography),MEG(magnetoencephalography) andMRI(magneticresonanceimaging)areestablishedmedical diagnosticmethodsbasedonmagneticfieldmeasurement. Currently, the only way to achieve greater precision is with highlysensitivemagneticfieldsensors,whichnormallyworkat extremely low temperatures. To enable biocompatible, ultra- Alexa, Siri and the like can be more than just valuable helpers in everyday life: they open up great potential for companies to facilitate human-machine interaction and offer new services. Using the latest conversational AI methods, the Fraunhofer Institute for Intelligent Analysis and Information Systems IAIS, in cooperation with the Fraunhofer Institute for Integrated Circuits IIS and in connection with the Fraunhofer Cluster of Excellence Cognitive Internet Technologies CCIT, developed anewdialogsystemfordomain-specificknowledge.With technologies from machine-learning, question answering and intelligent knowledge networking using knowledge graphs, sensitive laser threshold magnetometry to be used at room it differs from established services and is intended especially temperature, a group of junior researchers at the Fraunhofer InstituteforAppliedSolidStatePhysicsIAFiscombiningthe latestfindingsinquantumphysicswiththoseinmaterials science. As the laser medium, the physicists want to use a for use in industry. The system is customized for domain- specificknowledgeandtrainedforcertainfieldsofapplication, from voice-controlled customer service in call centers to dialog-based support for legal questions in management material with optically detectable magnetic resonance, as the consultancies. It is capable of processing complex content stronger signals and higher contrasts this produces will allow and creating semantic links and is the leading system in the them to obtain more precise measurement results. To achieve German-speaking countries when it comes to recognition rate this, diamond laser crystals with a high density of atomic nitrogen-vacancycenters(NVcenters)arebeingdeveloped. and semantic interpretation. In 2019, the researchers were primarily investigating opti- Thefirstdemonstrator,avirtualcityguidethroughBerlin,was created in cooperation with VW. Its interactive dialog system mized laser crystals – the basis for the world debut of the laser answers questions about the surrounding area. The smart threshold magnetometry approach. The second phase of the plannedfive-yearprojectisaimedatrealizingthelasersystem and conducting initial measurements – together with physi- cians and a medical device manufacturer. The DiLaMag project is funded by the German Federal Ministry of Education and Research(BMBF)throughtheNanoMatFuturcompetitionfor junior researchers. vehicle voice assistant is one example of how companies can use dialog systems to enable intuitive interaction with technology andtodevelopnewbusinessmodels.IntheSPEAKERproject sponsored by the German Federal Ministry for Economic Affairs andEnergythroughits“ArtificialIntelligenceasaDriverfor Economically Relevant Ecosystems” innovation competition, Fraunhofer IIS and Fraunhofer IAIS are further expanding these technologies and working with numerous partners on a German-made voice assistant platform. 79

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 1 Securely connecting millions of robots 1 Open up aeronautics research? According to a survey conducted by the International Federation ofRobotics(IFR),morethan3.7millionindustrialrobotsare expected to be in use in factories worldwide in 2021. Connect- ing,controllingandmaintainingtheserobotsposessignificant challenges for industry. Secure and near-real-time communi- Strengthening Europe’s competitiveness and harnessing the potential of open science are stated aims of the European Commission. As a key element of the European research landscape, aeronautics research in particular has a major socioeconomic impact due to its inherent transdisciplinary cation with and between the machines at production sites is nature and its relevance to society. Fraunhofer is making an essential to achieving this. One solution is to deploy local and important contribution to this effort with its EU project private 5G networks in combination with edge computing “OSCAR – Open ScienCe Aeronautic & Air Transport Research,” infrastructure. Rittal,togetherwithGermanEdgeCloud(GEC)andthe Fraunhofer Institute for Open Communication Systems FOKUS, realized just such an application scenario in a control cabinet launched in 2019. The project involves seven partners in- vestigating how the advantages of open science can be implemented in European aeronautics research and in the transportation industry. setup. A two-armed industrial robot attaches a conductor connection clamp to a busbar and inserts a cable into the clamp. The robot is controlled by means of virtual-reality For aeronautics research and the transportation sector, which particularlyfrequentlyrelyonconfidentialityagreementsin dealing with intellectual property, the project is an ambitious controllers connected to an edge-based 5G core network via radio cells. An optical and acoustic signal indicates whether the task was performed successfully. one. Its goal is to align open science methods with conventional contractualprovisions.Toachievethis,thepartnersfirst analyze the potential and the challenges involved in opening up aeronautics and air transport research. In the second step, The network infrastructure is based on Open5GCore, which they will develop an Open Science Code of Conduct that is was developed by Fraunhofer FOKUS and is one of the world’s firststandards-basedandmanufacturer-independent5Gcore networks. The modular, virtualized core network software lets usersflexiblycombinenetworkfunctionsforoptimumapplica- tion support on edge clouds, such as the German Edge Cloud. compatible with prevalent project agreements. Especially in early stages of technological maturity, the open exchange of knowledgeoffersmanybenefits.First,opensciencecanboost the quality of research results, for instance through trans- parency or reproducibility. Second, open science can also help Because the network is implemented as software, network shorten innovation cycles. functions can be dynamically combined to form a customized, virtual, special-purpose network based on the required latency time, security level and number of devices to be connected. Network functions can even be dynamically adjusted during operation to account for usage behavior. In addition, the various integrated access-network and backhaul technologies permit adaptation to local requirements. 80

2 The OSCAR project is coordinated by the Fraunhofer Institute for Manufacturing Technology and Advanced Materials IFAM. Hugo Geiger Prize Decoding how artificial intelligence makes decisions 2 The Fraunhofer Research Services & Open Science Competence CenterattheFraunhoferInformationCenterforPlanningand Building IRB in Stuttgart is contributing its open science expertise to the project, analyzing existing legal frameworks and developing the Open Science Code of Conduct. At the end of the project, this code of conduct is to be implemented Machine learning is one of the most common methods for equipping machines with capabilities that resemble intelligent human behavior. By repeating tasks, the machines – aided by algorithms–learntoachievepredefinedqualitycriteriabetter and better. One method is the black box model, in which in the aeronautics research community. the algorithm for the physical model with the problem to be learned is largely unknown. In his dissertation, which was awarded summa cum laude, Dr. Sebastian Lapuschkin, a postdoctoral student at the Fraunhofer Institute for Telecommunications, Heinrich-Hertz- Institut, HHI, focused on explaining decision-making processes used by AI systems in individual model predictions. To do this, the computer scientist used layer-wise relevance propagation (LRP)todevelopbothamethodforexplainingindividualmodel decisions and a methodological framework for systematically analyzing the general behaviors and predictive strategies the AI system has learned. With his methods and techniques, Lapuschkin coined the term “Clever Hans behavior” in AI research to describe ostensibly correct predictions made on the basis of unintended or incorrect decision-making processes. Due to their lack of transparency, black box models were previously subject to technical, ethical and legal limitations – especially in applications where security is vital, such as autonomousdrivingand(bio-)medicine.Lapuschkin’stech- niques now make it possible to verify or reject AI decisions, thus paving the way for new areas of application. 81

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 PROTECTION AND SECURITY 82 The multimedia detectives InMay2019,theGermanmagazine“DERSPIEGEL”andthe “SüddeutscheZeitung”newspaperreceivedsecretlyrecorded video footage. A few days after its publication, Austria tum- bled headlong into a government crisis over the “Ibiza video.” The journalists were faced with the question of whether they could use the footage for their work or whether they had been given fake material. To clarify this, the research team turned to one of the world’s premier institutions: the National ResearchCenterforAppliedCybersecurityATHENE(formerly knownasCRISP)inDarmstadt,inwhichtheFraunhoferInsti- tute for Secure Information Technology SIT is also involved. Five specialists from Fraunhofer SIT spent a week evaluating the video. First, using algorithms they had programmed them- selves, they ran an automated check to detect any data anom- alies in the video’s resolution, sampling rates and frequency responses. They also checked whether the interior shots in the villa matched photos of the property in Ibiza by reproducing the camera angles and gauging objects for comparison. In re- sponsetothisincident,Prof.Dr.MartinSteinebach,acomputer scientist and head of the Media Security and IT Forensics department, made it clear that photos and videos can serve as weaponsintoday’sinformationage.Herecommendsfirmly establishing new infrastructures in the media industry to make the digital pathway from capture to publication transparent.

1 2 Operations control and communication system for police task forces 1 A multi-year research and development cooperation agree- ment was signed by the Saxon LKA and meanwhile 18 addi- tional security agencies, stipulating the system’s immediate Since 2003, researchers at the Fraunhofer Institute for practical relevance and sustainable development. As a result Transportation and Infrastructure Systems IVI have been of the high level of acceptance in the operations of the partici- cooperating closely with users to develop solutions for civil pating agencies, the “Standing Conference of Interior Ministers security with a focus on control and communication systems, and Senators of the States” – AK II – Interior Security 2018 – and to translate these solutions directly into practical use. Theirpartnersandusersarepolice,firedepartment,emer- gency service and disaster management decision-makers and personnel. To successfully manage the practical challenges of fightingterrorismandcrime,since2013,Dr.KamenDanowski fromFraunhoferIVIandFrank-MichaelLöstfromtheSaxon StateOfficeofCriminalInvestigations(LKA)havebeenheading up the development of the “SE network” – the operations control and communication system for police task forces (“Spezialeinheiten,”orSEforshort). The SE network provides state-of-the-art web and server tech- nologies in connection with mobile applications and assists police task forces with operations preparation, operations control and communication, and documentation, both in every- day operations and in large-scale emergencies. The system offers control modules for staff and mobile applications for policeofficersinthefield.AkeyfeatureoftheSEnetwork technology is communication and coordination in operations across countries and authorities. The system has been in daily use since 2014 and is continually being expanded by the joint development team, which includes both researchers andpoliceofficers.Theexperiencegainedfromusingand analyzing future basic technologies forms the basis for the scientificandtechnologicalobjectivesforthesystem’s continuousrefinement. unanimously decided to roll out the SE network as a national standardunderthedirectionoftheFederalCriminalPolice Office(BKA),andtodevelopitfurtherunderthenameEKUS. Since mid-2019, in the context of another multi-year coopera- tion, Fraunhofer IVI has also been developing an innovative control and communication system for the standard police servicebasedoncomponentsfromtheSEnetwork/EKUS. Hugo Geiger Prize Vaccines are becoming more sustainable 2 While doing her doctorate at the Fraunhofer Institute for Cell TherapyandImmunologyIZI,molecularbiologistDr.LeaBayer worked on two different approaches for new vaccine technol- ogies.ThisworkgarneredhertheHugoGeigerPrize.Bayer’s genetic vaccine approach paved the way for protection against respiratorysyncytialvirus(RSV)infections.Ageneshuttle introduces the vaccine into the body as DNA. Bayer used the shell(capsid)ofnon-humanpapillomavirusestoperform this task. These viruses “transport” the vaccine DNA into the body. Genetic vaccines are cost-effective to manufacture since, after transfer, the body produces the vaccine on its own and with rapid adaptability to frequently mutating pathogens. 83

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 1 In connection with a MAVO project, Bayer also collaborated with three other institutes on the innovative manufacture of so-called inactivated vaccines. Currently, inactivated vaccines, suchasthoseagainstinfluenzaandpolio,containpathogens that are killed by chemicals. The research team succeeded in In analyzing and preventing cyber attacks, the Fraunhofer InstituteforCommunication,InformationProcessingand Ergonomics FKIE has proven to be a key partner to national and international investigative authorities. Their analysis of infrastructure and malware since 2012 helped expose manufacturing such vaccines, for instance against RSV, rapidly, Avalanche and provided the evidence needed for criminal reproducibly and without chemicals by means of electron radiation. In this process, accelerated low-energy electrons break up the pathogens’ DNA or RNA; while the pathogen’s genome is reliably destroyed, its external structure remains intact. Only this “skeleton” is needed to trigger the formation prosecution. At Fraunhofer FKIE – acting on behalf of Germany’sFederalOfficeforInformationSecurity(BSI)– a specially developed provider information system extracted victimdataandsentaroundfivemillionwarningstoproviders whose customers had been affected so those customers of the appropriate antibodies in the human immune system. could clean up their computers. This research initiative was supported by the Bill & Melinda Gates Foundation. The requisite irradiation facilities are now being developed with a licensee in the pharmaceutical sector. Particularlythesinkholeserversdevelopedandoperatedby Fraunhofer FKIE, along with the associated software, helped The genetic vaccine was successfully patented, and both in this context and generally help protect individuals and projects have been published. During her doctoral studies, companies around the world. These sinkholes redirect con- Lea Bayer participated in TALENTA speed up, a Fraunhofer nection requests from infected computers to special servers. funding program for women. During peak periods, the Fraunhofer FKIE sinkholes were being contacted by 1.4 million infected systems per hour. The international collaboration will be continued, particularly How to protect against Avalanches in cyberspace where the sinkholes are concerned. This will prevent the The Avalanche botnet infrastructure caused total estimated parties who might still possess the Avalanche program code. botnet infrastructure from being reactivated by any unknown damage of 100 million U.S. dollars worldwide. In May 2019, Europol and a number of law enforcement agencies gathered inTheHaguetopresentthefindingsofinvestigationsfrom nearly 40 countries: more than ten suspects from around the world were brought to trial for organized computer fraud and money laundering. It also became clear that the authorities must continue to jointly operate the prevention infrastructures established by Fraunhofer security experts. Transporting hydrogen safely and efficiently 1 Hydrogen can be a major key to reducing CO2 emissions. The most common and lightest element in our universe is capable of uniting the electricity, mobility, heating and industrial sectors toachievethetransitiontoanewenergyeconomy.Producing hydrogen with renewable energies and in large quantities can contributesignificantlytodefossilization–notonlyin(heavy goods)traffic,butalsoinbasic-industryprocesses. 84

2 Toefficientlystoreandtransportthisenergysource,the Fraunhofer Institutes for Microstructure of Materials and Bomb-sniffer dogs in training 2 Systems IMWS and for Mechanics of Materials IWM have partneredwithHexagonPurusGmbHandRayScanTechnolo- gies GmbH to develop safe and lightweight high-pressure Research on explosives and their detection is one of the core competences of the Fraunhofer Institute for Chemical Tech- nology ICT. Despite advances in technological systems, canine tanks. The tanks are designed to withstand operating pressures explosive detectors are the option of choice both for police of up to 1000 bar to temporarily store and dispense highly and military task forces and for private security providers, compressed hydrogen – with up to 600 times more hydrogen thanks to their mobility and dependability. For this reason, per tank than in the uncompressed state and twice as much they will continue to play an important role in detecting as in conventional pressurized vessels. explosives in the future. In the national “EVADEX – Methods For the vessel’s load-bearing structure, the partners use a fiber-reinforcedhybridcompositeplasticwithaninterior thermoplastic, gas-tight plastic liner. Metallic elements are traces of explosives” project funded by the German Federal MinistryofEducationandResearch(BMBF),FraunhoferICT researchers most recently looked extensively at how the attached to the ends of the tank. Some questions remain for performance of technical solutions and of sniffer dogs can for the standardized evaluation of measuring systems for operation at 1000 bar: how do materials react when the tank isfilledoremptied,andhowdotheywithstandextreme temperaturefluctuationsandotherloads?Basedonanunder- standing of the materials right down to their microstructure, the project partners want to develop an innovative macro- scopic material damage model to reliably predict component behavior. They want to achieve 100 percent quality monitoring be evaluated for the respective requirements in different scenarios. With the experience gained from numerous projects on explosives detection, the Fraunhofer ICT researchers developed scientificallyevaluabletrainingmethodsforthesnifferdog and handler teams. Their extensive offer includes different test with the 3D X-ray inspection method to be used in the scenarios for typical assignments. Dogs are trained using subsequent series production process for the hybrid-plastic pressurizedvessels.ThisworkispartoftheHYPOS–Hydro- genPowerStorage&SolutionsEastGermanyinnovation project. Funded by the German Federal Ministry of Education andResearch(BMBF),theprojectinvolvesmorethan100 partners from business and academia working to lower the costofhydrogenforthechemicalindustry,refineries,and the mobility and energy supply sectors. clean, uncontaminated explosives and homemade explosives, suchasTATP.Theycanbeconditionedtonewsubstancesat varyinglevelsofdifficultyondifferentiationcourses,but realistic scenarios involving vehicles, luggage racks and the like are also simulated to train both the dogs and their handlers. The institute also offers to conduct studies on sniffer dogs’ olfactory abilities. 85

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 MOBILITY AND TRANSPORTATION 86 1 Basic report on Germany’s blockchain strategy In September 2019, the German federal government approved the blockchain strategy set out in the coalition agreement. A basic report on mobility and logistics that fed into this strat- egy was compiled by the Fraunhofer Institute for Applied Information Technology FIT on behalf of Germany’s Federal Ministry of Transport and Digital Infrastructure. Blockchain is the most prominent distributed ledger techn ol- ogy(DLT)andisusedtodocumenttransactions–including, but not limited to, monetary ones. To put it simply, blockchain uses cryptographic methods to create a chain of transaction data. The most up-to-date copy of the blockchain is not stored centrally, but rather redundantly on the computers of thosedirectlyinvolved(peer-to-peer).Thisbasicstructure makes blockchain technology tamper-proof – any subsequent changes would be noticed immediately, rendering them unfeasible. This makes it possible to document and verify ownershipandentitlements(assets).IntheInternetofInfor- mation and the Internet of Things, this could only be done by using institutions such as a bank, an administrative body or some other trustworthy entity. Blockchain technology is thus enabling the shift toward the Internet of Value. The basic report addresses such key issues as fundamental technologies, economic principles and data protection. One conclusion is that, in principle, combined with other technologies, block- chaincanlowercostsandboosttheefficiencyandcompetitive- ness of entire industries. In the experts’ opinion, opportunities are opening up especially for mobility and logistics. Some of the applications the experts looked at included freight doc u- ments, electric vehicle charging, ridesharing and platooning.

2 Eyes for autonomous vehicles 1 Natural rubber owes its until-now unrivalled performance to its pronounced tendency to crystallize in the stretched state – A fail-safe sensor system will make autonomous vehicles under load, the material can reinforce itself. However, a fungal even more reliable. A consortium of members from business disease that affects rubber trees is threatening the supply and academia developed a combined camera-radar module security of this natural resource. designed to provide comprehensive protection for autonomous vehicles. Its reaction times are 50 times faster than standard sensor systems and 160 times faster than humans. This inno- vative electronics system consists of a camera and a radar sensor, combines the advantages of optical monitoring with radar technology, and uses integrated signal processing and An interdisciplinary Fraunhofer consortium that drove the de- velopmentofabiomimeticsyntheticrubber(BISYKA)inspired by nature has succeeded in optimizing the mechanical and tribologicalbehaviorofsyntheticrubber.Theyidentifiedkey biological components, optimized the synthesis of functio n- machine learning to evaluate the collected data. The ultrafast alized polyisoprene with high microstructural purity, and response is achieved through sensor fusion and integrated signalprocessing.Thedataisprocessedandfiltereddirectly inthemodule,andneuralnetworksevaluatevarioustraffic situations. Only instructions to react are sent to the vehicle, used extensional crystallization measurements to test the characteristics of the resulting compounds. After achieving results comparable to natural rubber, the process was scaled up to manufacture 30-kilogram synthetic rubber samples. no status information. This frees up the vehicle’s signaling bus These were used to manufacture a set of BISYKA tires, which to deal with urgent information, such as a child that suddenly runs out onto the road. The aim is to create a decentralized networkinwhichthesecamera-radarsystemscanbeflexibly connectedwitheachotheraswellaswithGPSandCar2X information. The Fraunhofer Institutes for Reliability and MicrointegrationIZMandforOpenCommunicationSystems FOKUS also participated in the project, which was funded by Germany’sFederalMinistryofEducationandResearch(BMBF). Biomimetic synthetic rubber with the same properties as natural rubber 2 When particularly high standards are set for the dependability andstructuraldurabilityofrubbercomponents(forexamplein aircrafttires,constructionvehiclesandtrucks),naturalrubber is the material of choice. Until now, the properties of synthetic were compared with a reference set of four tires made from naturalrubber.LabtestsconductedbyPrüflaborNordshowed that tires made from the synthetic BISYKA rubber outper- formed the natural rubber tires for the four evaluation criteria rolling resistance, dry grip, wet grip and wear. The positive scores for rolling resistance and wear are particularly good news, as the BISYKA tires lower fuel consumption, have a longer service life and produce fewer wear particles with the same mileage. In addition, the synthetic rubber can be produced on an industrial scale using existing machinery and equipment. TheFraunhoferPilotPlantCenterforPolymerSynthesisand ProcessingPAZ,aresearchdivisionoftheFraunhoferInstitute forAppliedPolymerResearchIAP,ledtheprojectconsortium, in which the Fraunhofer Institutes for Microstructure of Materials and Systems IMWS, for Molecular Biology and Applied Ecology IME, for Mechanics of Materials IWM and rubber have been inferior to those of its natural counterpart. for Silicate Research ISC also participated. 87

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 88 1 Car parts from biofibers 1 To lower CO2 emissions, cars need to lose weight. However, demands such as improved safety resulting from more sensor technology, or better battery range in electric cars, currently tend to result in heavier vehicles. The Fraunhofer Institute for Wood Research, Wilhelm-Klauditz-Institut, WKI was looking foropportunitiestousenaturalfibersandbiopolymersinareas wherethepositivecharacteristicsofcarbonfibersarenot requiredandthematerialpropertiesofnaturalfiberscanbe leveraged. As sustainable alternatives across all life cycle phases,theyoptedtousevegetalfibersascomponentsin bio-compositematerials.Withthisbiogeniccontent,fibrous materialsmadefromflax,hemp,woodorjutenotonlyimprove the ecological balance, they are more economical to manu- facturethancarbonfibersandofferadvantagesinindustrial processing, such as good acoustic damping properties and a low tendency to splinter, which is advantageous in the event of a collision. TheseargumentswereconvincingenoughtoPorsche.In2017, PorscheMotorsportandFraunhoferWKIbeganworkingwith the Four Motors racing team to test the bio-concept car. The experience gained in that process then informed material development for the parts of the new 718 Cayman GT4 Club- sport,thefirstseries-producedcartofeaturebodypartsmade fromabiofibercomposite.Thedriverandpassengerdoorsas well as the rear wing are made of a novel composite material, in which a thermoset polymer matrix is reinforced with natural fibersthatcaneasilybefittopartshapes.ThenewCaymanis a real lightweight, tipping the scales at 1320 kilograms. The project is part of the German Federal Ministry for Food and Agriculture’s “Renewable Resources” funding program viatheAgencyforRenewableResources(FachagenturNach- wachsendeRohstoffee.V.–FNR).

2 So long, conveyor technology: The revolution of the logistics vehicle 2 Charging points at the workplace There were still 57 German cities that exceeded the air quality The LoadRunner® high-speed vehicle offers the logistics sector threshold value of 40 micrograms of nitrogen dioxide per cubic a sustainable transportation technology. This innovative au to- meter of air in 2018. In municipalities with particularly high matic guided vehicle can organize itself highly dynamically inswarmsatupto10m/s–evenlinkedtoaplatoon.The LoadRunner® is completely digitally embedded, allowing it l evels of pollution, the collaborative “LamA – charging points attheworkplace”projectwillestablishasignificantcharging infrastructure for electric vehicles at Fraunhofer sites. The LamA to replace some parts of conventional conveyor technology. Thankstoartificialintelligence,itiscapableofindependently accepting and negotiating orders. Fully exploiting the poten- project is part of the German government’s “clean air 2017- 2022” immediate action program. The Fraunhofer Institute for Industrial Engineering IAO is heading up the project on behalf tial of the LoadRunner® technology requires an open digital of Fraunhofer headquarters, with Stuttgart, Freiburg and infrastructure in which the vehicles can communicate securely Dresden serving as the project’s lighthouse locations. Seven via 5G and independently conclude pay-per-use contracts institutes will pool their research activities and endeavor to using blockchain. A LoadRunner®swarmwasfirstintroducedtothepublicat the Digital Summit 2019 conference in Dortmund. On the make improvements in this area. Focus topics include secure IT solutions for implementing network-friendly charging, the im- pact of infrastructure provision on employee mobility behavior, and transferring experience in developing and operating the “digital platforms” information tour, the Fraunhofer Institute charging infrastructure to companies and municipalities. for Material Flow and Logistics IML also presented a bio- intelligent drone swarm, which essentially creates the basis All in all, the LamA measures are expected to save around for implementing high-speed applications in logistics. Through machine learning in a highly dynamic, three-dimensional system, the drone swarm develops bio-intelligent algorithms, whichinturnefficientlycontroldevicesontheground.With these two innovations, the LoadRunner® and the bio-intelligent 100 metric tons of nitrogen oxides annually. By 2022, 440 AC chargingpoints(upto22kilowatts)and44DCcharging points(upto150kilowatts)willbeestablishedat18Fraunhofer locations. The charging infrastructure is to be available to employees, vehicles of the Fraunhofer-Gesellschaft, and drone swarm, Fraunhofer IML has made the platform economy external third parties. In this way, the Fraunhofer-Gesellschaft of the future tangible. There, swarms of vehicles will organize is promoting environmentally compatible development of themselves and communicate with humans as well as with workplace mobility options at its nationwide locations, also other swarms and platforms to carry out their mission. for its own employees. The German Federal Ministry for Eco- nomic Affairs and Energy is funding the project with nearly 16 million euros. In addition, the Fraunhofer Executive Board is also providing nearly 600,000 euros in backing. Employers can support the transformation to sustainable mo- bility by setting up the necessary infrastructures, for instance byconvertingtheirfleetstoelectricvehiclesandprovidinga charging infrastructure for their employees’ private vehicles. 89

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 PRODUCTION AND SERVICES 90 1 Joseph von Fraunhofer Prize Measuring ice hockey moves 1 How fast does the puck shoot across the ice? Did it go into the goal or not? Analyses and game evaluations are an integral part of sports broadcasts. Thomas von der Grün, Norbert FrankeandThomasPellkofer,togetherwithanapproximately 20-member research team from the Fraunhofer Institute for Integrated Circuits IIS, have developed a positioning techno l- ogythatisbasedonmeasuringthetime-of-flightofradio signalsandisgearedspecificallytowardthedynamicprocesses inicehockey.Thistechnologymakesitpossibleforthefirst time to conduct and display game analyses in real time. What is special about this is the high sampling rate: the system measures the position of the puck 2000 times per second, and it determines the position of the individual players 200 times per second. To create this tracking system, the research team paired expertise in positioning system technology, signal processing andradiotechnologywiththesystem’scenterpiece,aspecific microelectronically integrated circuit. It combines basic re- quirements such as robustness, speed and precision – despite, for example, strong interference from wireless systems such as those created by interacting players and tens of thousands of Wi-Fi users in the sports arenas. To achieve this, a micro- chip was integrated both in the players’ shirts and in the puck, which even led to a redevelopment of the puck: the new one withthemicrochipcanwithstandspeedsofupto160km/h andaccelerationforcesofupto10,000g.Specificationsof this scope are otherwise only found in aerospace or in military systems. All of these challenges had to be overcome for the puck to be accepted for games in major sports arenas. The technology made its public debut at the 2019 Honda NHL All-Star Weekend ice hockey games in San Jose, USA, in January 2019.

2 Joseph von Fraunhofer Prize Film as a new experience – lifelike people in virtual worlds 2 Joseph von Fraunhofer Prize Less is more – saving energy in chemical manufacturing Walk-infilms,games,trainingcoursesandevenmodernmed- ical assistance systems: virtual and mixed reality are gaining ground and enabling users to completely immerse themselves in their scenes. While it is already possible to render environ- ments very realistically, people in these kinds of VR worlds oftenstillappearartificial,andtheirmovementsunnatural. Those who can produce dynamic 3D models of humans and The chemical industry is one of the main pillars of the European economy and an international market leader. However, the energy-intensive processes required to produce feedstocks for such products as plastics, detergents and fertilizers account foraroundone-fifthofEurope’sindustrialenergyconsumption. In addition, energy is expensive – particularly in Germany. When changing manufacturing processes, it must be ensured embed them in other scenarios hold one of the keys to this that quality standards are observed. Measurement data from future market. IngoFeldmann,Dr.OliverSchreerandPeterKaufffromthe Fraunhofer Institute for Telecommunications, Heinrich-Hertz- system sensors, coupled with the computer memory and capacities that are now available at low cost, pave the way for developing reliable computational models of processes. Machine-learning methods aid in incorporating expert knowl- Institut, HHI have found it. They were helped in this endeavor edge based on operating data to develop models for consis- by their many years of expertise, for instance in 3D recon- structions for video conference systems. Their work goes beyondthepatented3DHumanBodyReconstruction(3D HBR)software;theydevelopedanentireproductioninfra- structure with a recording studio. The software, for example, tent product quality. This is the approach the team working withDr.MichaelBortzandProf.Karl-HeinzKüferfromthe Fraunhofer Institute for Industrial Mathematics ITWM used to develop a model-based toolbox. It includes a hybrid model approach in which operating data is used when physical model had to be designed to facilitate recording and processing of representations are lacking. This approach forms the basis for up to 1.6 terabytes of data per minute. The studio is equipped a multicriteria optimization module, which has already resulted with 32 high-resolution cameras arranged as 16 stereo systems in double-digit percentage energy savings being achieved in in a nearly four-meter-high light rotunda. A new lighting an existing production system. concept was also created that allows the individual to be uniformly illuminated from all sides, as well as be perfectly cropped from the background. ThefirstcommercialvolumetricvideostudioontheEuropean mainland was established in the fx.center on the Studio Babels- German chemicals company BASF SE and Swiss chemicals and pharmaceuticalscompanyLONZAGroupAGseeenormous benefitinthis.AtBASFSE,thetoolboxisavailabletohundreds of process engineers, representing disruptive progress for them – and it has applications beyond the chemical industry: berg grounds in 2018. To make that happen, the production it offers advantages anywhere there is a need to control company Volucap GmbH was founded jointly with Studio Ba- processes with a large number of parameters. belsberg, ARRI, Interlake and UFA. At this studio, people and objects can be scanned three-dimensionally and transferred as holograms into virtual environments, where they can be viewed from all sides just like computer-generated 3D models. 91

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 92 1 Safe food 1 A mobile food scanner can determine whether food items are authentic and whether they have gone bad. The pocket-sized demonstrator unit measures the freshness of food, whether packaged or unpackaged. The core of the mobile scanner is a near-infrared sensor. In addition to determining the degree of ripeness of fresh foodstuffs, or the content of processed foods, it can also identify the provenance of products such as olive oil and salmon. This is how it works: consumers or food industry employees hold the scanner directly up to the surface ofthefoodoritspackagingfilm,andinfraredlightstrikesthe product.Thedevicecapturesthelightreflectionpattern. Using machine-learning methods, the scanner was trained to beabletoclassify,basedonthespectrumofreflectedlight, aproduct’sfirmnessandthusitsdegreeoffreshnessaswell asitsauthenticity.Tomatoesandmeatwerethefirstproducts used for training. The scanner sensor is made from off-the-shelf components, so it is relatively inexpensive. Apart from the scanner, the prototype also features an app and a cloud-based solution that lets users read and compare the measurements. The method is currently limited to homogeneous foodstuffs, but it could, in principle, also be applied in other contexts, to distinguish wood, textiles, plastics and minerals from one another.ParticipantsintheprojectaretheFraunhoferInstitutes for Optronics, System Technologies and Image Exploitation IOSBandforProcessEngineeringandPackagingIVV,Deggen- dorf Institute of Technology, Weihenstephan-Triesdorf Uni- versity of Applied Sciences and the Bavarian State Ministry of Food, Agriculture and Forestry’s Competence Center for Nutrition(KErn).TheprojectisoneoftheBavarianministry’s “We Rescue Food” funding initiatives.

2 Villages as digital ecosystems 2 Sustainability and quality in the foundry The Digital Villages project is aimed at making rural life as attractive as life in smart cities. In summer 2015, three communities of an association of municipalities in Rhineland- Palatinate–Eisenberg,GöllheimandBetzdorf-Gebhardshain– serving as a living lab in the Smart Rural Areas research program launched a number of modern neighborhood assis- tance concepts. Since then, many other municipalities have joined the model project, whose modular structure enables thescopeanddesigntobeflexiblytailoredtotheneedsof the municipality, or new services to be added. There are now nearly 100 “digital villages” spread throughout Germany. Light metal foundry Leichtmetallgießerei Bad Langensalza succeeded in reducing its energy needs and CO2 emissions. With modular, expandable burner technology and decentral- ized melt supply, companies can save as much as 60 percent of production-related energy costs and 80 percent of CO2 emissions.Anewburnersystemusesanefficientandextremely clean gas to produce the thermal energy needed for melting and holding, delivering control system performance and tem- perature homogeneity previously only seen in electrically heatedunits.Forthefirsttime,thewasteheatproducedis reliably recycled. This burner system is the centerpiece of an The digital ecosystems this creates combine traditional village innovative process concept: the melting material is melted, life with modern technology. Thefirstinitiativeswerelocalsupplyservices“BestellBar”and “LieferBar”; by late 2019, communication and administration options had been added. DorfFunk and DorfNews, for instance, provided avenues for local residents to communicate by radio andnewspaper,whilethe“LösBar”providedachannelfor communicating with local government, forwarding residents’ suggestions and problems to municipal administrations. These concepts and solutions, developed at the Fraunhofer Institute for Experimental Software Engineering IESE, show the op- portunities a holistic approach to digitalization in rural areas offers.TheconsortiumismadeupoftheRhineland-Palatinate Ministry of Home Affairs and for Sports, Fraunhofer IESE, EntwicklungsagenturRheinland-Pfalze.V.andthemunicipal- itiesBetzdorf-Gebhardshain,EisenbergandGöllheim. transported and held at docking stations in mobile crucibles. This eliminates the dangerous, energy-intensive and quality- lowering emptying processes between the smelter, the transfer ladleandtheholdingfurnacewhileatthesametimesignifi- cantly boosting the quality of the cast products and increasing productionflexibility.Aninnovativesensorsystemcontinu- ously monitors the entire process, thus creating the prerequisite for future automated and decentralized process control. ParticipatingintheETALprojectfundedbytheFederalMinistry forEconomicAffairsandEnergy(BMWi)weretheFraunhofer Institute for Factory Operation and Automation IFF, Otto von Guericke University in Magdeburg, promeos GmbH and Leichtmetallgießerei Bad Langensalza GmbH. In September 2019, a prototype that is ready for use in mass production and that already offers sustainable and digitally connected op- eration was installed at Leichtmetallgießerei Bad Langensalza. 93

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 ENERGY AND RAW MATERIALS 94 1 Climate-friendly heat pump With their low CO2 emissions, heat pumps are a favorite among future heating technologies. Most of the heat pumps in use today still run largely on refrigerants containing environmentally harmfulfluorinatedgreenhousegases.AnEUregulation (the“F-GasRegulation”)stipulatesthatthesegasesmustbe reduced starting in 2020, but most of the alternatives devel- opedtodatearetoxicorflammable,andstricterlegalsecurity requirements are making heating systems with heat pumps more expensive. A high-performance brine-to-water heat pump from the Fraunhofer Institute for Solar Energy Systems ISE uses propane, a natural gas, as the refrigerant. The global warming potential of this gas is extremely low. In addition, the LC150 prototype requires only a quarter of the refrigerant needed for commer- cially available heat pumps, making it suitable for indoor use in residential buildings – with no additional safety precautions. With just 150 grams of propane, the LC150 pump delivers a heating power of around 8 kilowatts, which is estimated to be sufficienttoheatasingle-familyhomewithaverageheating energyconsumption.Theresearchersachievedasignificant improvement by using asymmetrical plate heat exchangers for their innovative approach: due to their design, asymmetrical heat exchangers require less refrigerant. In addition, using less oilinthecompressoralsosignificantlyloweredtheamountof refrigerant required. Fraunhofer ISE conducts research along the entire heat pump value chain – from materials to component and device devel- opmenttoqualityassuranceandmonitoringinthefield.The institute has an accredited test lab for heat pumps and chillers.

2 Recycled batteries for electric vehicles 2 Manufacturing batteries ecologically and economically 1 Most electric vehicles are equipped with lithium-ion batteries, and to a great extent, European companies have to import them.Inaddition,increasingvehicleelectrificationwillleadto a rapidly rising number of used batteries. It is hoped that efficientrecyclingwillmakeitpossibletokeepthevaluable components and materials in the recycling loop at the end of the battery life cycle. This is the aim of the research and industrypartnerscollaboratingontheAutoBatRec2020(Auto- motiveBatteryRecycling2020)project.Thisinitiativeispart oftheEuropeanInstituteforInnovationandTechnology(EIT) Knowledge and Innovation Community “KIC RawMaterials,” which is being coordinated by the Fraunhofer Research Insti- tution for Materials Recycling and Resource Strategies IWKS Currently, the major automakers usually outsource their battery cell production to Asia – in part because of the lower energy costs in the production process there. To enable eco- nomical and ecofriendly manufacture of next-generation battery cells in Germany, researchers at the Fraunhofer Institute for Material and Beam Technology IWS in Dresden have developed a new transfer method for dry coating. Itentails,first,mixingactivematerialwithbindingpolymers. Engineers then feed this mixture into a rolling mill to produce aflexibleelectrodefilmwithhighstability,whichtheylaminate directly onto an aluminum foil. This creates a battery electrode in Alzenau and Hanau. Besides further research partners that does without ecologically unsafe and energy-intensive and companies such as Samsung SDI Battery Systems and wet chemical methods requiring pastes and subsequent drying UMICORE, project participants also include the Fraunhofer InstitutesforManufacturingEngineeringandAutomationIPA and for Silicate Research ISC. Itsgoalistodevelopefficientprocesscyclesforrecycling traction batteries on a pilot scale – from collecting used bat- processes, all of which necessitates complex industrial safety measures. In addition to conventional lithium-ion batteries, this innovative method can also be used for solid-state batteries withion-conductingsolidsinsteadofflammableliquidelectro- lytes. It was not possible to treat the solid-ion conductors used in these batteries with the existing wet chemical method. teries to disassembling them to separating the individual types The researchers are also using the new approach to process of material. Innovative, automated disassembly, crushing and new electrode materials such as sulfur. These are precisely the sorting technologies are one of their focus areas. The diversity kinds of materials that will be needed to manufacture future of materials and designs used in battery systems, and the batteries with higher energy density. Finnish battery company expected increase in the quantity such systems in the life cycle, BroadBit Batteries partnered with Fraunhofer IWS to open a pose great challenges. The new solutions for disassembly pilot plant with a dry-coating process in May 2019. Now inno- processes and recycling-compatible design are also aimed at vative sodium-ion batteries are being manufactured in Espoo, eliminating the risks involved in disassembly as a result of handlinghighvoltagesandflammableandnoxiouscompo- nents. The project partners assess the various methods in terms of cost-effectiveness and sustainability. Custom-com- biningandrefiningthesemethodscreatesaneconomically promising value creation cycle for the reuse of old electric- vehicle batteries. in the Helsinki metropolitan area. To further develop dry elec- trode coating on an industrial scale, additional companies are collaboratingwithFraunhoferIWSonDryProTex,afunding initiative of Germany’s Federal Ministry of Education and Research(BMBF). 95

R E V I E W O F F R A U N H O F E R R E S E A R C H Projects and results 2019 1 Hugo Geiger Prize Resource-efficient corrosion-protection coatings 1 Environmental analytics with and for the public Quickly and easily determining nitrate levels in the vegetable While completing his doctorate at the Fraunhofer Institute for patch: that is what microelectronics experts at the Fraunhofer Laser Technology ILT, Dr.-Ing. Hendrik Sändker developed Research Institution for Microsystems and Solid State Tech- innovative methods for manufacturing functional coatings fromparticulatepolyetheretherketone(PEEK)usinglaser technology.Ahigh-performanceplastic,PEEKismoresuitable than magnesium or other metals for coating metallic com- nologies EMFT, together with citizen scientists from the non- profitassociationFabLabMünchene.V.,areworkingoninthe Citizen Sensor project. Nitrates are essential to healthy plant growth, but in excess, they are harmful to the environment ponents if not only abrasion protection is required, but also and pollute drinking water. However, obtaining truly meaning- high temperature and corrosion resistance. These kinds of specificationsareneededinmanyindustries–frommechanical and automotive engineering to generating plants for renew- able energies. ful measurements requires wide-ranging expertise and expen- sive laboratory equipment. The Citizen Sensor team’s mobile lab is set to change that. It consists of an electrochemical measuring kit that delivers a direct value for the nitrate con- centration in the soil and, with integrated digital step-by-step Hendrik Sändker worked on various process steps; in addition instructions, guides users through the process – from proper to optics and laser technology – disciplines in which he is very much at home – he familiarized himself with polymer chemistry, metallic materials, simulation calculations based on thermo- sample collection to evaluation of the results. Following initial fieldtestswithsomeofMunich’surbangardeninginitiatives in summer, the project team has turned its focus to further dynamics, and the analysis and testing of functional coating optimizing the measurement process and making the device properties. The physicist also participated in jointly funded initiativeswithindustrypartners,makingasignificantcontri- bution to developing tailored, laser-based manufacturing more robust. From the socioeconomic perspective, and with a view to wider utilization, the project is being supported by experts from the Fraunhofer Center for International Manage- methods, for instance for temperature-sensitive metal com- ponentsorforlocation-selectivecoating.Thisledtothefirst implementation of a dual-beam method with different laser beamwavelengthsinthisapplicationfield.Workingwithpart- nerssuchasSchaeffler,Evonik,MahleandELB–Eloxalwerk Ludwigsburg, these methods will be transferred to industry. ment and Knowledge Economy IMW and the Fraunhofer In- formationCenterforPlanningandBuildingIRB.CitizenSensor is one of the 13 citizen science projects launched in 2017 with funding from the German Federal Ministry of Education and Research(BMBF).AtotaloffiveFraunhoferconsortiasucceeded in securing such funding. In related studies, the researchers Leichtbau Baden-Württemberg, a state agency for the light- intend to determine where current utilization and cooperation weight sector, presented ELB with the ThinKing Community Award 2019 for the method it developed in collaboration with Fraunhofer ILT. models come up against their limits, and which aspects must betakenintoaccountinthespecificcontextofjointresearch with citizen scientists. 96

2 Using ceramic to obtain climate-friendly chemical feedstocks 2 temperature electrolysis process. The concept is designed to allow the energy needed for the process to be obtained from both variable renewable energy and biogas. In addition to waxes, methane and synthetic oil for fuel production can also be manufactured in the new plant. Furthermore, by 2021, a partnership with a lime plant is slated to realize a facility that uses unavoidable CO2 from the exhaust from lime production to produce synthetic waxes, for instance for lubricants. Ceramics-based reactors and intelligently coupled power-to-X processeslaidthefoundationforauniquelyefficientlabora- tory facility in Dresden, which demonstrates how CO2 can be produced from chemical feedstocks without impacting the climate. Several ceramic components and processes developed at the Fraunhofer Institute for Ceramic Technologies and Systems IKTS were brought together to make this possible. First, CO2, which occurs in large quantities and is unavoidable in, for instance, the cement and lime industry, is dedusted withfiltercandlesandfilteredthroughmembranes.Inace- ramic high-temperature electrolysis reactor, the carbon dioxide is converted to carbon monoxide at temperatures above 750°C. At the same time, hydrogen is produced from steam in the same reactor. Together, these two gases form the syn- thesis gas. This in turn is transformed into chemical precursors in a Fischer-Tropsch reactor, another component that was developed at Fraunhofer IKTS. Through closed and environ- mentally friendly material and energy cycles, the researchers strivetoachieveanefficiencyofmorethan55percentwith the power-to-X system. In another project in Saxony, Fraunhofer IKTS is collaborating with industry partners on a concept for using biogas to man u- facture waxes. The plant is currently being built and readied for operation at the site in Thallwitz. Starting in 2020, cooper- ation partners will join in to scale up and expand the plant to include electrolysis. In a funding project dealing with structural change, a new modular plant concept is being created for the circular economy. This will be realized technologically by coupling biogas reforming and co-electrolysis in a high- 97

AWARDS 2019 ERC Advanced Grant A new breed of versatile and powerful fiber lasers Prof.JensLimpert,aphysicist,andhisresearchteamattheFriedrichSchillerUniversityinJena havebeenawardedaprestigiousERCAdvancedGrant.TheEuropeanResearchCouncil(ERC) hasearmarkedcloseto2.5millioneurosinfundingoverthenextfiveyearstosupporttheteam’s effortstobuildahigh-performancefiberlasersystem.ThisprojectgoesbythenameofSALT, anacronymofsortsforHigh-FluxSynchrotronAlternativesDrivenbyPowerfulLong-Wave- lengthFiberLasers.Itsobjectiveistodevelopfrequency-convertedfiberlasersthatgenerate coherent laser pulses in the infrared, terahertz and soft X-ray range, yet can be operated in standard laser laboratories. Limpert and his team in Jena aim to broaden the range of potential applications, which is currently limited to high-performance particle accelerators, or synchrotrons. This Advanced Grant, one of the European Union’s largest funding packages, is the third the ERC has awarded Limpert after a Starting Grant in 2009 and a Consolidator Grant in 2014.Prof.Limpertistheco-directoroftheFraunhoferClusterofExcellenceAdvancedPhoton SourcesCAPS. 98

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R E V I E W O F F R A U N H O F E R R E S E A R C H ERC Starting Grant Accelerating the transition to renewables to benefit the climate Prof.KarolineRogge,deputyheadoftheCompetenceCenterPolicyandSocietyatthe Fraunhofer Institute for Systems and Innovation Research ISI, was awarded a Starting Grant fromtheEuropeanResearchCouncil(ERC).Prof.RoggeandherresearchteamattheUniversity of Sussex are looking to accelerate the transition to more sustainable low-carbon energy and transportsectorsinaprojectcalledEMPOCI(Governingsustainableenergy-mobilitytransitions). TheiranalysesfocusonBaden-Württemberg(Germany),California(USA),Guangdong(China), andScotland(UK).Theseresearchersaimtocollaboratewithbusinesses,government,scientists and societal stakeholders to develop transformative strategies and policies to promote climate- friendly innovations. The ERC is contributing 1.5 million euros to fund this project. An economist and geo-ecologist, Rogge has been researching climate policy and innovation at FraunhoferISIsince2004.SheisalsoprofessorofSustainabilityInnovation&Policyanddeputy headoftheSussexEnergyGroupattheSciencePolicyResearchUnit(SPRU)oftheUniversity of Sussex, UK. 99

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R E V I E W O F F R A U N H O F E R R E S E A R C H Awards 2019 EARTO Innovation Award Mathematical methods for radiotherapy More than 20 years of research and applied science at the Fraunhofer Institute for Industrial Mathematics ITWM have culminated in an Innovation Award from the European Association of ResearchandTechnologyOrganisations(EARTO).FraunhoferITWMearnedthisdistinctionin the Impact Delivered category for its interactive, easy-to-use software that supports decision- making and planning for intensity-modulated radiotherapy. Varian Medical Systems, the global market leader for radiation equipment, has licensed this software, which is to be deployed to more than 36,000 therapy planning stations around the world. DevelopedbyProf.Karl-HeinzKüfer’sresearchteam,thisefficiency-enhancingtoolspeeds up radiotherapy planning by as much as 80 percent. It helps physicians strike a good balance betweenthepotentialtherapeuticbenefitsandpossiblesideeffectstoimprovethechances of recovery. The tool is based on multi-criteria optimization, a mathematical method of aligning different objectives. It can even serve to reconcile contradictory goals. Users report a 30 percent reduction of the radiation dose to organs at risk and improved tumor coverage. 100

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EU Champions Challenge Digital innovation hubs DigitalinnovationhubssteppeduptocompeteforthefirsttimeataEuropeanchampions challengeinMadrid.DigitalHubLogisticstookfirstplaceintwocategories,SMEOrientation andServicePortfolio. The Dortmund-based innovation ecosystem for logistics is one of twelve hubs selected by the German government to drive the economy’s digital transformation. It offers start-ups the space and infrastructure needed to develop digital products and business models. The Fraunhofer Institute for Material Flow and Logistics IML, the Fraunhofer Institute for Software and Systems EngineeringISST,EffizienzClusterManagementGmbHandDuisburgerHafenAGsupport Digital Hub Logistics in Dortmund. 101

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R E V I E W O F F R A U N H O F E R R E S E A R C H Awards 2019 Thuringian Research Prize A more ecofriendly ceramic battery An R&D team at the Fraunhofer Institute for Ceramic Technologies and Systems IKTS won the ThuringianResearchPrize,takingtophonorsintheAppliedResearchcategoryforaceramic batterythatprovidesanaffordable,ecofriendlymeansofstoringenergy.DevelopedbyProf. Michael Stelter, Dr. Roland Weidl, Dr. Matthias Schulz, Heidi Dohndorf, Lutz Kiesel, Martin Hofacker and Benjamin Schüssler, it is made entirely of non-critical, domestically sourced raw materialssuchascommonsalt,aluminumoxideandnickel.Thisstationarysodium/nickel- chloridebatteryisdurable,systemicallyefficient,andsafeenoughforinstallationinresidential buildings. Its core is a solid-state electrolyte – that is, a tube made of a special ceramic and sealed at one end. Theresearchteamdevelopedthepowdersneededtomakethisbatteryandmodifiedthe sintering process. They also modeled a sophisticated corrosion-resistant ceramic seal to provide a permanent bond between the metallic cell wall and the ceramic core. But these experts’ crowning achievement is their optimized cell design. This cell’s storage capacity of around 250 watt-hoursisnearlythreetimesthatofearlierstationarybatteriesofthistype.Afull-fledged battery module with 20 of these cells can store roughly the amount of energy collected by the solar panels of a single-family house on a sunny day. 102

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Research grant from the Hans-und-Ruth-Giessen-Stiftung Regenerative treatment of age-related eye disease Dr. Ina Meiser, head of the Cryobiotechnology working group at the Fraunhofer Institute for Biomedical Engineering IBMT, has received a grant of 20,000 euros from the Hans-und-Ruth- Giessen-Stiftung for a project to investigate application-oriented cryopreservation for the regenerativetreatmentofage-relatedmaculardegeneration(AMD).Oneoftheworld’smost common eye diseases, AMD is to blame for countless cases of blindness. A lifelong medication regimen can slow, but not stop, the disease’s progression. Meiser, a biologist, uses human-induced pluripotent stem cells in the laboratory to cultivate functional retinal cells that can serve to restore vision. She wants to safely store cell-based transplantsforlongperiodstopreventthedegradationofartificialtissuegrowninthelab while it awaits transplantation in operating rooms. Clinical trials are already underway to evaluate her therapeutic approach. Meiser aims to use this award’s endowment to fund a research stay at a partner institute in France that will further expand her network of partners for future collaboration. 103

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R E V I E W O F F R A U N H O F E R R E S E A R C H Awards 2019 Argentinean national award Excellence in engineering Prof.AndrésLasagni,headoftheCenterforAdvancedMicroPhotonicsattheFraunhofer Institute for Material and Beam Technology IWS, and his twin brother Dr.-Ing. Fernando Lasagni,directorattheAdvancedCenterforAerospaceTechnologies(CATEC)inSeville,were honored with the Domingo Faustino Sarmiento award for their outstanding achievements in the engineering sciences. This prize is bestowed by the Senate of the Argentine Nation. The twoengineerswereborninArgentina.AndrésLasagniisaleadinginternationalexpertinlaser technologywithmorethan250scientificpublicationsandover30patentstohiscredit.He and his team have succeeded in processing various materials with the direct laser interference patterning method, setting a world record with speeds of up to one square meter per minute. 104

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Klaus Tschira Boost Fund The building blocks of better hearing Dr. Jan Rennies-Hochmuth, head of group at the Oldenburg branch of the Fraunhofer Institute for Digital Media Technology IDMT, has received a two-year grant from the Klaus Tschira Boost Fund.ThisaffordsDr.Rennies-Hochmuthandhisgroupthefinancialfreedomandtimeto work on preliminary research projects with great potential for publication and to collaborate with scientists abroad. They want to better understand how speech is perceived in complex listening situations and explore how the brain connects the information picked up by each ear. The researchers aim to conduct speech intelligibility tests to gauge individual subjects’ hearing andperceivedlisteningeffort,andthenapplytheirfindingstoimprovepredictivemodelsand applications such as hearing aids and communication systems. 105

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VISIONS THAT WILL SHAPE TOMORROW’S WORLD A contest of ideas “To create sustainable value” Going plastic-free in the garden Germany churns through a lot of plant pots made of petroleum- This year’s contest of ideas at the Netzwert Symposium on based plastic – some three billion a year, most of which are February 18 and 19, 2020, was all about sustainable manage- disposable. Franziska Saft from the Fraunhofer Institute for ment. Over the course of these two days, 20 scientists pre- Ceramic Technologies and Systems IKTS is eager to replace sented their solutions to conserve resources, enable a circular these synthetic pots, which are used on a massive scale in economy, arrest climate change, ease the transition to renew- ables, and secure the water supply. The challenge was to pitch visionary yet ecofriendly and conservation-minded ideas that would create value and keep Germany and Europe compet i- tive. Six winning teams – three on each day – received up to 5000 euros personal prize money and 25,000 euros in start- upfinancing. agriculture, with biobased alternatives. Made entirely of waste fibers,thesenewproductsaretobefullybiodegradable. Researchers have now developed a technology to recondition wastefibers.Thisway,theycanbeputtoproductiveuseas feedstock for new products rather than going to waste in storage and disposal facilities. Leatherwear made of mushrooms Scaling up solar power for more biomass Robert Schreiber from Fraunhofer headquarters and Felix Clothing, plastic and furniture fabricated with fungi? With Derwenskus from the Fraunhofer Institute for Interfacial Engi- mushrooms and organic waste such as sawdust, waste wood neering and Biotechnology IGB are determined to produce or fruit peels providing a sustainable alternative source of materials,funguscouldindeedfigureprominentlyinourfuture. Dr. Hannes Hinneburg from the Fraunhofer Institute for Applied PolymerResearchIAPispursuingthisvisionwithhisideafor a mushroom-based faux leather. “Fungi grow fast in just two to three weeks and require little water, energy and room, so they are a cost-effective and ecological alternative to cowhide,” says the young scientist. Hinneburg now aims to apply tanning more algae in a much smaller space to increase the yield of biofuel production, for example. Their idea is to focus solar energy with a light guide and direct it to places where the sun does not normally shine, for example, in the basements ofofficebuildings.Accordingtothetworesearchers’calcula- tions, this will increase per unit area productivity to 20 times thatofconventionalphotobioreactors.Thefirststepoftheir plan is to build a demonstrator that produces around ten liters methods to toughen up and waterproof the mycelium’s of biomass at a go, while winning over internal and external web-like structure, which is colored with dyes and shaped partners to their project. organically as it grows. A prototype is to be ready sometime in the next six months. 106

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Energy fishing at the equator If Jan Mohring has his way, thousands of solar pontoons will format, and then protect this data with blockchain technology. Thebenefitsofthissortofsystemwouldbemany:Consumers win because they can make informed decisions about buying one day drift the ocean between Western Europe and the sustainable merchandise. Legislators can use it to set sustain- equator. Once they soak up enough intense sunlight to synthe- size fuel from CO2 and water, they will ride the Gulf Stream’s current to return home. That is still but a vision, but Mohring, ability standards. And industries will have full traceability of their products. The two researchers now want to team up with other Fraunhofer Institutes to develop the system further, a mathematician at the Fraunhofer Institute for Industrial starting with photovoltaic modules. Mathematics ITWM, believes it would have a tremendous impact in weaning Western Europe off its dependency on global energy markets. Of course, it would also take a huge Ecofriendly flame retardants effort on all parts to realize this vision. For one, stakeholders would have to organize pontoons, synthesis plants and ships for transport to ports. “We can only make this venture happen if we get strong partners on board,” says Mohring. He has the likes of Lufthansa and the German Federal Defence Forces in mind. Mohring also wants an internal consortium of Fraunhofer Institutes that specialize in energy and process engineering to helpwiththeplanningandprovidescientificsupport. Tracing products’ sustainability credentials Would consumers buy a washing machine if they knew that children were employed to make it? Of course not, but they are likely to have bought merchandise without being aware that child labor is part of its provenance. There is much we don’t know about the products we buy. What resources were consumed in its manufacture? Under what conditions were its metals mined? Estelle Gervais and Shivenes Shammugam from the Fraunhofer Institute for Solar Energy Systems ISE have set themselves a lofty goal: They want to document information Someplasticproductsposerisks,asdisasterslikethe2017fire that engulfed a London high-rise apartment building go to show.Theycanbetreatedtoreducethefirehazard,butmany flameretardantscontainhalogensandantimony,whichare harmful to human health and the environment. Flame retard- ants based on phosphorus compounds are a good alternative, but most are not organic or made in an ecofriendly way. Dr. Michael Ciesielski of the Fraunhofer Institute for Structural Durability and System Reliability LBF wants to change that. He hasinventedbiobasedphosphorous-basedflameretardants thatareharmless,yethighlyefficient.Ciesielski’sideawasto use cellulose, a phosphorus compound and sugar alcohols, which sell for very low prices these days, to produce a new breedofmacromolecularflameretardant.ThisFraunhoferLBF researcher has already achieved remarkable results with the process he invented. It not only lives up to all his expectations forsustainabilityandefficiency;italsoproducescellulose acrylate intermediates suitable for use in paints and other coatings.Ciesielskiaimstocontinuerefiningthenewflame retardants and cellulose acrylates into industrial products in all along the value chain about material consumption, manu- the hopes of seeing a lot more biobased compounds used in facturing practices and products’ place of origin in a digital plastics. 107107

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R E V I E W O F F R A U N H O F E R R E S E A R C H PROF. DR. PHIL. NAT. DR. MED. HABIL. ULRIKE KÖHL BiologistandM.D.|Direc toroftheFraunhoferInstituteforCellTherapyandImmunologyI ZIinLeipzig| ProfessorandDirec toroftheInstituteforClinicalImmunologyattheUniver sit yofLeipzig|Direc torof t h e I ns t i tu te of Ce llular T h e ra p eu t i c s at t h e H ann ove r M e di c a l S ch o o l UlrikeKöhlhasdevotedmuchofherlifetofightingcancer. Her brother had suffered from the disease as a child, steeling her resolve to make a difference. This experience remains the drivingforcebehindKöhl’sdeterminationtoadvancethe cause of European cancer research. cancercelllikeakeyfittingintoalock,andthengoonto destroy it.” So far, this method has proven very successful in treatingtwotypesofbloodcancer.NowKöhlandthere- searchers at her institute are striving to make this therapy work for other highly aggressive tumors. After interning at hospitals, she set out to study biology with afocusonpharmacology.Köhlthenwentontomajorin medicine, a combination that made a lot of sense to her. Pursuingaseconddegreewasnoeasyundertakingfora young woman with two small children and a part-time job, but her ambition paid off. A postdoctoral scholarship from the Mildred Scheel Foundation took her to the MD Anderson One obstacle impedes this gene therapy – much of the production requires manual labor, which is costly. Eager to help more people, this physician wants to automate production andmakeitmoreflexible.Thatisnotrivialmattergiventhe complexities of personalized medicine. Clearly undeterred, Köhlsays,“TheFraunhofernetworkhasexpertiseinAI,robot- ics, life sciences and IT security and close ties to industry. It Cancer Center in Houston for a year in 1995, where she is better suited than any other organization for setting up delved deeply into cell and gene therapeutics. Oncology and modular production processes for CAR-T cells along Industrie immunology have been the focus of her work ever since. 4.0 lines – with all the quality control, safety and documen- Today, she is a full professor who also heads the Fraunhofer InstituteforCellTherapyandImmunologyIZIinLeipzigas well as two institutes at the University of Leipzig and the HannoverMedicalSchool(MHH).Apassionateresearcher, herpetprojectatFraunhoferIZIisinvestigatinglivingcancer drugs. She had begun exploring this topic at the MHH and tation that that entails. It means so much to me to be able to start this up in a joint effort with other Fraunhofer Institutes and outside partners such as pharmaceutical companies.” Atalentednetworker,Köhlcertainlyvaluesthebenefitsof collaboration. Another top priority for her is to build and expand a European network for cell and gene therapy. stepped up her research efforts later at Leipzig. “Our immune system protects us against disease, but bodily immune cells aresometimestooweaktofightcancercells,”saysKöhl,an expert on the subject. “In CAR-T cell therapy, we take immune Her heavy workload leaves this researcher with little free time. An avid cyclist, she takes her daily commute to work and be- tween her institutes as an opportunity to pursue her passion. cells from patients and reprogram them genetically so they “It clears my mind.” form a new receptor on the surface. They dock onto the 109

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R E V I E W O F F R A U N H O F E R R E S E A R C H People in research PROF. DR. SCI. RAOUL KLINGNER H o l d e r of a B. S c. in wo o d s ci e n ce and te chn o l o g y | D ire c to r of R e s e arch M ana g e m e nt and G ove r nan ce, Fraunh ofe r- G e s e lls chaf t , M uni ch Intrepid, inventive and empathetic – Raoul Klingner had to Klingner was born and raised in the Upper Bavarian town of check all those boxes when he began work on a doctoral Weilheim. His fascination with science and politics dates back thesis in a lab he shared with hornets. As a postgrad student, to his school days. Setting out with a scholarship from the inter- he set out to investigate how these creatures perfected climate national exchange program sponsored by the German federal control in their nests, which happen to be masterpieces in parliament, he attended high school in North Carolina for a lightweight wood design. Those same qualities work in his favor in his current position as Director of Research Management and Governance at the Fraunhofer-Gesellschaft. “In my job, it is important to have the courage to explore new avenues. I have to quickly acquaint myself with diverse subject matter, spotthestickingpoints,andfigureoutwhatmotivatesthe various players,” says Klingner. year. ”That’s where I learned to adapt to other cultures, expec- tationsandsituations.Thisbenefitedmelaterwhenworking in an intercultural setting.” After graduating from the University of Hamburg, Klingner went on to earn a doctorate from the EmpaInstituteinZurich,thepartoftheSwissFederalInstituteof Technology(ETH)thatspecializesinapplication-orientedma- terials research. “A restructuring was underway at the institute when I completed my doctorate there. Fraunhofer was held up One of his many varied tasks is to keep on top of what each as an example well worth emulating – that caught my attention.” of the 74 Fraunhofer Institutes is doing; another is to follow After completing his dissertation in fall of 2005, he jumped at important developments in business and politics. He prefers to the opportunity to join Fraunhofer headquarters as a research do this face to face whenever he can, which is why he spends fellow in the Research Management department. “It was the so much time on the road. „This is the only way to provide the competentsupporttheinstitutesneedtopursuetheirscientific mission and to coordinate the collaboration among them.” He right place for me to help improve the general conditions for research, which was a prospect that appealed to me.” wants to bring down the barriers that sometimes impede this Three years ago, he started sharing his wealth of experience cooperation. “If we work together effectively, we can fully in science and innovation management with students at TU exploit our potential through our broad range of services,” Braunschweig. He certainly has plenty of real-world examples says Klingner with conviction. He should know, being an “old to impart his knowledge and methods. “I really enjoy working hand in the business,” as he puts it with a wink. Klingner has with the students; it’s inspiring and challenging. I learn a lot been with Fraunhofer for 15 years, initially joining the Strategic PlanningandResearchProgramsdepartmentandlatermoving on to head up International Business Development before by doing this.” Klingner was appointed honorary professor in November 2019. He has no regrets about being out of the lab. “There’s so much research going on around me that I don’t taking on his current position. miss anything. I’m very aware of my responsibility in everything I do. Fortunately, a great team supports me in my efforts. I have the best job imaginable!” 110

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MARTA GILABERTE BASSET D o c to ra l s tu d e nt | M e m b e r of t h e Q uantum I ma g ing g ro u p at t h e Fraunh ofe r I ns t i tu te fo r AppliedOptic sandPrecisionEngineeringI O FinJena|M.Sc.inAerospaceScienceandTechnology; B.Sc.inPhysic s “Opportunities are born of staying open to new ideas and A far cry from the great expanse of space, her current research entertaining all the possibilities that crop up along your chosen focuses on the minuscule dimensions of the quantum world. path,” says Marta Gilaberte Basset. This adage has proven mostbeneficialtotheyoungphysicistandaerospaceresearcher inherchosenfieldofresearch,quantumimaging.Thesame can be said of her career to date. When opportunity knocked in 2018, she opened the door, She aims is to harness the power of quantum entanglement for purposes of medical imaging in cancer diagnostics. The theory behind this application was developed by a team from Fraunhofer IOF and scientists at the prestigious Institute for QuantumOpticsandQuantumInformation(IQOQI)ofthe Austrian Academy of Sciences. The idea is to split a laser beam relocating to Jena to work on her doctoral research with erst- into twin entangled beams. One is directed at the sample while while project partners. This also brought her into contact withtheFraunhoferInstituteforAppliedOpticsandPrecision Engineering IOF. A historic university town with a rich heritage its twin serves to generate an image of that sample without ever having been directed at it. If this works, medical staff will be able to look at tissue at high resolution for extended periods. in optics research and industry, Jena is surrounded by beautiful That is not possible today because conventional imaging causes scenery dominated by impressive forests. Marta Gilaberte Basset loves that her current home is just a hop, skip and jump away from the countryside. such excessive damage to cells. Marta Gilaberte Basset built herfirstexperimentalsetupforthissortofquantumsource anddemonstrateditatthe2019LASERWorldofPHOTONICS. She does miss the ocean, though. A native Catalan, she left theICFO–InstituteofPhotonicSciencesinCastelldefels,a seaside town with a beach on the Balearic Sea, to come to “Magical” and “fascinating” are two words she uses to describe the quantum world. “We can’t really grasp it with our current understanding of mathematics and physics,” she says. Jena. At the time, she also worked for the laser manufacturer “But we can see that it works in the lab! Ultimately, it’s all Monocrom in nearby Barcelona, where she headed the de- about allowing the existence of two different entities.” velopment project for a Raman spectrograph. It was to set off on a very long journey in 2020. Developed by Marta Gilaberte This duality could also describe the road that Marta Gilaberte Basset and her current colleagues at Fraunhofer IOF, this robust Basset has chosen for her career in science. After all, she is de- miniaturized spectrometer will be on board the European SpaceAgency‘s(ESA)ExoMarsmissiontoanalyzethesurface of the red planet. termined to see the fruits of her research widely applied in the real world. She hopes to soon provide medical engineering com- panies with quantum-based technology that delivers high-quality diagnostic images. “There’s something very satisfying about being able to accompany an invention from a concept to a pro- totype and out onto the market,” says Marta Gilaberte Basset. 113

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PROF. DR. RER. NAT. MICHAEL STELTER El e c t ro ch e mis t | D e pu t y dire c to r of t h e Fraunh ofe r I ns t i tu te fo r Ce rami c Te chn o l o g i e s and Sy s te ms I K T S atHermsdor fandDresden|ProfessorforTechnicalEnvironmentalChemistr y Michael Stelter likes to see things in context. A native-born Saxon,Stelterfirstmajoredinphysicalchemistryandelectro- chemistry, and then branched out to study technology impact research,afieldrelatedtotechnologyassessment.“It’svery importanttometobeabletoexplainthebenefitsofour research to people,” says the energetic 46-year-old scientist. from 2002 to 2005, where he built a fuel cell that he had started optimizing in the course of research conducted during hisuniversitydays.ItwasthenthatStelterfirsttouchedbases with Fraunhofer IKTS, seeking to jointly develop a ceramic fuel cell, which was an unprecedented approach at the time. This venture culminated in a spin-off from Webasto. Stelter, its desig- It is clearly no coincidence that his research focuses on re- nated CTO, was instead recruited by the director of Fraunhofer source-sparing energy storage systems and processes. IKTS and appointed head of department to set up a unit to Stelter has worked at the Fraunhofer Institute for Ceramic Tech- rather than just work with individual materials. That appealed develop fuel cells. “IKTS was keen to develop complete systems nologies and Systems IKTS since 2005, heading the Modules andSystemsdepartmentuntil2010andtheProcessesand Componentsresearchfieldfrom2010to2013.Takingonthe mantle of deputy director in 2013, he has been helping to manage this central German materials research institute and making decisions about the development of high-performance to me.” His intensive research culminated in an award in April 2019. Stelter and fellow researchers at Fraunhofer IKTS garnered the ThuringianResearchPrizeforaceramicbatterymadeentirely of non-critical, domestically sourced raw materials such as ceramic materials and industrial manufacturing processes ever common salt, aluminum oxide and nickel. A ceramic battery since. He also teaches at the University of Jena, where he is from the institute has been gracing the Energy and Environment professor of Technical Environmental Chemistry. His focus in exhibition in Munich’s Deutsches Museum since November. this branch of science is on developing novel physical-chemical processesforwaterpurification.Asaresearcher,wantsto develop technologies that treat water as a vital resource. “The ceramic battery is a serious alternative to the lithium-ion battery in the context of the exit from fossil fuels, which demands storage possibilities for alternative energy sources,” says the researcher. “Ihadn’tintendedtogointoresearchafterfinishingmy studies,” says Stelter, a father of two. He adds that he was Speaking of this topic – the transition to a sustainable energy unimpressed with the German university system in the 1990s afterthefalloftheBerlinWall.Instead,thenewlyqualified chemist embarked on a career in the automotive industry, system – Stelter says he is happy to be working in research: “Fortunately, science is ruled by factual evidence and laws of physics. We’re not going to budge on that, not even by a where he held various management positions. He headed the millimeter. We develop practical solutions that work and Fuel Cell Development work group at Webasto AG in Munich create jobs.” 115

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R E V I E W O F F R A U N H O F E R R E S E A R C H People in research DR. PHIL. KATHARINA WÄSCHLE Co m pu te r s ci e nt is t | R e s e arch fe ll o w w i t h t h e M o b il e Te r re s t r ia l S c anning g ro u p at t h e FraunhoferInstituteforPhysicalMeasurementTechniquesI PMinFreiburg “We can work our way to a slice of knowledge with every The award-winning project for Deutsche Telekom provides a research project. But that doesn’t lessen the awe with which good example of how these systems are trained. Sidewalks we contemplate the world’s complexity.” An outlook very muchrootedinscientificcuriosity,itinspiredKatharina Wäschle, a computational linguist and computer scientist, to and streetlights look different from region to region. “So we established a process to spot these differences. We set up a platform where we could enter the places in Germany where remain true to the world of science after earning a master’s the appearance of sidewalks, tram lines and urban centers is degree with distinction. Keen to investigate machine learning, known to vary from the purported norm. We used this as she looked into ways of improving machine translations in the baseline for putting together routes to record as many her doctoral thesis. In 2019, the young researcher and two colleaguesgarneredtheJosephvonFraunhoferPrizefortheir efforts.WorkingattheFraunhoferInstituteforPhysical MeasurementTechniquesIPM,thisteamdevelopedasmart data interpretation tool for Deutsche Telekom. It is part of a novel process chain that uses machine learning methods to speed up engineers’ efforts to map out routes when laying fiber-opticcables. variations as possible. That worked very well. We were able to increase the recognition rate from 10 to 80 percent for some street scenarios.” WäschlejoinedFraunhoferIPMfortheroute-planningproject. She had no trouble making the transition from speech to imagerecognition.TheverydiverseteamatFraunhoferIPM alsomadeitveryeasyforhertofitin.“Thepeoplewhowork here have a wide range of interests and think outside the box,” Wäschle wants to dispel people’s reservations about machine says Wäschle, who has two daughters. The move to Fraunhofer learning while pointing out that this innovative technology has its limits. She says, “Attempts to anthropomorphize AI and the notion of a magical tool that will solve every problem put her in touch with application-oriented research: “It’s so motivatingwhenaresearchprojectyieldsatangiblebenefit.” When working with a customer as a project manager, she are misguided, realistically speaking,” adding that accuracy prefers to use reliable, established methods that users can in describing problems and looking at what and how these readily handle – even if these are not always the very latest in systems actually learn is the key to achieving good results. research tools. “I have to save the icing on the cake for the “We shouldn’t impose our assumptions on the system and best model, which goes on my postdoc page,” says the overestimate what it can do. It helps to be aware of what a researcher. She has certainly found her place at Fraunhofer – narrow slice of the world a machine-trained system can and dispensed with the notion that a researcher cannot serve actually see,” she says, speaking her mind as an expert. the interests of both science and industry. 116

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PRIV.-DOZ. DR.-ING. OLIVER SCHREER Eng in e e r | A s s o ciate p rofe s s o r at t h e Te chni c a l U ni ve r si t y B e r lin | H e a d of t h e I mm e r si ve M e dia & Co mmuni c at i o n g ro u p at t h e Fraunh ofe r I ns t i tu te fo r Te l e co mmuni c at i o ns , H e inr i ch - H e r t z- I ns t i tu t , H H I in B e r lin Turning a passion into a profession can be a wish come true cations for augmented and virtual reality. He has also been for some. Oliver Schreer is one of those people. Born in Mu- teaching stereo analysis and view synthesis to students at nich, he has been fascinated by moving images ever since his childhood.Nowhasbeenresearchinginthisfieldfornearly 30 years. As a research fellow at the TU Berlin, he investigated ways of using stereo cameras to help mobile robots navigate on their own. When Schreer joined the Fraunhofer Institute for Telecommunications, Heinrich-Hertz-Institut, HHI in 1998, he could not have found an employer better suited to his interests. “Fraunhofer HHI conducts cutting-edge research, TU Berlin since 2001. The2019JosephvonFraunhoferPrizecameasacareerhigh- light.SchreerandhiscolleaguesIngoFeldmannandPeter Kauff received the award for their work on 3D human body reconstruction(3DHBR).Thistechnologywouldprovidethe meanstosetupavolumetricvideostudioinPotsdam-Babels- berg. Its 32 cameras capture the motions of people from all time and again developing prototypes with capabilities no sides. These images are then integrated into virtual environ- one else has been able to realize.” ments as lifelike 3D holographic avatars. “This is a prime ex- AnEUinitiativecalledVIRTUEwashisfirstmajorprojectat Fraunhofer HHI. Running from 2000 to 2003, it was also the firsttimetheelectricalengineerlookedinto3Dvideocommu- nication. The premise for this project was for several cameras tofilmapersoninfrontofadisplay.Algorithmswouldthen adjust the viewing angle in real time so the person on camera looks the viewer straight in the eye. It was then that Schreer foundhisspecialtyfield,3Dvideoanalysis.Anothermilestone wasRUSHES,aEuropeanFP6projectthatranfrom2007to 2009.ThefirstEUprojectheheadedascoordinator,ityielded an annotation tool for image and video search engines. “This major foundational research project with twelve partners was a success. I am very proud of that,” says the researcher. Schreer has pursued other projects centered on new tech- nologies such as real-time 3D video processing, gesture analy- sis, human-machine interaction and immersive media appli- ample of application-oriented research achieving commercial success, which is what every researcher strives for,” says the scientist.Hecanforeseethistechnologybenefitingsocietyin other applications, for example, in medicine. “If we manage to capture surgical procedures volumetrically, surgeons could be trained in the virtual realm and live animal models would no longer be needed.” The scientist has since turned his attention to two lofty visions. “I want to make it possible for a blind person and a deaf-mute person to communicate with each other in 3D.” He is also keenly interested in preserving humankind’s cultural heritage. AjointprojectwiththefilmproductioncompanyUFAisa case in point: A three-dimensional volumetric video of Jewish Holocaust survivor Ernst Grube captured his story for posterity. “It’sveryimportanttomethatmyworkbenefitssociety,” says Schreer. 119

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R E V I E W O F F R A U N H O F E R R E S E A R C H People in research PROF. DR. MED. DR. RER. NAT. DR. MED. HABIL. GERD GEISSLINGER M . D., li ce ns e d p hy si cian and p har ma cis t , s p e cia lis t in clini c a l p har ma co l o g y | E xe cu t i ve dire c to r of t h e Fraunh ofe r I ns t i tu te fo r M o l e cular B i o l o g y and A p p li e d Eco l o g y I M E and D ire c to r of t h e D e p ar t m e nt ofClinicalPharmacologyattheGoetheUniver sit yinFrank fur tamMain Mathematics, physics, chemistry and biology were Gerd What he really likes about Fraunhofer is its transdisciplinary Geißlinger‘s favorite subjects at school. These interests prompted him to major in pharmacy. “This course of study is very well suited for learning the fundamentals of pharma- structures, which enable researchers to work with people in otherfieldssuchasengineersandcomputerscientists.He believes that collaborative formats like this are the key to ceutical research and seeing how key concepts are connected. success in translating cost-minded new ideas into applications. But a grasp of the pathophysiological mechanisms and knowl- He and his team developed the concept of the 4Ds that calls edge of disease pathologies still evaded me. That’s why I embarked on a second course of study, majoring in medicine,” says the researcher, who holds two doctorates. After earning post-doctorallecturingqualificationsinpharmacologyand toxicology, Geißlinger thought he would pursue a career in the pharmaceutical industry. A six-month stint at St Vincent’s Hospital in Sydney, Australia, prompted him to reconsider. The freedom of researching and teaching at a university held a greater attraction, so he changed his plans. Three universities for collaboration across the four areas of drugs, diagnostics, dataanddevices.AsFraunhofer’shealthresearchofficer,heis also striving to develop models for in-house collaboration to better tap the organization’s potential across disciplinary boundaries.“Wewanttoshapemedicaladvancestobenefit patients and contribute to optimum healthcare with cutting- edge, transdisciplinary research. The goal is for Fraunhofer to becomeahigh-profileglobalplayerinhealthresearch.Weare in an excellent position to accomplish this, thanks to the trans- offered him a professorship; Geißlinger opted for Frankfurt disciplinary collaboration among the professionals behind am Main. the 4Ds – doctors, engineers, computer scientists and natural scientists,” says Geißlinger. “We had already set up an interdisciplinary center for drug research, development and safety in Frankfurt 20 years ago with the support of the Hessian state government and the company formerly known as Aventis. We wanted to join forces across institutes and clinics to work on projects along the value chain,” says the researcher. When the question arose about the feasibility of turning this network into an He has many awards for his excellent research work to his credit,includingtheLeonGoldbergAward,theSertürnerPrize, theresearchprizeoftheGermanAssociationforPalliative Medicine(DGP)andanhonoraryawardfromtheGerman PainAssociation(DGS).Heisalsoco-publisherandco-author of ”Mutschler Arzneimittelwirkungen“, a standard German institute, a partner in applied research seemed like the best reference work. In what little spare time he has, the father of choice. This is how Geißlinger arrived at Fraunhofer. two hikes and cycles to recharge his batteries. 120

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FRAUNHOFER INSTITUTE SPIN-OFFS Fraunh ofe r I ns t i tu te s are p r ize d by busin e s s and g ove r nm e nt a like b e c aus e t h e y d raw e x is t ing co m p ani e s into t h e ir o r b i t and p rov i d e t h e s e e d b e d fro m w hi ch n e w co m p ani e s are b o r n. Eve r y ye ar, a mul t i tu d e of Fraunhofer Institute employees use the exper tise they have acquired there to star t up their own businesses. H e re we p re s e nt jus t a fe w of t h e co m p ani e s t hat we re fo und e d o r o p e n e d fo r busin e s s la s t ye ar. “We are delighted to have found an innovative, experienced partner with a long-term outlook for our energy management softwareknow-how.ThisenablesbothusandAMPEERS ENERGY GmbH to develop new markets and growth opportu- nities,”saysProf.Dr.PeterBretschneider,headoftheEnergy department and deputy director of the branch of the institute. LastJune,thefledglingcompanywasabletosecureaseven- digitfigureinseedfunding.ItsbackersincludetheFraunhofer- Gesellschaft and the Jost Group. This investment will also financethecompany’seffortstodevelopandrolloutproducts. The medium-term goal is to develop and market technologies for cognitive energy systems that deliver power in a highly automated and reliable way across sectors. AMPEERS ENERGY GmbH Digital business models centered on sector coupling Sector coupling – that is, using technologies to interconnect the electrical power, heating and transport sectors – is vital to thetransitiontorenewables.AMPEERSENERGYGmbH,a Fraunhofer spin-off founded in May 2019, offers innovative software-as-a-service solutions for sector coupling to B2B customers. Its product range encompasses a power manage- ment system for an entire neighborhood, an app to manage the supply of locally generated electricity to tenants, and a software solution to control the charging of e-vehicles. This start-up is seeking to turn the transition to sustainable and decentralizedenergysupplyintoaprofitablebusinessmodel for companies. “Havingalreadywonoverourfirstcustomers,wearenow working with them to make this happen,” says Dr. Karsten Schmidt, founder and managing director of the freshly minted start-up. Target groups include the housing sector, power companiesandfleetoperators.“Oursolutionshelpthese companies optimize their energy management and cut energy costs,” says Schmidt, a former staffer at Fraunhofer head- quarters. These solutions are based on an AI-supported energy management platform developed by the Applied Systems Technology(AST)branchoftheFraunhoferInstitutefor Optronics, Systems Engineering and Image Exploitation IOSB. 122

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R E V I E W O F F R A U N H O F E R R E S E A R C H Skinmade GmbH A micro-factory for personalized cosmetics without fragrance. Then the micro-factory starts dosing and homogenizing contaminant-free ingredients such as hyaluronic acid, aloe vera and sodium lactate. A few minutes later, the A lotion tailored to suit the individual’s skin condition? Surely customer has a small jar of personal cream to take home. this is the stuff of cosmetic researchers’ and dermatologists’ Thirty milliliters cost around 40 euros. dreams. Researchers at the Fraunhofer Institute for Manufac- turingEngineeringandAutomationIPAteamedupwith Dermatest to achieve a breakthrough on that front. The spin- One micro-factory is already up and running in a Frankfurt outlet of the Douglas retail chain. The brand also has a store off Skinmade has built a micro factory that produces a person- of its own in Berlin. Another 20 cosmetic studios have the alized skin-care cream in a matter of minutes. “Conven tional tools for these skin analyses, the results of which they send to skin-care products may contain too much of certain active the factory in Stuttgart. It produces the cream on demand and ingredients for a given individual, and that can be detrimental then sends it straight to the customer. The company plans to to their skin,” says Viktor Balzer, Skinmade founder and researchfellowatFraunhoferIPA.Skinmadetakesadifferent approach, tailoring the ingredients and dosage to the indi- roll out a full skincare system in 2020 with a problem solver, personalized serum and cleanser. Skinmade also wants to offer medical ointments, for example, for diabetics and people with vidual’s skin and its current condition. This produces a far neurodermatitis, at some point in the future. more effective cream. This concept’s success is also down to its no-fuss skin analysis. A beauty counselor gauges skin properties on the forehead, cheek and below the corner of the mouth. One probe takes moisture readings while another device measures the oil content on the skin’s surface. Each reading takes no more than 30 seconds. The results appear on the touch display. An auto- mated routine determines the optimum care for the current skin condition based on this analysis. The customer can then decide whether they want a light or a heavy cream with or 123

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R E V I E W O F F R A U N H O F E R R E S E A R C H Fraunhofer Institute spin-offs PerioTrap Pharmaceuticals GmbH A highly specific agent to combat periodontitis Periodontitisisaverycommondisease.Morethanhalfof all adults in Germany suffer from this bacterially induced inflammationofthegums.Thereisnocure,andmerely ad ministering broad-spectrum antibiotics is not a viable so lution. A research team at the Fraunhofer Institute for Cell TherapyandImmunologyIZIandtheMolecularDrugBio- chemistryandTherapyDevelopment(MWT)branchlabatHalle joined forces with scientists from the University of Krakow and the Berne Dental Clinic to develop and patent a highly specificactiveingredienttotreatperiodontitis.PerioTrapPhar- maceuticals, a start-up launched in 2018, is striving to bring this new development to market. Researchers from Halle and the Fraunhofer-Gesellschaft have a stake in the company as its founders. “The new active substance is doubly selective – that is, it is absorbed exclusively by and acts only on the germs that cause There is a long way to go yet before the agent is licensed and can be brought to market. First it has to undergo a preclinical trial, where it will be tested for toxicity and on living organisms. This preclinical phase will be followed by clinical trials to test the agent in studies with humans. MonitorFish GmbH Smart means of monitoring aquacultures Lessthanperfectconditionsfortheirstockscostfishfarms 40 percent of their potential earnings on average. Launched in January of 2019, MonitorFish has set out to put an end to those losses. Its core technology is an AI-based system to monitorthewellbeingoffishinaquacultures,whichitdevel- oped in collaboration with the Fraunhofer Institute for Com- puter Graphics Research IGD. The system reviews data sourced from sensors and cameras to analyze growth indicators and recommendactionsforspecificspecies.“Thefishyieldcanbe doubled with our technology,” says CEO and co-founder the disease. Administered locally in the periodontal pocket, it Chaitanya Dhumasker. does not stress the organism. And it mitigates the development ofresistances,”saysDr.MirkoBuchholzfromFraunhoferIZI, oneofthetwomanagingdirectorsandfoundersofPerioTrap. An initial idea for a delivery system has been de veloped to optimizethedrug’seffect:Anabsorbablerodasflexibleas a thread releases the test agent over the course of 42 days, a very long period by any count. The state of Saxony-Anhalt supported this development effort by funding a project that sawtheFraunhoferHigh-PerformanceCenterChemical and Biosystems Technology join forces with the Fraunhofer Institute for Microstructure of Materials and Systems IMWS and the universities of Bern and Halle. Thecompanyaimstoprovideexpertisetofishfarmsby re commending actions at the earliest opportunity. “We are fasterthanthefishexperts,”saysDhumasker.Thisearly warningsystempreventsacatastrophiclossoffishandmiti- gatesfarmers’financialrisk.Optimizedamountsoffeedand fertilizers also reduce environmental pollution. 124

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The German Federal Ministry of Education and Research (BMBF)fundedtheMonitorFishteamin2018aspartofits TechBridge project. The team also received funding from the FTTF(FraunhoferTechnologie-TransferFonds)in2019.The start-up came up with the camera technology; Fraunhofer developed the smart algorithm and granted the start-up a license for its underwater image recognition software. The “Psoidoofferstheonlysolutionwhenasystemrequires authenticated data with the real identity being protected and unique IDs for data analysis,” says CEO Steffen Holly. The GeneralDataProtectionRegulation(GDPR),whichharmonized data privacy laws in all EU member states when it came into forceinMay2018,gavePsoidoGmbH’sbusinessmodelabig boost. “Companies now have to live up to their data pro- company is now readying the system’s rollout. Tests are under- tection obligations. That drives our business,” says Holly. A patent held by Fraunhofer IDMT provided the launch pad for this spin-off. Holly, at the time a business unit manager, saw the potential and prepared the spin-off with a helping hand from Fraunhofer Venture. “The programs of the Venture department afforded us the opportunity to try things out before we ventured into the market,” says Holly. The most suitable partners were soon found in the logistics and mobility sectors.PsoidoGmbHreceivedstart-upfinancingfromthe FTTF(FraunhoferTechnologie-TransferFonds).Thecompany is now planning to branch the software solution out into new linesofbusinesssuchasbanking(financeandinsurance). way with three pilot customers in Germany, Austria, and Switzerland to further improve the cameras and the algorithm. Thesetestshavealreadyyieldedinsights.Forexample,fishdo not thrive under bright camera light, which is why the system hasbeenmodifiedtoworkwithredlight.Thecompanyexpects itspilotcustomerstosoonbecomebonafidecustomerswhen it ramps up for real business in May 2020. Psoido GmbH The ticket to anonymous pseudonyms Many companies’ success hinges on their ability to analyze business data in great detail. This often runs counter to data privacyconcerns.PsoidoGmbHhasfoundawayoutofthat conundrum. Spun off from the Fraunhofer Institute for Digital Media Technology IDMT in late June 2019, this enterprise provides a software-as-a-service solution that severs the ties between real and virtual identities. This enables companies to conduct sophisticated data analyses without the source being traceable.Inotherwords,Psoidoenablesownerstoretain sovereignty over their data, yet share it easily and quickly. 125

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FINANCIAL REPORT B A L A N C E S H E E T A T D E C E M B E R 3 1 , 2 0 1 9 I N C O M E S T A T E M E N T F O R T H E F I N A N C I A L Y E A R 2 0 1 9 R E C O N C I L I A T I O N B E T W E E N I N C O M E S T A T E M E N T A N D P E R F O R M A N C E S T A T E M E N T ( C A S H - B A S I S A C C O U N T I N G ) 2 0 1 9 P E R F O R M A N C E S T A T E M E N T F O R I N D I V I D U A L F R A U N H O F E R E N T I T I E S E X C E R P T S F R O M T H E N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2 0 1 9 C O N V E N I E N C E T R A N S L A T I O N O F T H E G E R M A N I N D E P E N D E N T A U D I T O R ’ S R E P O R T

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BALANCE SHEET AT DECEMBER 31, 2019 FRAUNHOFER-GESELLSCHAFT ZUR FÖRDERUNG DER ANGEWANDTEN FORSCHUNG E.V., MÜNCHEN ASSETS Current assets Cash and cash equivalents Marketable securities € € 91,339,513.30 415,311,929.94 2019 € 2018 € (1000) 162,500 384,659 Accounts receivable and other current assets Trade receivables 216,125,455.38 222,741 relating to base funding relating to project billing, including contract research relating to pension and compensated Receivables from the federal and state governments absence provisions Accounts receivable from associated companies Other current assets Inventories Prepaid expenses and deferred charges 103,002,368.39 204,330,271.08 80,601,000.00 387,933,639.47 116,378.21 122,417,827.70 726,593,300.76 75,545,547.78 80,941,290.43 25,399 146,901 72,324 244,624 13,132 127,762 608,259 61,922 92,208 1,309,548 55,310 2,060,104 20,624 3,445,586 33,626 1,389,731,582.21 50,145,374.68 2,250,260,805.70 18,248,218.97 3,708,385,981.56 21,820,363.23 Total current assets Intangible assets Property, plant and equipment Financial assets Total assets Trust assets 128

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LIABILITIES AND EQUITY Current liabilities Trade payables Unappropriated grants from the federal and state governments relating to base funding relating to project billing Accounts payable to associated companies Other current liabilities Total current liabilities Deferred income Provisions for pensions and similar obligations Other provisions Special reserves License-fee revenue reserve Grants relating to non-current assets Grantsusedtofinancecurrentassets Present value of deferred income from patent deal Equity Capitalofthenon-profitorganization Carried forward Retained earnings Restricted reserve Total equity Total liabilities and equity Trust liabilities F I N A N C I A L R E P O R T € € 2019 € 2018 € (1000) 110,589,737.50 109,552 194,121,057.29 99,788,602.24 293,909,659.53 650,851.70 35,578,922.28 440,729,171.01 4,713,780.57 9,101,000.00 187,408,458.78 415,508,285.76 2,305,946,247.30 265,213,563.44 64,409,844.51 3,051,077,941.01 15,287,367.41 52,387.78 15,339,755.19 15,875.00 15,355,630.19 3,708,385,981.56 21,820,363.23 187,631 110,068 297,699 1,224 6,384 414,859 122 9,224 164,347 384,908 2,120,977 265,152 69,486 2,840,523 15,233 54 15,287 1,224 16,511 3,445,586 33,626 129

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INCOME STATEMENT FOR THE FINANCIAL YEAR 2019 FRAUNHOFER-GESELLSCHAFT ZUR FÖRDERUNG DER ANGEWANDTEN FORSCHUNG E.V., MÜNCHEN € € 2019 € 2018 € (1000) 846,646,386.66 157,684,290.51 1,004,330,677.17 768,020 123,336 891,356 594,856,665.44 22,602,915.75 183,247,347.23 1,874,319.10 724,416,768.22 166,615,723.58 1,693,613,739.32 Revenue from base funding Federal government State governments Revenue from own activities Revenue from research and development activities Contracts Federal government: Project funding State governments: Project funding Business, industry and trade associations Researchfundingorganizationsandothersources Contracts Other revenue Total revenue Increase in work in progress Otherinternallyconstructedandcapitalizedassets Other operating income Income from equity investments Other interest and similar income Total base funding and revenue from own activities Change in special reserves License-fee revenue reserve Grants relating to non-current assets Grantsusedtofinancecurrentassets 526,780 14,543 161,994 2,329 691,861 188,249 1,585,756 5,446 1,591,202 29,127 8,179 43,326 4,298 1,233 86,163 6,528,275.43 1,700,142,014.75 8,884,447.53 8,963,808.42 33,991,831.40 1,802,769.54 2,001,592.57 55,644,449.46 2,760,117,141.38 2,568,721 – 30,600,000.00 – 189,589,101.13 – 61,590.43 – 220,250,691.56 – 46,000 – 161,354 – 17,597 – 224,951 Total income available to cover expenditure 2,539,866,449.82 2,343,770 130

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Cost of materials Personnel expenses Amortization of intangible assets and depreciation of property, plant and equipment Other operating expenses Amortization of financial assets and current marketable securities Interest and similar expenses Total expenditure Net income for the year Transfer from reserves Transfer to reserves Retained earnings Allocation to capital of the non-profit organization € € 406,171,074.84 1,465,299,974.89 288,293,263.71 372,523,114.87 8,066,293.90 668,190.32 F I N A N C I A L R E P O R T 2019 € 2018 € (1000) 381,115 1,350,182 282,978 324,312 4,452 675 2,541,021,912.53 2,343,714 – 1,155,462.71 1,211,050.49 – 3,200.00 52,387.78 – 52,387.78 – 56 – – 2 54 – 54 – 131

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RECONCILIATION BETWEEN INCOME STATEMENT AND PERFORMANCE STATEMENT (CASH-BASIS ACCOUNTING) 2019 Income/receipts Income/receipts from base funding from research and development activities from other sources Increase in work in progress Otherinternallyconstructedandcapitalizedassets Other income Total income/receipts Change in special reserves License-fee revenue reserve Grants relating to non-current assets Allocations to special reserves (capital expenditure) Reversal of special reserves (depreciation) Grantsusedtofinancecurrentassets Change in grants receivable relating to pension and compensated absence provisions Total business volume (cash basis) Performance statement € Non-profit organization capital € Reconciling items € Income statement € 996,053,877.17 1,706,236,752.01 397,237.70 8,963,808.42 39,845,904.02 2,751,497,579.32 8,276,800.00 – 12,623,012.69 6,131,037.73 1,004,330,677.17 1,693,613,739.32 6,528,275.43 8,884,447.53 8,884,447.53 8,963,808.42 342,762.06 – 2,392,472.57 37,796,193.51 – 30,600,000.00 – 30,600,000.00 –61,590.43 8,276,800.00 2,759,712,788.89 – 481,058,980.83 – 481,058,980.83 12,464.92 291,457,414.78 291,469,879.70 –61,590.43 – 6,306,500.00 355,226.98 – 220,201,566.05 2,539,866,449.82 132

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F I N A N C I A L R E P O R T Performance statement € Non-profit organization capital € Reconciling items € Income statement € 373,241,585.57 1,478,534,011.33 23,917.77 5,640.00 32,905,571.50 – 13,239,676.44 406,171,074.84 1,465,299,974.89 396,272,263.54 182,139.43 1,298,992.49 288,111,124.28 – 16,313,656.94 288,293,263.71 381,257,599.09 2,541,021,912.53 Expenditure/disbursements Expenditure/disbursements Expenditure as per the income statement Cost of materials Personnel expenses Amortizationofintangibleassetsand depreciation of property, plant and equipment Other operating expenses Change in special reserves License-fee revenue reserve Capital expenditure (current and major infrastructure) Net income for the year Total business volume (cash basis) 30,600,000.00 – 30,600,000.00 481,064,928.45 – 481,064,928.45 2,759,712,788.89 – 1,155,462.71 – 1,155,462.71 355,226.98 – 220,201,566.05 2,539,866,449.82 133

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PERFORMANCE STATEMENT FOR INDIVIDUAL FRAUNHOFER ENTITIES Fraunhofer Institute/ Research Institution for Fraunhofer ICT Group AlgorithmsandScientific Computing SCAI Sankt Augustin Applied and Integrated Security AISEC Garching Applied Information Technology FIT Cognitive Systems IKS Communication, Information Sankt Augustin München Processing and Ergonomics FKIE Wachtberg Computer Graphics Research Expenses Operating expenses 2019 € (1000) 12,346.2 10,541.3 21,117.6 6,337.0 9,048.1 IGD Darmstadt, Rostock 16,352.3 Capital expenditure 2019 € (1000) Income From external sources Base funding 1 2019 € (1000) 2019 € (1000) 612.5 167.9 601.3 157.8 238.5 858.9 232.7 504.6 9,323.5 3,635.2 6,836.3 3,873.0 15,717.1 2,985.4 6,001.8 3,509.4 6,923.5 2,363.1 10,128.0 7,083.1 5,815.0 5,759.6 11,876.3 3,159.6 Ilmenau, Oldenburg 11,341.9 Kaiserslautern 14,531.3 Sankt Augustin Kaiserslautern 31,376.7 2,629.9 22,682.7 11,323.9 24,353.9 11,126.0 32,041.0 865.3 587.2 964.7 19,973.9 5,245.3 7,058.2 4,655.0 24,944.2 8,061.5 34,558.7 1,640.5 25,991.0 10,208.2 8,012.5 5,517.6 420.7 119.9 6,568.9 1,864.2 4,458.6 1,179.0 11,999.1 1,828.5 11,913.9 1,913.7 296.5 14.6 103.9 207.1 260,897.8 12,445.4 193,300.4 80,042.7 Digital Media Technology IDMT Experimental Software Engineering IESE Industrial Mathematics ITWM Intelligent Analysis and Information Systems IAIS Medical Image Computing MEVIS Bremen Open Communication Systems FOKUS Optronics, System Technologies and Image Exploitation IOSB Secure Information Technology SIT Software and Systems Engineering ISST Transportation and Infrastructure Systems IVI Centraloffice–FraunhoferICT Group Berlin Karlsruhe, Ettlingen, Ilmenau, Lemgo Darmstadt Dortmund Dresden Berlin 1 Figures rounded on the basis of real values. 134

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F I N A N C I A L R E P O R T Expenses Operating expenses 2019 € (1000) 8,086.2 36,970.2 7,681.7 28,571.3 Capital expenditure 2019 € (1000) Income From external sources Base funding 1 2019 € (1000) 2019 € (1000) 564.1 1,233.6 143.6 620.6 5,265.7 32,075.8 3,384.6 6,128.0 2,728.4 5,096.8 22,364.3 6,827.7 2,714.6 16.7 1,873.7 857.6 84,024.0 2,578.6 64,307.9 22,294.7 16,811.8 676.3 13,582.8 3,905.2 39,924.4 1,857.3 27,507.6 14,274.0 Fraunhofer Institute/ Research Institution for Fraunhofer Group for Innovation Research – INNOVATION Center for International Management and Knowledge EconomyIMW Industrial Engineering IAO Information Center for Leipzig Stuttgart Planning and Building IRB Stuttgart Systems and Innovation Research ISI Technological Trend Analysis INT Karlsruhe Euskirchen Fraunhofer Group for Life Sciences BiomedicalEngineeringIBMT Cell Therapy and ImmunologyIZI Sulzbach,St.Ingbert Leipzig,Potsdam-Golm Interfacial Engineering and Biotechnology IGB Stuttgart, Leuna 25,185.3 1,221.4 18,321.7 8,085.0 Marine Biotechnology and Cell Technology EMB Lübeck 2,712.7 6.2 1,221.7 1,497.3 Molecular Biology and Applied Ecology IME Aachen, Schmallenberg 41,800.2 2,761.1 32,457.9 12,103.4 Process Engineering and Packaging IVV Toxicology and Experimental Medicine ITEM Freising, Dresden Hannover, Braunschweig, Regensburg 23,885.1 1,259.7 19,720.0 5,424.8 32,473.6 3,673.2 23,357.2 12,789.6 182,793.1 11,455.2 136,168.8 58,079.4 Fraunhofer Group for Light & Surfaces Applied Optics and Precision Engineering IOF Laser Technology ILT Material and Beam Technology IWS Organic Electronics, Electron Beam and Plasma Technology FEP Physical Measurement Techniques IPM Surface Engineering and Thin Films IST Jena Aachen Dresden Dresden Freiburg 36,096.2 42,253.5 6,788.3 8,377.6 32,993.6 33,343.7 9,891.0 17,287.4 31,881.6 2,924.9 24,590.6 10,216.0 24,032.4 1,025.3 17,335.2 7,722.4 19,876.2 568.6 12,836.6 7,608.3 Braunschweig 12,768.4 1,387.7 7,093.6 7,062.4 166,908.3 21,072.4 128,193.2 59,787.4 1 Figures rounded on the basis of real values. 135

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F I N A N C I A L R E P O R T Performance statement for individual Fraunhofer entities Fraunhofer Institute/ Research Institution for Fraunhofer Group for Microelectronics Applied Solid State Physics IAF Electronic Nano Systems Freiburg Expenses Operating expenses 2019 € (1000) Capital expenditure 2019 € (1000) Income From external sources 2019 € (1000) 14,642.8 2,802.1 11,886.1 ENAS Chemnitz 15,315.8 1,232.8 12,372.7 Base funding 1 2019 € (1000) 5,558.8 4,175.8 High Frequency Physics and Radar Techniques FHR Integrated Circuits IIS Integrated Systems and Wachtberg Erlangen, Nürnberg, Dresden 15,154.1 1,004.8 12,828.6 3,330.2 174,098.7 6,957.8 140,054.1 41,002.3 Device Technology IISB Erlangen 28,559.4 2,204.7 23,329.3 7,434.9 Microelectronic Circuits and Systems IMS Microsystems and Solid State Technologies EMFT Photonic Microsystems IPMS Reliability and Microintegration IZM SiliconTechnologyISIT Telecommunications, Heinrich-Hertz-Institut,HHI Centraloffice–ResearchFab Duisburg München Dresden Berlin, Dresden Itzehoe Berlin,Goslar 38,671.6 1,339.4 23,025.1 16,985.9 15,376.7 44,685.9 35,658.3 25,578.5 57,265.7 741.5 1,097.3 2,126.1 1,466.6 5,154.5 10,996.7 31,353.6 28,023.3 17,309.5 5,121.5 14,429.5 9,761.0 9,735.6 48,329.5 14,090.7 Microelectronics Germany (FMD) Berlin 1,966.8 483.6 1,173.4 1,277.1 466,974.2 26,611.0 360,681.9 132,903.3 Fraunhofer Group for Production Additive Manufacturing Technologies IAPT Casting, Composite and Processing Technology IGCV Environmental, Safety and EnergyTechnologyUMSICHT Hamburg Augsburg, Garching Oberhausen, Sulzbach-Rosenberg Factory Operation and Automation IFF Large Structures in Magdeburg Production Engineering IGP Rostock 8,937.4 787.1 6,163.5 3,561.0 16,147.5 1,805.9 14,656.1 45,205.5 4,236.2 39,968.4 3,297.3 9,473.3 20,260.1 9,575.9 489.4 268.4 15,641.3 5,108.2 7,226.1 2,618.2 Machine Tools and Forming TechnologyIWU Manufacturing Engineering and Automation IPA Material Flow and Logistics IML Mechatronic Systems Design IEM Production Systems and Design Technology IPK Production Technology IPT Chemnitz 45,477.2 3,500.5 33,789.0 15,188.8 Stuttgart Dortmund, Hamburg Paderborn Berlin Aachen 66,634.5 33,136.6 11,805.2 20,038.0 28,846.0 4,110.3 1,468.0 640.5 2,113.6 836.9 55,082.5 26,338.5 10,620.0 13,975.2 21,436.4 15,662.2 8,266.1 1,825.7 8,176.4 8,246.5 306,063.8 20,256.8 244,897.0 81,423.6 1 Figures rounded on the basis of real values. 136

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Fraunhofer Institute/ Research Institution for Expenses Operating expenses 2019 € (1000) Capital expenditure 2019 € (1000) Income From external sources Base funding 1 2019 € (1000) 2019 € (1000) 24,146.3 2,421.5 17,802.5 27,773.4 1,070.0 19,786.5 8,765.4 9,057.0 Fraunhofer Group for Materials and Components – MATERIALS Applied Polymer Research IAP Building Physics IBP Ceramic Technologies and Systems IKTS Chemical Technology ICT, Polymer Potsdam-Golm Stuttgart, Holzkirchen Dresden, Hermsdorf 58,204.3 6,115.9 48,469.4 15,850.8 EngineeringDepartment Pfinztal,Karlsruhe 27,460.1 3,475.5 20,954.0 9,981.6 Energy Economics and Energy System Technology IEE Kassel 26,871.7 1,205.9 22,869.8 5,207.7 Energy Infrastructures and Geothermal Systems IEG High-Speed Dynamics, Ernst-Mach-Institut, EMI Manufacturing Technology Bochum Freiburg 287.0 0.0 0.0 287.0 9,047.7 1,237.8 7,054.7 3,230.8 and Advanced Materials IFAM Bremen, Dresden, Stade 52,471.0 4,054.4 41,947.8 14,577.6 Mechanics of Materials IWM Microengineering and MicrosystemsIMM Microstructure of Materials and Systems IMWS Nondestructive Testing IZFP SilicateResearchISC Solar Energy Systems ISE Structural Durability Freiburg Mainz Halle 21,742.8 1,040.1 15,247.1 11,383.2 1,306.8 4,620.7 7,535.8 8,069.3 24,071.1 3,447.6 20,200.9 7,317.8 Saarbrücken Würzburg,Bronnbach, Garching, Bayreuth 14,309.1 629.1 9,315.2 5,622.9 33,474.3 1,037.7 21,266.1 13,245.9 Freiburg, Halle 92,433.8 10,396.0 88,394.4 14,435.4 and System Reliability LBF Darmstadt 28,919.8 2,907.9 19,627.9 12,199.8 Wind Energy Systems IWES Wood Research, Bremerhaven, Kassel 28,390.7 10,183.1 34,812.5 3,761.3 Wilhelm-Klauditz-Institut,WKI Braunschweig 15,980.0 2,838.5 13,863.6 4,954.9 496,966.2 53,367.9 406,233.1 144,101.0 1 Figures rounded on the basis of real values. 137

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F I N A N C I A L R E P O R T Performance statement for individual Fraunhofer entities Fraunhofer Institute/ Research Institution for Additional research funding 2 ATHENE – Computer Graphics Research IGD ATHENE – Secure Expenses Operating expenses 2019 € (1000) Capital expenditure 2019 € (1000) Income From external sources Base funding 1 2019 € (1000) 2019 € (1000) 0.0 0.0 1,369.6 10,558.1 Darmstadt 1,291.7 78.0 Information Technology SIT Darmstadt 9,212.8 1,345.3 Research Fab Battery Cells (FFB) – Production Technology IPT Münster 2,093.2 0.0 2,093.2 0.0 Applied Solid State Physics IAF Freiburg 16,769.3 3,876.4 11,275.0 9,370.7 Chemical Technology ICT, Department of Energetic Materials Communication, Information Processing and Ergonomics FKIE High Frequency Physics and Pfinztal 14,483.6 833.1 4,375.0 10,941.8 Wachtberg 27,371.6 2,019.7 15,945.5 13,445.7 Radar Techniques FHR Wachtberg 18,236.2 2,310.1 8,935.6 11,610.6 High-Speed Dynamics, Ernst-Mach-Institut, EMI Freiburg 16,792.5 6,989.1 13,138.6 10,643.0 Optronics, System Technologies and Image Exploitation IOSB, Ettlingen branch Technological Trend Analysis INT Ettlingen Euskirchen 22,438.7 7,496.6 5,182.8 456.0 19,931.9 3,334.7 7,689.6 4,617.9 136,186.1 23,090.4 79,029.4 80,247.1 Centrally managed entities Fraunhofer headquarters Institute Center Birlinghoven Institute Center Stuttgart General overhead costs München Sankt Augustin Stuttgart 39,625.9 549.8 83.9 137,574.8 2,509.1 46.9 146.2 2,059.2 5,526.9 56.4 8.5 9,531.4 36,608.1 540.3 221.5 130,102.6 Major infrastructure capital expenditure 305,425.8 127,508.6 177,917.2 Performance statement 177,834.4 310,187.3 142,631.9 345,389.8 2,278,647.9 481,064.9 1,755,443.7 1,004,269.1 Total business volume (cash basis) 2,759,712.8 1 Figures rounded on the basis of real values. 2 Not including contract research activities of the defense-related institutes, plus ATHENE and FFB. 138

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EXCERPTS FROM THE NOTES TO THE FINANCIAL STATEMENTS 2019 I. General disclosures Fraunhofer-GesellschaftzurFörderungderangewandten Forschunge.V.,headquarteredinMunich,isanon-profit organizationregisteredwiththedistrictcourtofMunich under the reference code VR 4461. TheannualfinancialstatementsfortheyearendingDecember31, 2019 were prepared voluntarily and in accordance with the andequipmentandonfinancialassets,ontheotherhand, isrecognizedatcostonacquisitionoftheassets.Therefore the operating budget does not include any depreciation/ amortizationexpensesontheseitems. In order to provide full accountability for grants received from funding agencies, the performance statement for the organizationasawholeisreconciledtotheincomestatem- ent format required by public authorities by eliminating the requirements of the German Commercial Code (HGB) as effect of non-cash income and expense items. The amounts applicable to large corporate entities. The income statement presented in the income statement include items showing was prepared in accordance with the total cost method. The basis of the Fraunhofer-Gesellschaft’s accounting is the performancestatement,fromwhichtheannualfinancial statements are derived. The performance statement is adapted to the requirements the changes in payables and receivables and in depreciation/ amortizationchargescomparedwiththepreviousyear.On the face of the balance sheet, these reconciliation items are includedinthespecialreservesforgrantsrelatingtofixed assetsandforgrantsusedtofinancecurrentassets.The figuresfromtheperformancestatementareexplainedinthe management report, where they are broken down into the of the public funding authorities in terms of format and areas of contract research, additional research funding, and reconciliation. It provides a breakdown of operating expenses major infrastructure capital expenditure. and capital expenditure at three different levels: individual institutes,headquarters,andtheorganizationasawhole. The components of the operating budget are presented as income or expenses in accordance with generally accepted accounting principles. Capital expenditure on property, plant Annual financial statements of the Fraunhofer-Gesellschaft Income statement Reconciliation between income statement and performance statement Performance statement Reconciliation with income statement format required by public funding authorities Presentation of annual accounts of the Fraunhofer-Gesellschaft Balance sheet Management report Notes to thefinancial statements Budgeted operating expenses and capital expenditure at Fraunhofer-Gesellschaft level “total business volume (cash basis)” Separatefinancialstatementsoftheinstitutes/headquarters Operating budget Capital expenditure Costs(excludingdepreciationandamortization) Expenses Income Income 139

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F I N A N C I A L R E P O R T Excerpts from the notes to the financial statements 2019 II. Recognition and measurement methods Intangible assets and property, plant and equipment are measuredatamortizedcost,i.e.thecostofacquisition orconstructionlessdepreciation/amortizationcalculated on a straight-line basis. Intangibleassetsareamortizedoverausefullifeof three years. Institute buildings on own and third-party land are depreciated as follows: – Added before April 1985: at 2 percent – Added between April 1, 1985 and December 31, 2000: at 4 percent – Added after January 1, 2001: at 3 percent Ausefullifeoffiveyearsisappliedtomovableitems of property, plant and equipment. However, a useful life of four years is assumed for communication, video and Since the non-current assets presented in the ordinary accounts arefinancedbygovernmentgrants,thespecialreservefor grants relating to non-current assets is reduced by an amount correspondingtothedepreciation/amortizationofthese assets. Therefore, these adjustments have no impact on the income statement. Work in progress is measured at the cost of construction or fair value, whichever is lower. Construction costs include applicable personnel expenses, cost of materials, general administrativeexpenses,anddepreciation/amortization charges. Advance payments received (including VAT) are recognizedunderinventories. Tradereceivablesandotherassetsarerecognizedattheir nominal value. Irrecoverable debts are remeasured at the reporting date. The overall non-payment risk is limited by creating a provision for doubtful debts corresponding to 2 percent of the total amount of accounts receivable. audio systems and of three years for IT hardware. Motor Currentmarketablesecuritiesarerecognizedatcost. vehicles are depre ciated over a useful life of four years. Financial assets are measured at cost or at fair value, whichever is lower. Cashandcashequivalentsarerecognizedattheirnominal value. Payments made before the reporting date for which the associatedbenefitswillbereceivedinafutureperiodare recognizedasprepaidexpensesinthebalancesheet. 140

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The Fraunhofer-Gesellschaft makes use of the instrument providedforinitsfinancialstatutesofrecognizingabalance sheet reserve, which mainly comprises revenues from the Other provisions comprise amounts set aside to cover all identifiablerisksandcontingentliabilities.Theseprovisionsare measured in accordance with Section 253 (1) of the German licensing of audio-encoding technologies. The purpose of thisreserveistoenabletheorganizationtofinanceitsown pre-competitive research in the medium term. Commercial Code (HGB) on the basis of a reasonable estimate of the most probable outcome. Other provisions for liabilities due in more than one year are discounted at the average Fundingusedtofinancenon-currentassetsisallocatedto the special reserve for grants relating to non-current assets. by the Deutsche Bundesbank in December 2019, pursuant to Section 253 (2) of the German Commercial Code (HGB). A separate special reserve is used to account for grants used tofinancecurrentassets. Pro visions for phased early retirement are calculated on the basis of the contracts already concluded and on an estimate market interest rate for loans of a similar maturity as calculated Provisions for pensions and similar obligations, for which the Fraunhofer-Gesellschaft has a reinsurance policy in place, are measuredonthebasisofthecapitalizedamountcalculatedby theinsurancecompanyatthereportingdate.Thecapitalized amounts are calculated in accordance with the information provided by the insurance company and on the basis of DAV 2004 R guideline tables. Adjustments to current pensions and to applicable income are not taken into account. If there is no reinsurance policy in place, or if the settlement cost of the pensionobligationsexceedsthecapitalizedamountcalculated bythereinsurer,theamountrecognizedasaprovisionis calculated in accordance with an expert opinion based on actuarial evidence. The settlement amount of the pension of those to be concluded in the future. Liabilities are measured at the settlement amount. Paymentsreceivedbeforethereportingdateforbenefitsto bedeliveredinafutureperiodarerecognizedinthebalance sheet as deferred income. Amountsrecognizedfortransactionsinforeigncurrenciesare translated at the applicable hedging rates of the respective currencies.Intheannualfinancialstatements,foreigncurrency holdings are translated at the average spot exchange rate prevailing on the reporting date. obligation is calculated using the present value method (method Items in transit are noted as trust assets and trust liabilities for calculating current single premiums). A 10-year-average in a separate line at the foot of the balance sheet for the actuarial interest rate of 2.71 percent was used in the calculation Fraunhofer-Gesellschaft. in accordance with Section 253 (2) of the German Commercial Code (HGB), along with the 2018 G Heubeck guideline tables. The following independent auditor’s report is based on the balance sheet at December 31, 2019, the income statement forthefinancialyear2019andthefullnotestothe2019 financialstatementsandthemanagementreport2019. 141

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CONVENIENCE TRANSLATION OF THE GERMAN INDEPENDENT AUDITOR’S REPORT Note: This is a convenience translation of the German original. Audit Opinions Solely the original text in German language is authoritative. INDEPENDENT AUDITOR’S REPORT TotheFraunhofer-GesellschaftzurFörderungder angewandten Forschung e. V., Munich 142 Wehaveauditedtheannualfinancialstatementsof Fraunhofer-GesellschaftzurFörderungderangewandten Forschung e. V., Munich, which comprise the balance sheetasatDecember31,2019,andthestatementofprofit andlossforthefinancialyearfromJanuary1,2019to December 31,2019andnotestothefinancialstatements, including the presentation of the recognition and measurement policies. In addition, we have audited the managementreportofFraunhofer-Gesellschaftzur FörderungderangewandtenForschunge.V.,Munichfor thefinancialyearfromJanuary1,2019toDecember31, 2019. In our opinion, on the basis of the knowledge obtained in the audit, – theaccompanyingannualfinancialstatementscomply, in all material respects, with the requirements of German commercial law applicable to business corporations and give a true and fair view of the assets, liabilities and financialpositionoftheCompanyasatDecember31, 2019andofitsfinancialperformanceforthefinancialyear from January 1, 2019 to December 31, 2019 in compliance with German Legally Required Accounting Principles, and – the accompanying management report as a whole provides an appropriate view of the Company’s position. In all material respects, this management report is consistent withtheannualfinancialstatements,complieswith German legal requirements and appropriately presents the opportunities and risks of future development. Pursuant to § 322 Abs. 3 sentence 1 HGB [German Commercial Code], we declare that our audit has not led to any reservations relating to the legal compliance of the annualfinancialstatementsandofthemanagementreport.

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F I N A N C I A L R E P O R T Basis for the Audit Opinions Weconductedourauditoftheannualfinancialstatementsand of the management report in accordance with § 317 HGB and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s Responsibilities Inpreparingtheannualfinancialstatements,theexecutive directors are responsible for assessing the Company’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financialreportingbasedonthegoingconcernbasis of accounting, provided no actual or legal circumstances conflicttherewith. for the Audit of the Annual Financial Statements and of Furthermore, the executive directors are responsible for the the Management Report” section of our auditor’s report. preparation of the management report that as a whole provides an appropriate view of the Company’s position and is,inallmaterialrespects,consistentwiththeannualfinancial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a management report that is in accordance with the applicable German legal requirements, and to be able toprovidesufficientappropriateevidencefortheassertions in the management report. The senate decides on the annual accounts to be submitted to the general assembly meeting. We are independent of the Company in accordance with the requirements of German commercial and professional law,andwehavefulfilledourotherGermanprofessional responsibilities in accordance with these requirements. We believethattheauditevidencewehaveobtainedissufficient and appropriate to provide a basis for our audit opinions ontheannualfinancialstatementsandonthemanagement report. Responsibilities of the Executive Directors and the Senate for the Annual Financial Statements and the Management Report The executive directors are responsible for the preparation oftheannualfinancialstatementsthatcomply,inallmaterial respects, with the requirements of German commercial law applicable to business corporations, and that the annual financialstatementsgiveatrueandfairviewoftheassets, liabilities,financialpositionandfinancialperformanceofthe Company in compliance with German Legally Required Accounting Principles. In addition, the executive directors are responsible for such internal control as they, in accordance with German Legally Required Accounting Principles, have determined necessary to enable the preparation of annual financialstatementsthatarefreefrommaterialmisstatement, whether due to fraud or error. 143

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F I N A N C I A L R E P O R T Convenience translation of the German independent auditor‘s report Auditor‘s Responsibilities for the Audit of the Annual Financial Statements and of the Management Report Our objectives are to obtain reasonable assurance about whethertheannualfinancialstatementsasawholearefree from material misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the Company’s position and, in all material respects,isconsistentwiththeannualfinancialstatements and the knowledge obtained in the audit, complies with the We exercise professional judgment and maintain professional skepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of theannualfinancialstatementsandofthemanagement report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidencethatissufficientandappropriatetoprovide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, German legal requirements and appropriately presents the forgery, intentional omissions, misrepresentations, or the opportunities and risks of future development, as well as to override of internal controls. issue an auditor’s report that includes our audit opinions ontheannualfinancialstatementsandonthemanagement report. – Obtain an understanding of internal control relevant to theauditoftheannualfinancialstatementsandof arrangements and measures (systems) relevant to the audit Reasonable assurance is a high level of assurance, but is of the management report in order to design audit not a guarantee that an audit conducted in accordance with§ 317HGBandincompliancewithGermanGenerally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems of the Company. will always detect a material misstatement. Misstatements – Evaluate the appropriateness of accounting policies used can arise from fraud or error and are considered material by the executive directors and the reasonableness of if, individually or in the aggregate, they could reasonably beexpectedtoinfluencetheeconomicdecisionsofusers takenonthebasisoftheseannualfinancialstatementsand this management report. estimates made by the executive directors and related disclosures. – Conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificantdoubtontheCompany’sabilitytocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the annual financialstatementsandinthemanagementreportor,if 144

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such disclosures are inadequate, to modify our respective We communicate with those charged with governance audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to be able to continue as a going regarding, among other matters, the planned scope and timing oftheauditandsignificantauditfindings,includingany significantdeficienciesininternalcontrolthatweidentify during our audit. concern. – Evaluate the overall presentation, structure and content Nuremberg, March 23, 2020 Rödl&PartnerGmbH Wirtschaftsprüfungsgesellschaft, Steuerberatungsgesellschaft signed Vogel Wirtschaftsprüfer signed Hahn Wirtschaftsprüfer oftheannualfinancialstatements,includingthe disclosures,andwhethertheannualfinancialstatements present the underlying transactions and events in a mannerthattheannualfinancialstatementsgiveatrue andfairviewoftheassets,liabilities,financialposition andfinancialperformanceoftheCompanyincompliance with German Legally Required Accounting Principles. – Evaluate the consistency of the management report with theannualfinancialstatements,itsconformitywithlaw, and the view of the Company’s position it provides. – Perform audit procedures on the prospective information presented by the executive directors in the management report.Onthebasisofsufficientappropriateauditevidence weevaluate,inparticular,thesignificantassumptionsused by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information. The auditor‘s report issued in German refers not to the foreign language version of the balance sheet and income statement, which are enclosed hereto as appendices, but to the original versionofthecompletefinancialstatementsandmanagement report prepared in the German language. 145

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STRUCTURE OF THE FRAUNHOFER-GESELLSCHAFT Constituent bodies and their tasks The Executive Board consists of the president and several The General Assembly is made up of the members of the Fraunhofer-Gesellschaft.Officialmembershipisopentomem- bers of the Senate and the Executive Board, institute directors other full-time members. Its duties include managing the and senior management, and members of the advisory boards. Fraunhofer-Gesellschaft and representing its interests both Ordinary membership is open to individuals and legal entities i nside and outside the organization. It formulates the basic who wish to support the work of the Fraunhofer-Gesellschaft. principles of the Fraunhofer-Gesellschaft’s science and researchpolicy,plansitsgrowthanditsfinances,ensures its base funding, organizes the distribution of funds among Honorary members may be elected from among the research staff and patrons of the Fraunhofer-Gesellschaft in recognition of outstanding services to the organization. The General the individual institutes and appoints the institute directors. Assembly elects the members of the Senate, discharges the A total of 74 institutes and research institutions at locations across Germany operate under the umbrella of the Fraunhofer-Gesellschaft. Each cultivates its own market presence and manages its own budget. They are organized in seven Fraunhofer Groups,eachdevotedtoaspecificarea of technology and tasked with coordinating thematically related areas within the Fraunhofer-Gesellschaft and harmonizing the Executive Board of its functions, and formulates decisions concerning amendments to the Statute. The Scientific and Technical Council (STC)istheorgani- zation’s internal advisory body. It consists of the directors and senior management of the institutes and an elected repre- sentativeofthescientificandtechnicalstaffofeachinstitute. The STC provides advice to the Executive Board and other market presence of the respective group members. The chairs constituent bodies in matters of fundamental importance. It of the Fraunhofer Groups, together with the members of the makes recommendations concerning research and HR policy, Executive Board, make up the Presidential Council of the expresses its opinions regarding the creation of new institutes Fraunhofer-Gesellschaft. The Presidential Council participates or the closure of existing institutes, and participates in the in Executive Board decision-making processes and, as such, appointment of new institute directors. is entitled to make proposals and recommendations and has the right to be heard. The Senate has around 30 members, comprising eminent figuresfromtheworldsofscience,businessandpubliclife, representatives of the federal and state governments, and membersoftheScientificandTechnicalCouncil(STC).The Senate’s duties include appointing members of the Executive Board,definingtheoutlinesofFraunhofer’sscienceand research policy, and formulating decisions concerning the establishment, devolution, merger or dissolution of research entities belonging to the Fraunhofer-Gesellschaft. The advisory boards are external advisory bodies of the institutes. They consist of representatives of science, business and public life. For each institute, approximately twelve mem- bers are appointed to the advisory board by the Executive Boardwiththeapprovalofthedirector(s)oftheinstitute.The advisory boards act as advisors to the institute directors and the Executive Board on matters concerning the research orientation and any structural changes to the institute. 148

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S E R V I C E Sturcture of the Fraunhofer-Gesellschaft PRESIDENTIAL COUNCIL appoints Senate Executive Board advises Scientific and Technical Council (STC) elects discharges General Assembly Group chairs delegates 74 Fraunhofer Institutes and Research Institutions delegates 7 Fraunhofer Groups – Information and Communication Technology – Innovation Research – INNOVATION – Life Sciences – Light & Surfaces – Materials and Components – MATERIALS – Microelectronics – Production organized into 7 groups advise Advisory boards External advisory bodies of the institutes Although the Fraunhofer-Gesellschaft is basically a decentralized organization, its structure also allows for a centrally agreed strategy and effective centralized management. Various constituent bodies and committees are responsible for coordination, consultation and leadership across the organization as a whole. 149

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MEMBERS, CONSTITUENT BODIES, COMMITTEES Members Senate – Kerstin Grosse – Dr. Manja Schüle The Fraunhofer-Gesellschaft has Members from the science KOMSA Kommunikation Brandenburg State Minister Chair of Supervisory Board, (duetoherappointmentas 1196 members, comprising 229ordinarymembers,959official and from public life and business communities, Sachsen AG members, 1 honorary senator – Prof. Dr.-Ing. and 8 honorary members. Some Heinz Jörg Fuhrmann Technologies Austria AG – Dr. Sabine Herlitschka CEOandCTO,Infineon of Science, Research and Cultural Affairs, only a member of the Senate from January 1 throughFebruary10,2020) members have multiple functions. Chair of the Senate of the – Sabine Herold – Prof. Dr. Wiltrud Treffenfeldt Fraunhofer-Gesellschaft, Managing Partner of Chairman of the Executive DELO Industrie Klebstoffe Members representing Honorary members Board, Salzgitter AG GmbH & Co. KGaA government institutions – Prof. Dr. phil. habil. Dr.-Ing. – Reiner Hoffmann – State secretary – Dr.-Ing. Peter Draheim Birgit Spanner-Ulmer President of the German Trade Susanne Bowen – Dr. Alfred Hauff Deputy chair of the Senate Union Confederation DGB State Ministry of Education, – Dr.-Ing. Horst Nasko of the Fraunhofer-Gesellschaft, – Dr. Nicola Leibinger-Kammüller Science and Culture, – Dr. Dirk-Meints Polter Director of Production President and Chairwoman Mecklenburg-Vorpommern – Prof. Dr.-Ing. Dr.-Ing. E. h. Dr. h.c.EkkehardD.Schulz – Prof. Dr. rer. nat. Erwin Sommer and Technology, Bayerischer of the Managing Board, – State secretary Tobias Dünow Rundfunk – Oliver Zipse TRUMPF GmbH & Co. KG Brandenburg State Ministry – Dr.-Ing. E. h. Friedhelm Loh of Science, Research and Deputy chair of the Senate Owner and Chairman of Cultural Affairs – Prof. Klaus-Dieter Vöhringer of the Fraunhofer-Gesellschaft, the Board of Management, – State secretary Andrea Franke – Dr. rer. pol. Hans-Ulrich Wiese CEO of BMW AG Friedhelm Loh Group State Ministry for Science, – Dr. Oliver Blume – Pär Malmhagen Culture and Tourism, Saxony Member of the Board of ChiefOperationOfficerof – MinDirig Dr. Ole Janssen Management, Volkswagen AG ABC Technologies German Federal Ministry for Chairman of the Executive Board, – Natalie Mekelburger President and CEO of Economic Affairs and Energy (BMWi) Dr. Ing. h. c. F. Porsche AG Coroplast Fritz Müller – Parliamentary secretary – Dr.-Ing. E. h. GmbH & Co. KG Thomas Rachel Michael von Bronk – Hildegard Müller German Federal Ministry – Dr. Roland Busch – Tankred Schipanski ChiefTechnologyOfficer Member of the German of Education and Research (BMBF) and Member of the Managing Bundestag, CDU/CSU – MinDirig Ralf Schnurr Board, Siemens AG parliamentary group German Federal Ministry ofDefence(BMVg) 150

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S E R V I C E – Dipl.-Ing. Wolfgang Lux Scientific and Technical – Prof. Dr.-Ing. Members delegated by the Scientific and Technical Deputy chair of the Fraunho- Council (STC) Council (STC) fer-Gesellschaft general works Welf-Guntram Drossel Fraunhofer Institute for – Prof. Dr. Peter Gumbsch council, Fraunhofer Institute The STC has 150 members, 85 of Machine Tools and Forming Director of the Fraunhofer for Manufacturing Engineering whom are delegated institute Technology IWU Institute for Mechanics of and Automation IPA directors or senior managers, while – Prof. Dr. techn. Materials IWM – State secretary – Dipl.-Ing. Stefan Schmidt Annette Storsberg 65 are elected representatives ofthescientificandtechnicalstaff Deputy chair of the STC, Ministry of Culture and Science of each institute. Fraunhofer Institute for of North Rhine-Westphalia Dieter W. Fellner Fraunhofer Institute for Com- puter Graphics Research IGD – Prof. Dr. Peter Gumbsch Material Flow and Logistics IML – Prof. Dr. Martin Stratmann Chair of the STC: Fraunhofer Institute for – Prof. Dr. Andreas Tünnermann President of the Max Planck – Prof. Dr. Andreas Tünnermann Mechanics of Materials IWM Chair of the STC, director Society for the Advancement Director of the Fraunhofer – Prof. Dr.-Ing. Albert Heuberger of the Fraunhofer Institute for of Science e.V. Institute for Applied Optics Fraunhofer Institute for Applied Optics and Precision – Dipl.-Ing. Dominik Toussaint and Precision Engineering IOF Integrated Circuits IIS Engineering IOF Chair of the Fraunhofer- – Prof. Dr. Gesellschaft general works Honorary senator council, Fraunhofer Institute Presidential Council – Prof. Dr.-Ing. Dr.-Ing. E. h. Dr. h.c.EkkehardD.Schulz for Systems and Innovation Research ISI The Presidential Council of the – Minister of State Fraunhofer-Gesellschaft is made Horst-Christian Langowski Fraunhofer Institute for Process Engineering and Packaging IVV Permanent guests Prof. Dr. Konrad Wolf up of the members of the Executive Board – Prof. Dr. Martina Brockmeier Ministry of Science, Executive Board and the chairs Chair, German Council of Education and Culture of of the eight Fraunhofer Groups, – Prof. Dr.-Ing. habil. Science and Humanities Rhineland-Palatinate named below: – Prof. Dr. Pascale Ehrenfreund Chair of the Executive Board, German Aerospace Center e.V. (DLR) Advisory boards – Prof. Dr.-Ing. Prof. E. h. Wilhelm Bauer Fraunhofer Institute for Prof. E. h. Dr.-Ing. E. h. mult. Dr. h.c.mult. Reimund Neugebauer (President) Industrial Engineering IAO – Prof. Dr. rer. nat. – State secretary In total, the advisory boards of – Prof. Dr.-Ing. Jürgen Beyerer Ralf Boris Wehrspohn Dr. Oliver Grundei the institutes consist of 838 Fraunhofer Institute for – Prof. Dr. rer. publ. ass. iur. Ministry of Education, members, some of whom hold Optronics, System Technologies Alexander Kurz Science and Cultural Affairs seats on the advisory boards of and Image Exploitation IOSB – Dipl.-Kfm. Andreas Meuer of Schleswig-Holstein more than one institute. – Prof. Dr. Karsten Buse Fraunhofer Institute for Physical Listed information valid Measurement Techniques IPM as at January 31, 2020 151

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FURTHER INITIATIVES AND RESEARCH INFRASTRUCTURES Fraunhofer 2022 Agenda and Future Commission Fraunhofer Strategic Research Fields As part of the work being performed to develop the Fraunhofer The Strategic Research Fields are the key areas consti tuting 2022 Agenda, the Future Commission, which was set up in the Fraunhofer-Gesellschaft’s research portfolio. They build on 2018, collaborated with many other internal units in 2019 to the impetus provided by the Key Strategic Initiatives, taking devise an organizational structure that will make the Fraunhofer- Gesellschaftfittofacethefuture.Theaimistogivetheorga- nization a clear, less complex structure that will enable it to these initiatives to the next level. Taking relevance, strategy and priorities into account, Fraunhofer is positioning itself in thefollowinginterdisciplinaryresearchfields: compete in the global research environment and also live up to the expectations of its stakeholders – namely policymakers, industryandthescientificcommunity. – ArtificialIntelligence – Digital Healthcare – Quantum Technologies – Hydrogen Technologies – Next Generation Computing – Bioeconomy – ResourceEfficiencyandClimateTechnologies Impact Goals The purpose of the Impact Goals is to help Fraunhofer hone itsprofilewithpolicymakers,industryandsociety.Thegoals address social and cross-industry challenges and highlight the areasinwhichFraunhofercancontributesignificantsolutions by taking an interdisciplinary approach: – Affordable healthcare – Energiewende accomplished – Security and resilient society – Digitalized value chain – Fully circular economy The following structural measures will be initiated in 2020: skills-based alliances, Fraunhofer Strategic Research Fields, and lead-market-oriented alliances. 152

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S E R V I C E Fraunhofer Groups Lead-market-oriented alliances Within the Fraunhofer model, groups are places of solidarity Alliances are instruments that Fraunhofer uses to address and the joint utilization of resources. Their mission is to safe- guardandevolvescientificexcellenceintheirrespectiveareas of expertise. industries that are key to Germany’s and Europe’s power of innovation. Above and beyond the individual institutes’ R&D activities, Fraunhofer intends to set up lead-market- oriented alliances in order to generate system solutions and cross- In 2020, each Fraunhofer Group will kick off a portfolio pro- institute offerings for selected industries – lead markets. cess, the goal of which is to record and structure the skills Among other things, business plans and roadmaps will be portfolio. The results of this process will be used to identify drawn up to support strategic and cross-institute technology any necessary changes to the structure of each group and, transfer. Activities will center around the interaction with possibly, to the group structure as a whole. relevant industry associations. There were 22 active Fraunhofer Alliances in 2019. They are to be fundamentally restructured from 2020 onward. It is planned to address the following lead markets: – Mechanical Engineering Industry – Construction and Real Estate – Chemical Industry – Energy Sector – Agriculture and Food Industry – Healthcare Sector – Digital Economy – Mobility Sector Former Fraunhofer Alliances that were not focused on a specificmarket,butonanareaofscientific/technicalresearch, may be continued in the form of thematic networks. 153

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S E R V I C E Further initiatives and research infrastructures Fraunhofer Clusters of Excellence Lighthouse projects In a multidisciplinary research program, teams from several With its lighthouse projects, the Fraunhofer-Gesellschaft sets Fraunhofer Institutes collaborate in six Fraunhofer Clusters of strategic priorities in pre-competitive research. By pooling Excellence, which in organizational terms function like virtual their expertise and involving industrial partners at an early platforms with agile structures. – Advanced Photon Sources – ultrashort-pulse laser systems offering unprecedented high-power output stage, the Fraunhofer Institutes involved in the projects aim toturnoriginalscientificideasintomarketableproductsas quickly as possible. – Cognitive Internet Technologies – key technologies for the cognitive web. With the research centers Machine Current lighthouse projects – Evolutionary Self-adaptation of Complex Production Learning, IoT-COMMs, Data Spaces Processes and Products – EVOLOPRO – Immune-Mediated Diseases – personalized therapy and – Cognitive Agriculture – COGNAC diagnostics for autoimmune pathologies and immune – Medical Data Driving an Integrated Cost-Intelligent dysregulation Model – MED²ICIN – Programmable Materials – materials with reversible – Machine Learning for Production – ML4P functionalities, which could replace sensor-actuator systems – Quantum Methods for Advanced Imaging Solutions – QUILT – Circular Plastics Economy – routes to a knowledge-based – Towards Zero Power Electronics – ZEPOWEL plasticsrecyclingstrategywithsocioeconomicbenefits – Sensor Systems for Extremely Harsh Environments – eHarsh – Integrated Energy Systems – creation of an energy system – Next Generation Additive Manufacturing – futureAM and market capable of dealing with a greater proportion of – Digital Manufacturing – Innovative Integration of Digital renewable energy sources with variable output Printing and Laser Processes for Mass Customization – Go Beyond 4.0 154

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Completed lighthouse projects – Combustion Engines for Tomorrow’s Mobility – new drive systems, fuels and AI – Electricity as a Raw Material – electrochemical processes Collaborations Research Fab Battery Cells (FFB) The idea behind this development center is to modularize the forfluctuatingenergyandrawmaterialssystems manufacture of large-format lithium-ion battery cells using – Theranostic Implants – approval-relevant development digitalization strategies and to help replace conventional, rigid of key technologies for medicine production lines. – CriticalRareEarths–efficientuseofstrategichigh-tech metals – Paradigm shift in production technology: Away from maximizingprofitfromminimumcapitalinvestmenttoward maximizing added value from minimum resources – Research Fab Microelectronics Germany (FMD) To reinforce the position of Europe’s semiconductor and electronics industry in the face of global competition, 11 member institutes of the Fraunhofer Group for Micro- E³ Production electronics are collaborating with 2 institutes from the Leibniz – Electromobility – innovative technologies and components Association in a jointly managed facility for microelectronics for hybrid and electric vehicles and nanoelectronics research. – Cell-Free Bioproduction – developing an industrial process for cell-free protein production Cybersecurity Training Lab Fraunhofer’s further education initiative Cybersecurity Training Labstrengthensresearch-basedskilldevelopmentinthefield of IT security. It is operated by the Fraunhofer Academy in cooperation with select top-ranking universities of applied sciences. The topics covered extend from Industrie 4.0 to critical infrastructures and from software development to IT forensics. Max Planck School of Photonics Sponsored by the Federal Ministry of Education and Research (BMBF),theMaxPlanckSchoolsinitiativefostersaninnovative brand of graduate education in Germany. The Max Planck School of Photonics is lead-managed by the Fraunhofer Institute for Optics and Precision Engineering IOF in Jena. National Research Center for Applied Cybersecurity ATHENE ATHENE is an innovative, still unique form of collaboration in thefieldofuniversityandnon-universityresearch.Itexamines key issues and problems in relation to cybersecurity and the protection of privacy rights, develops appropriate solutions, and provides corresponding assistance to businesses, the public sector, company founders and start-ups. 155

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S E R V I C E Further initiatives and research infrastructures High-Performance Centers International activities Each based in a particular region, High-Performance Centers work together with university and non-university research partners to serve the needs of local industry. New Project Centers in Shanghai, China In 2019, Fraunhofer opened two Project Centers in China, bothincooperationwithShanghaiJiaoTongUniversity(SJTU). Together with SJTU’s Faculty of Mechanical Engineering, the – Center for Digital Connectivity, Berlin Fraunhofer Institute for Manufacturing Engineering and – Chemical and Biosystems Technology, Halle-Leipzig region Automation IPA founded the Fraunhofer Project Center for – Connected Adaptive Production, Aachen Smart Manufacturing, while the Fraunhofer Project Center – DYNAFLEX®: Technologies for the Energy and for Urban ECO-Development was also inaugurated at SJTU. Raw Materials Transition, Oberhausen The Fraunhofer Institute for Building Physics IBP and SJTU’s – Electronic Systems, Erlangen School of Design are performing joint research into innovative, – Functional Integration for Micro-/Nanoelectronics, smart and sustainable solutions for growing cities. Dresden / Chemnitz – Integration of Biological and Physical-Chemical Material Functions, Potsdam-Golm – Logistics and IT, Dortmund – Mass Personalization, Stuttgart – Mobility Systems, Karlsruhe – Photonics, Jena New Project Center in Jerusalem, Israel The Fraunhofer Project Center for Cybersecurity and the Fraunhofer Project Center for Drug Discovery and Delivery were established in May 2019 in cooperation with the Hebrew UniversityofJerusalem(HUJI).Thesetwocenterscombine the expertise of our Israeli partners at HUJI with that of the – Secure Smart Systems, Munich Fraunhofer Institute for Secure Information Technology SIT – Simulation- and Software-Based Innovation, Kaiserslautern and the Fraunhofer Institute for Interfacial Engineering and – Smart Production and Materials, Chemnitz Biotechnology IGB. – Sustainability, Freiburg – Translational Biomedical Engineering, Hannover KI4Life innovation center in Klagenfurt, Austria KI4LIFE, a Fraunhofer Austria innovation center for digitization andartificialintelligenceinKlagenfurt,hasbeensupporting local businesses in the state of Carinthia with digitization issues since October 2019. 156

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Establishment of the European Defence Research and Innovation Network – EDRIN Together with Dutch research facility TNO, French research partnersONERAandCEA,andthescientificorganizations VTT in Finland and FOI in Sweden, Fraunhofer launched the Further initiatives Industrial Data Spaces for data sovereignty The objective of the International Data Spaces initiative is to create secure data spaces that enable companies of all sizes European Defence Research and Innovation Network – EDRIN. and from different industries to manage their data assets 5G-Industry Campus Europe The goal of 5G-Industry Campus Europe, which was launched by Fraunhofer and its research partners, is to carry out practice-oriented research and testing for the deployment of 5G wireless technology in the production environment. securely and independently. Morgenstadt Innovation Network – developing ideas to improve the quality of life in the city of tomorrow Through its “Morgenstadt” initiative, the Fraunhofer- Gesellschaft is supporting the German federal government in implementing an innovation project entitled “The CO2- neutral,energy-efficientandclimate-adaptedcity,”oneof 10 projects selected to form part of the government’s High-Tech Strategy 2020. Project Centers TheinterdisciplinaryFraunhoferProjectCenters(FPCs)enable FraunhoferInstitutestocreatelocalhubsfocusingonspecific areas of research. Their purpose is to establish a long-term relationship with other actors in the region, so as to develop adistinctprofileforthatregion. – Lightweight Construction and Electromobility, Wolfsburg – Microelectronic and Optical Systems for Biomedicine, Erfurt – Project Center for Energy Storage and Management Systems ZESS, Braunschweig 157

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ADDRESSES IN GERMANY Fraunhofer-Gesellschaft Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V. Postal address Postfach 20 07 33 80007 München, Germany Phone +49 89 1205-0 Fax +49 89 1205-7531 info@fraunhofer.de Address for visitors Hansastrasse 27 c Executive Board President, Corporate Policy and Research Management: Prof.Dr.-Ing.habil.Prof.E.h.Dr.-Ing.E.h. mult. Dr. h.c.mult.ReimundNeugebauer Technology Marketing and Business Models: Prof. Dr. rer. nat. habil. Ralf Boris Wehrspohn 80686 München, Germany Human Resources, Legal Affairs and IP Management: Prof. Dr. rer. publ. ass. iur. Alexander Kurz Finances and Digitalization: Dipl.-Kfm. Andreas Meuer Youcancalluptheaddresses,focalfieldsofresearch, and contacts for all Fraunhofer Institutes and Groups in English or German on the Internet: www.fraunhofer.de Historic Fraunhofer Glassworks Fraunhoferstrasse 1 83671 Benediktbeuern Germany 159

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INTERNATIONAL ADDRESSES The Fraunhofer-Gesellschaft operates legally independentinternationalFraunhoferaffiliates in Europe, North America and South America. In other regions, Fraunhofer representative officesandFraunhofersenioradvisorsform a bridge to local markets worldwide. The FraunhoferofficeinBrusselsservesasaninter- face between Fraunhofer and the institutions oftheEuropeanUnion.Forspecificcontact addresses, please consult our website: www.fraunhofer.de Fraunhofer International Contact in Germany Fraunhofer-Gesellschaft, International Research Programs and Networks Thomas Dickert Phone +49 89 1205-4700 Fax +49 89 1205-77-4700 thomas.dickert@zv.fraunhofer.de Hansastrasse 27 c 80686 München, Germany Contact in Brussels Fraunhofer-Gesellschaft Brusselsoffice Verena Fennemann MBA Phone +32 2 50642-45 verena.fennemann@zv.fraunhofer.de Rue Royale 94 1000 Brussels, Belgium 161

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S E R V I C E Editorial notes Editorial team Dr.MartinThum(editorinchief) MarkusJürgens(pictureeditor) You can call up the addresses, focalfieldsofresearch,and Editorial address Fraunhofer-Gesellschaft contacts for all Fraunhofer Insti- Hansastrasse 27 c Eva Bachmann Mandy Bartel tutes and Groups in English 80686 München, Germany or German on the Internet: Dr. Martin Thum Roman Möhlmann www.fraunhofer.de Internal Communications Phone +49 89 1205-1367 martin.thum@zv.fraunhofer.de Reproduction of any material requires the editors’ consent. © Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V., München 2020 Heike Münch Eva Rathgeber Cornelia Reimoser Tanja Schmutzer Ulla Wolfshöfer Production Silke Schneider Design concept Markus Jürgens Silke Schneider Layout Christin Schneider English edition Burton, Van Iersel & Whitney GmbH, Munich 162

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Photo acknowledgments Page 82: Spezialeinsatzkommando All other photos: Front cover, pages 4 / 5, 6 / 7, 52, Sachsen © Fraunhofer-Gesellschaft e.V. 55, 57, 59, 65, 79, 85, 146 / 147: Page 83: Fraunhofer IZI iStock Page2:Bernhard Huber Page8:Bernhard Huber Page9:Bernhard Huber Page10:Bernhard Huber Page11:Bernhard Huber Page 84: Fraunhofer IMWS / Andrea Roberto Codrignani Page 86: Fraunhofer IZM / Volker Mai Page 87: Fraunhofer / Till Budde Page 88: Mirko Krenzel Page 39: Salzgitter AG Page. 89: Fraunhofer IML Page 41: Porsche AG Page 90: Piotr Banczerowski Page 42: Jens Schwarz Page 91: Piotr Banczerowski Page 44: Siemens AG Page 92: Fraunhofer IVV Page 47: Marcus Simaitis Page 93: Fraunhofer IESE Pages 48 / 49: Shutterstock Page 94: Norbert Millauer Page 50: unsplash / daniel chen Page 95: Daimler AG Page 52: Elke Sähn Page 96: Fraunhofer ILT Page 61: Ansichtssache Page 97: Fraunhofer IKTS Page 62: Sascha Kreklau Page 63: Andreas Jacob Page 98: Jan-Peter Kaspe / FSU Page99:Carmele|TMC-Fotografie Page 66: Mars Dolschon Page 100: EARTO – European Page 67: MBWI Association of Research and Page 68: Fraunhofer IOF Technology Organisations Page 71: Cornelia Schubert Page 101: Digital Hub Logistics Page 73: Fraunhofer SIT / Page 102: Fraunhofer IKTS / Catharina Frank Steffen Walther Page 75: Piotr Banczerowski Page 103: Fraunhofer IBMT Page 76: Fraunhofer UMSICHT Page 104: TU Berlin / Tobias Ritz Page 77: Fraunhofer IGB Page 105: Fraunhofer IDMT / Page 78: Piotr Banczerowski Hannes Kalter Page 80: Fraunhofer FOKUS / Page 107: www.mueller.photo / Marc Frommer Matthias Balk Page 81: Fraunhofer / Pages 108 – 121: Oliver Soulas Marc Müller Pages 126 /127: Shutterstock 163

Annual Report 2019

REPORT OF THE EXECUTIVE BOARD

The Executive Board

Management report 2019

Report of the Senate on the financial year 2019

Inside the Fraunhofer Senate

REVIEW OF FRAUNHOFER RESEARCH

Our future motivation – ethics and responsibility in applied research

New initiatives and infrastructures

Projects and results 2019

Awards 2019

Visions that will shape tomorrow’s world

People in research

Fraunhofer Institute spin-offs

FINANCIAL REPORT

Balance sheet at December 31, 2019

Income statement for the financial year 2019

Reconciliation between income statement and performance statement (cash-basis accounting) 2019

Performance statement for individual Fraunhofer entities

Excerpts from the notes to the financial statements 2019

Convenience translation of the German independent auditor’s report

SERVICE

Structure of the Fraunhofer-Gesellschaft

Members, constituent bodies, committees

Further initiatives and research infrastructures

Addresses in Germany

International addresses

Editorial notes