Fraunhofer at 75 — a cause for celebration … Dr. Ursula von der Leyen, President of the European Commission Christian Lindner, German Federal Minister of Finance Anke Rehlinger, Minister-President of Saarland “… because the Fraunhofer-Gesellschaft, more than any other institution, stands for Europe’s leading position in applied research. Our unique European research landscape, combined with the internal market and wealth of innovative medium- sized businesses, is the essential driver of growth and forward-looking jobs in Europe. Many thanks for all you do — and keep up the good work!” “… because the cutting-edge applied research of the Fraunhofer-Gesellschaft has been a driver of growth in the German economy for 75 years. Innovative strength and openness to new technologies are the only way forward as we tackle the chal- lenges we face these days. The Fraunhofer- Gesellschaft is setting a brilliant example. It is an important factor in making our country attractive as a place to do business.” “… because the Fraunhofer-Gesellschaft has been harnessing tremendous innova- tive strength and creative ideas to blaze new trails in science and research for 75 years now. Saarland especially needs this inventiveness and outstanding research findings, paired with the courage to forge new paths, if we are to advance the transformation process. I extend my best wishes to the Fraunhofer-Gesellschaft on its many years of successful work in applied research, which has brought important advances for the whole of humanity and for our local companies.” “… because technology is the future! Fraunhofer has been combining cutting- edge research with real-world applications for 75 years and is an international leader in this field. Happy birthday and congratula- tions on this success! The Free State of Bavar- ia has been a driving force and close partner right from the start. Fraunhofer and Bavaria form a great alliance, one that we will con- tinue in the future. As part of the Hightech Agenda, Bavaria is currently investing over €5.5 billion in science and research through- out the federal state. In addition to room for 13,000 more students at universities and 1,000 professorships for the brightest minds, we are actively promoting the transfer of knowledge from research to real-world applications. Live long and prosper!” “… because the Fraunhofer-Gesellschaft has been shaping the German scientific system for 75 years. It conducts research for real- world applications, keeping an eye on new technologies and markets. Fraunhofer stands for successful transfers and a vibrant start-up culture. It dares to make progress. All of this is becoming increasingly important in the face of growing international competition. As a country of innovation, we must not only conduct excellent research but also utilize the results in the domestic economy. The ace up our sleeve is our collaboration and ecosystems with partners from science and industry. The success of the Fraunhofer- Gesellschaft is driven by its employees, who master the balancing act between research and entrepreneurial thinking on a daily basis and are committed to finding solutions” “… because Fraunhofer stands for new beginnings, innovative strength, and excellence in research. And because the Fraunhofer institutes and all their hard- working employees are important sources of fresh impetus, in Saxony and beyond. The research organization was also an instrumental part of the Free State of Saxony’s successful development after the German reunification. Dr. Markus Söder, Minister-President of the Free State of Bavaria Bettina Stark- Watzinger, Federal Minister of Education and Research Michael Kretschmer, Minister-President of the Free State of Saxony 2

2023 Annual Report | Contents Contents Executive board’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The executive board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2023 management report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 The senate’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 The senate’s report on the financial year 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 New to the senate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Review of Fraunhofer research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Fraunhofer world records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Projects and results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 People in research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Selected transfer activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Balance sheet at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Income statement for the financial year 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Excerpts from the notes to the 2023 financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Convenience translation of the German independent auditor’s report . . . . . . . . . . . . . . . . . . 90 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Members, constituent bodies, committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Structure of the Fraunhofer-Gesellschaft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Fraunhofer Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Publishing notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 4

Executive board’s report | The executive board The executive board Prof. Holger Hanselka President, Executive Vice President for Corporate Strategy, Research and Communications, Acting Executive Vice President for Innovation, Transfer and IP Management Holger Hanselka has been the 11th president of the Fraunhofer-Gesellschaft since 2023. Before that, he was president of the Karlsruhe Institute of Technology (KIT) for ten years and vice-president of the Helmholtz Association for the energy research field. A mechanical engineer by train- ing, Hanselka was the head of the Fraunhofer Institute for Structural Durability and System Reliability LBF in Darmstadt from 2001 until 2013 and was a member of the Fraunhofer presidential council for a time. He is active on various commit- tees that advise the German chancellor on matters of science and research policy. “Transferring scientific findings into applications, solutions, and products for and with German and European industry, especially medium-sized businesses, is what makes Fraunhofer essential. Through its strategic realignment, Fraunhofer is positioning itself for the future and creating guidelines for our future research activities.” 6 Elisabeth Ewen Executive Vice President for Human Resources, Corporate Culture and Legal Affairs Elisabeth Ewen is a fully qualified lawyer with an additional qualification in administrative and labor law. After graduating, she worked as a lawyer in the HR department of the German Aerospace Center (DLR) before she became director of human resources at GMD — Forschungszentrum Informationstechnik GmbH. She came to the Fraunhofer-Gesellschaft with the inte- gration of GMD — Forschungszentrum Informationstechnik GmbH. She has held several management positions in human resources at the Fraunhofer-Gesellschaft, most recently as director of human resources. Ewen has been on the executive board of the Fraunhofer-Gesellschaft since August 2022. “The development of our culture takes place through a participatory, forward-looking, and ongoing, lasting process. Fraunhofer is an attractive employer, and we need to commu- nicate that to the applicant market credibly and authentically and ensure that it is something employees experience for themselves as well.”

Executive board’s report | Executive board’s report Executive board s report | 2023 management report ’ 88888 8

Executive board’s report | 2023 mangement report Fraunhofer-Gesellschaft — key data for 2023 (in € million) Total business volume Contract research Additional research funding Major infrastructure capital expenditure Business volume by budget Operating budget Capital expenditure.1 Project revenue Contract research of which industrial revenue of which public-sector revenue 2 Additional research funding Major infrastructure capital expenditure 2022 3,049 2,615 245 189 3,049 2,567 482 2,083 1,907 787 1,120 145 31 2023 3,404 2,991 249 164 3,404 2,823 581 2,327 2,167 836 1,331 139 21 +355 +376 +4 –25 +355 +256 +99 +244 +260 +49 +211 –6 –10 Change +12% +14% +2% –13 % +12% +10% +21% +12% +14% +6% +19% –4 % –32% 1 Capital expenditure for contract research, additional research funding and major infrastructure capital expenditure. 2 Comprises German federal and state government, EU and other revenue. 10

Executive board’s report | 2023 mangement report » 12 The process toward a Fraunhofer umbrella strategy for 2030 was launched at the start of 2024. The goal is to use participa- tory processes to identify the long-term plans and alignment of the Fraunhofer-Gesellschaft at the overarching organizational level. The aim of the umbrella strategy is to set out how the Fraunhofer-Gesellschaft uses its resources to achieve com- petitive advantages and ensure long-term success within the Fraunhofer model. Other elements of the transformation process include the further development of modern governance struc- tures and systems and transparent compliance as well as designing organizational structures for greater efficiency and agility on the basis of a modern, open corporate culture. These steps are geared toward creating a climate that fosters innovation by top researchers, along with establishing relationships of mutual trust with internal and external stake- holders. A number of different platforms for dialogue between the president and the executive board and various reference groups of employees were launched when Prof. Hanselka took office, in August 2023. The president traveled to multiple locations for participatory dialogue with institute directors, staff, and other stakeholders. These activities were accompa- nied by discussion events held by the executive board at seven institute locations that cut across different fields, institutes, and levels of the hierarchy. Interactive formats (in person and online from September 2023 to March 2024) with different groups of employees form the basis for the development of a future vision of the Fraunhofer corporate culture. There are thus multiple interlocking participatory formats pursuing the same goal of picking up on and consolidating ideas and impetus across the organization with the aim of ensuring a forward-looking Fraunhofer culture. In this way, these formats mark a symbolic starting point for the organization’s collective evolution. Science policy framework and positioning Increased geopolitical and economic conflicts and the chal- lenges posed by climate change influenced developments in 2023. In light of the challenging processes of transformation these trends have brought across business, industry and society, innovations like those Fraunhofer gets off the ground are critical. However, 2023 was also a year of huge tech- nological breakthroughs in fields such as as generative artificial intelligence (AI), and it brought key advances in digital policy. Fraunhofer contributes its applied research perspective to the ongoing discourse around research policy to help improve overall conditions and make them more innova- tion-friendly and to accelerate and streamline the transfer of knowledge and technologies.

Executive board’s report | 2023 mangement report International activities The Fraunhofer-Gesellschaft’s internationalization strategy aims to create scientific value within its own organization and to generate profitable effects for Germany and Europe as well as the respective partner country. Fraunhofer has developed various formats for generating excellent scientific content and collaborating with attractive international partners. The eight legally independent international Fraunhofer affiliates repre- sent the most institutionalized form of such partnerships: Fraunhofer USA, Inc. Fraunhofer Austria Research GmbH Fraunhofer Italia Research Konsortial-GmbH Fraunhofer UK Research Ltd Fundación Fraunhofer Chile Research Associação Fraunhofer Portugal Research Stiftelsen Fraunhofer Chalmers Centrum för Industrimatematik (in Sweden) Fraunhofer Singapore Research Ltd. 14 The international affiliates act as legal entities for 11 research centers outside of Germany. These institutionalized Fraunhofer collaborations with local universities facilitate long-term research activities abroad. As their work is not profit-oriented, the international affiliates generally qualify for base funding from their country of domicile, and they are financed in a manner similar to the Fraunhofer funding model. There has been a changing of the guard at Fraunhofer Austria, as Prof. Sebastian Schlund was appointed to suc- ceed Prof. Wilfried Sihn as managing director. The Fraunhofer Austria Center für Data Driven Design (DDD), which has locations in Graz and Klagenfurt, also successfully passed an evaluation and audit in July. The audit is a prerequisite for the three-year continuation of the start-up financing provid- ed by the Austrian state of Carinthia for the DDD office in Klagenfurt. Prof. Raoul Klingner was appointed to serve as the new chair- man of the board of directors of Fraunhofer USA. An application to create a Spanish Fraunhofer foundation as a legal umbrella organization for a Fraunhofer center in Barcelona was filed in 2023. The official process of registering with the Spanish authorities is currently under way. The partner institute for the planned new center is the Fraunhofer Institute for Biomedical Engineering IBMT, which plans to begin working with the Institute for Bioengineering of Catalonia (IBEC) on an institutional basis in the area of applied theragnostics. Plans call for the necessary development and base funding for the new center to come 100 percent from Spanish sources. Both Fraunhofer Portugal centers, the Center for Assistive Information and Communication Solutions AICOS and the Center for Advanced Water, Energy and Resource Manage- ment AWAM, underwent a strategy audit in October 2023. Results for both were positive, and a continuation recom- mendation for the coming funding period was issued to the grant authorities (Fundação para a Ciência e a Tecnologia FCT and the Fraunhofer-Gesellschaft). As part of the Fraunhofer Innovation Platforms (FIPs), Fraunhofer institutes cooperate with a foreign university or a non-university research institution on a certain area. The longer-term cooperation pursues joint applied research, joint projects for customers from industry, and participation in pub- licly funded projects. After two several-stage calls for tenders in 2023, there are now four FIPs in preparation, with plans to establish two in South Korea and one each in Taiwan and China in 2024. The internal program ICON (International Cooperation and Networking) enables cooperation with excellent foreign scientific universities and non-university research institutions in

Executive board’s report | 2023 mangement report Business report Contract research Contract research is the mainstay of Fraunhofer’s business activities and, in line with the Fraunhofer funding model, consists of three core areas, each contributing equal amounts to the organization’s finances: Research directly contracted by industry Publicly funded research projects Pre-competitive research financed through base funding In 2023, the base funding requirement increased by 16 percent to €824 million. Base funding is provided by the German Fed- eral Ministry of Education and Research (BMBF) and the state governments at a ratio of 90:10. Industrial revenue rose by 6 percent to a new high of €836 million. While revenue from contracts with industry increased by 8 percent to €679 million, license-fee revenue from industry stood at €157 million, slight- ly below the high level seen in the previous year. See p. 20, chart titled “Revenue from contract research” Revenue from publicly funded projects increased sig- nificantly again in 2023. Project funding from the German federal government, in particular, jumped by 21 percent to €802 million. Within this, the revenue of the BMBF increased by 18 percent to €406 million, the funding of the Federal Ministry for Economic Affairs and Climate Action (BMWK) by 15 percent to €267 million and the revenue of the other federal ministries by 54 percent to €129 million. Project fund- ing provided by the German state governments decreased by 5 percent to €232 million after a sharp increase in preced- ing years. There was a significant rise in EU revenue, which was up 28 percent to stand at €114 million. Other revenue increased by 46 percent to €183 million and includes funding granted by foundations, universities and other research-fund- ing institutions. In 2023, this figure also includes €19 million in reimbursements under the German Energy Price Brake Act (Energiepreisbremsengesetze) and an extraordinary insurance claim payment of €13 million for the Fraunhofer Institute for Technological Trend Analysis INT based on the flooding in 2021. See p. 20, chart titled “2023: Revenue from publicly funded projects” In addition to being one of the Fraunhofer institutes’ crite- ria for success, the high share of funding coming from external project revenue is a unique selling point for the Fraunhofer-Gesellschaft. The project funding share therefore serves both as a key performance indicator and as a barometer for establishing an optimal funding mix in contract research. It is calculated as the share of project revenue in the operat- ing budget, including imputed depreciation of capital assets (excluding project groups and special effects on the balance sheet regarding reserves and provisions). Due to the significant increase in revenue from publicly funded projects, the project Total business volume In business terms, 2023 was a successful year for Fraunhofer. The total business volume amounted to €3.4 billion, having increased by a substantial 12 percent compared with the pre- vious year. Contract research accounted for 88 percent of this sum (€3.0 billion) and represents the organization’s core activ- ity. Around one-third of contract research funding is provided by base funding from the German federal and state govern- ments. Research with long-term funding that falls outside the scope of this regular base funding is allocated to a new item, additional research funding, which amounted to €249 million in the reporting period. Major infrastructure capital expendi- ture amounted to €164 million. These three segments will be discussed in greater detail in the following sections. See p. 20, chart titled “Fraunhofer total business volume” Business volume is based on the performance statement, which meets the requirements of the grant authorities. In the operating budget, personnel and non-personnel expenses are recognized according to general accounting practice along with the change in the extraordinary item “License-fee reve- nue reserve for statutory purposes.” As capital expenditure is recognized at the amount incurred at the time of purchase, depreciation, amortization and impairment losses are not included in the performance statement. In 2023, Fraunhofer’s capital expenditure amounted to €581 million overall, a 17 per- cent share of the total business volume. Personnel expenses increased by 9 percent to €1,920 million. This is due primarily to a 5 percent increase in permanent staff and to one-time payments to compensate for inflation as part of the collective agreement reached in 2023. At €921 million, non-personnel expenses were 13 percent higher than in the previous year, owing to factors including higher energy and material prices and an increase in externally financed project volume. The reserve was used during 2023 to cover liquidity requirements. €18 million net was released to provide funds to establish high-performance centers, to equip Fraunhofer institutes with solar photovoltaic systems and to fund strategically important formats aimed to promote the acquisition of shareholdings. See p. 20, chart titled “2023: Total business volume by budget” 1616161616

Executive board’s report | 2023 mangement report » 18 receivables for funding approved during this financial year. receivables for funding approved during this financial year. Their over-year nature is ensured by the budgetary instru- Their over-year nature is ensured by the budgetary instru- ment of Selbstbewirtschaftungsmittel (SBM – resources ment of Selbstbewirtschaftungsmittel (SBM – resources managed independently ). As a result, SBM in the amount of managed independently ). As a result, SBM in the amount of €345,000,000 from the German Federal Ministry of Educa- €345,000,000 from the German Federal Ministry of Educa- tion and Research (BMBF) and €13,503,000 from the German tion and Research (BMBF) and €13,503,000 from the German Federal Ministry of Defence (BMVg) are included (SBM were Federal Ministry of Defence (BMVg) are included (SBM were recognized in cash and cash equivalents the previous year). recognized in cash and cash equivalents the previous year). Receivables from the German federal government and the Receivables from the German federal government and the German state governments from project billing (including con- German state governments from project billing (including con- tracts) increased by €20 million to €355 million. Receivables tracts) increased by €20 million to €355 million. Receivables from affiliated companies decreased by €7 million to from affiliated companies decreased by €7 million to €0.4 million. Cash and cash equivalents (including bank €0.4 million. Cash and cash equivalents (including bank account balances) decreased by €275 million to €18 million. account balances) decreased by €275 million to €18 million. The value of the securities portfolio was €53 million lower, at The value of the securities portfolio was €53 million lower, at €459 million. Of this, €372 million stemmed from license-fee €459 million. Of this, €372 million stemmed from license-fee revenue reserve, €17 million corresponded to the extraordi- revenue reserve, €17 million corresponded to the extraordi- nary item “For financing restructuring measures” and nary item “For financing restructuring measures” and €70 million was from a patent sale. €70 million was from a patent sale. Equity — which comprises the non-profit organization capital Equity — which comprises the non-profit organization capital that is not financed by government grants (€15.6 million) and that is not financed by government grants (€15.6 million) and the reserve for statutory purposes (€11,225) — increased by the reserve for statutory purposes (€11,225) — increased by a marginal amount. Economic equity also includes four kinds a marginal amount. Economic equity also includes four kinds of extraordinary items recognized in the balance sheet: The of extraordinary items recognized in the balance sheet: The extraordinary item “Grants relating to noncurrent assets” extraordinary item “Grants relating to noncurrent assets” was €216 million higher at €2,986 million. The extraordinary was €216 million higher at €2,986 million. The extraordinary item “License-fee revenue reserve for statutory purposes” item “License-fee revenue reserve for statutory purposes” decreased by €32 million to €372 million. The “Extraordinary decreased by €32 million to €372 million. The “Extraordinary item for payments from patent sales” was €103 million. This item for payments from patent sales” was €103 million. This item is matched by other receivables and securities of an equiv- item is matched by other receivables and securities of an equiv- alent amount on the assets side of the balance sheet. alent amount on the assets side of the balance sheet. An extraordinary item of €17 million was entered for the An extraordinary item of €17 million was entered for the necessary restructuring of cleanroom infrastructure. This necessary restructuring of cleanroom infrastructure. This item is matched by securities of an equivalent amount on the item is matched by securities of an equivalent amount on the assets side of the balance sheet. Use of these funds is tied to assets side of the balance sheet. Use of these funds is tied to a restructuring plan and contributes to the development of a restructuring plan and contributes to the development of the main sites of Fraunhofer institutes and their secondary the main sites of Fraunhofer institutes and their secondary locations. The aim is to reduce fixed costs while also enhancing locations. The aim is to reduce fixed costs while also enhancing collaboration and the quality of services. €4.3 million was used collaboration and the quality of services. €4.3 million was used for this purpose during this financial year. for this purpose during this financial year. The extraordinary item “Grants used to finance current assets” The extraordinary item “Grants used to finance current assets” is not included in financial equity and is used to account for is not included in financial equity and is used to account for income not yet received, less expenses not yet paid, by the income not yet received, less expenses not yet paid, by the reporting date. This essentially corresponds to advance project reporting date. This essentially corresponds to advance project funding and amounted to €320 million at the reporting date. funding and amounted to €320 million at the reporting date. Provisions increased by €34 million to €277 million, €40 mil- Provisions increased by €34 million to €277 million, €40 mil- lion of which was accounted for by provisions with maturities lion of which was accounted for by provisions with maturities of more than one year. In the case of pension and compen- of more than one year. In the case of pension and compen- sated leave provisions, a corresponding amount of receivables sated leave provisions, a corresponding amount of receivables from the German federal and state governments totaling from the German federal and state governments totaling

Executive board’s report | 2023 mangement report Facts and figures Fraunhofer total business volume in € million Revenue from contract research in € million 2,760 2,832 306 159 270 164 2,915 3,049 189 245 234 163 3,404 164 249 2,991 2,615 2,398 2,518 2,295 2,991 836 2,615 787 2,295 2,398 2,518 658 723 724 825 1,331 1,120 895 1,015 746 845 780 708 824 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Major infrastructure capital expenditure Additional research funding Contract research Industrial revenue Revenue from publicly-funded projects Base funding 2023: Total business volume by budget in € million 2023: Revenue from publicly funded projects in € million 3,404 1,920 1,331 232 114 183 406 267 129 BMBF BMWK Other federal ministries Federal states EU Other 581 -18 921 Personnel expenses Non-personnel expenses Change in reserves Capital expenditure 222000

Executive board’s report | 2023 mangement report » 2222 k c o t S i : o t o h P

Executive board’s report | 2023 mangement report Implementing the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz, LkSG) The German Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz, LkSG) entered into force on January 1, 2023. This German federal law governs the economic activities of companies based in Ger- many with 3,000 or more employees working there (1,000 or more starting next year) by imposing due diligence obligations intended to minimize human rights and environmental risks in the supply chains of these enterprises. The Fraunhofer-Ge- sellschaft meets the requirements of the LkSG and has taken steps to fulfill its due diligence obligations. The role of human rights officer falls within a newly created department tasked with monitoring the risks related to human rights and the environment within Fraunhofer’s own value chain and supply chain. The existing risk management system of the Fraunhofer-Gesellschaft has been expanded to include the LkSG and will continue to grow in order to permit identification of risks related to human rights and the environment. The first regular risk analysis aimed at identifying risks related to human rights and the environment in Fraunhofer's sphere of business and among direct suppliers was performed this year. An external provider that specializes in these matters was brought in to analyze the risks relating to direct suppliers. As the first step, the specifications of the LkSG and the guidelines from the German Federal Office for Economic Affairs and Export Control (BAFA) were used to perform an abstract risk analysis. The results were then subjected to a manual plausi- bility check. This process identified risks but no violations, and appropriate preventive measures were initiated. Corrective processes that will apply in the event that any violations are identified in the future were also defined. The Fraunhofer-Gesellschaft human rights strategy was adopt- ed in late 2022. It was set out in a declaration of principles by the executive board and made accessible on the Fraunhofer website as of January 1, 2023. An LkSG channel was added to the Fraunhofer whistleblowing system to ensure that incoming reports of potential violations can be processed systematically and anonymously. In relation to indirect suppliers, a process of as-needed risk analysis was defined to allow for immediate action if any violations in the supply chain come to light. The documenta- tion and public reporting pursuant to the specifications of the BAFA will be presented on time as of April 30, 2024. 24 Sustainability research Some 32,000 Fraunhofer employees work with partners from industry and the research sector to translate ideas into inno- vative solutions. These activities are aimed at addressing the urgent challenges facing society today. Fraunhofer’s research currently focuses on five overall societal objectives: digitalized value creation, a fully circular economy, completing the energy transition, affordable healthcare, and security and a resilient society. Transferring research findings into application can be a significant help to companies in achieving their sustainability goals and developing more sustainable products and services. Protecting the climate is one of the most important tasks that our society faces at a global level, particularly when it comes to making the switch to renewable sources in our energy systems and decarbonizing our industry sector. Fraunhofer researchers are making vital contributions to this process. One example is Fraunhofer’s Electrocaloric heat pumps ElKaWe flagship project, in which teams of researchers are developing electrocaloric heat pumps as an alternative to the currently prevailing compressor technology, which is not cost-effective. These innovative heat pumps promise higher efficiency, plus they operate without any coolant. 2023 saw a milestone in the gallium nitride-based power electronics needed to this end: Fraunhofer researchers finalized an ultra-efficient circuit topology for voltage converters with 99.74 percent elec- trical efficiency. This result is setting standards worldwide and represents an important advance toward zero-emissions solutions for heating and cooling. The ReSoURCE EU project (Horizon Europe) is also making a crucial contribution to cutting carbon emissions. Fraunhofer researchers are participating in the industry-led consortium, where they are working with others on sustainable solutions for recycling refractory materials. The Fraunhofer Institute for Laser Technology ILT and its spin-off Laser Analytical Systems & Auto- mation GmbH (LSA) are involved in these efforts. In particular, they are contributing their laser expertise toward measurement equipment for automated sorting facilities. Worldwide, some 32 million metric tons of used refractory materials are gener- ated each year. Thus far, only a fraction of that amount has been recycled. Producing refractory materials from primary raw materials generates significant volumes of CO2, so the project’s goal is to recycle these materials instead. The researchers’ find- ings will lay the groundwork for increasing the share of these materials that is recycled, which currently stands at 7 to 30 per- cent, to 90 percent, thereby reducing European CO2 emissions by as much as 800,000 metric tons per year. Global water use has nearly sextupled in the past 100 years and is rising by about 1 percent a year. Increasing consumption and pollution of water resources, a growing global popula- tion, and longer periods of drought have combined to make

Executive board’s report | 2023 mangement report and the Helmholtz Association), internal and external areas of responsibility for Fraunhofer project teams were defined as part of a further Fraunhofer project in 2023. These areas can now be discussed based on new guidelines. The internal area of responsibility addresses the design of the research process, and especially good scientific practice, quality assurance for project management, and — where necessary — adherence to codes of ethics during project implementation. External responsibility toward stakeholders includes grappling with the potential ramifications of project results, both through the nec- essary transfer of results to deliver benefits across industry and society and through a capably performed impact assessment to minimize the risks of misuse and abuse of research findings. The guidelines are intended to assure Fraunhofer project teams that all of the relevant aspects relating to responsibility have been taken into account through open internal discussion as a group before a project starts. In particular, scientists are invited to contribute their own individual moral views, and raising awareness of ethical issues, especially new ones, is a focus of the process. The guidelines were introduced on an optional basis for all Fraunhofer project teams, along with a module for Fraunhofer’s central continuing education activities titled Introduction to the Ethics of Technology and Technol- ogy Impact Assessments (launching in 2024). Both mea- sures — the guidelines and the module — serve to strengthen excellence in Fraunhofer research and foster people’s greater satisfaction with their own work. Community participation in the research and innovation process makes an important contribution to shaping innova- tion for maximum benefit. In an EU project titled FRANCIS — Frugal Innovation by Citizens for Citizens (funding period: 2021–2024), the Fraunhofer Institute for Industrial Engineering IAO and the Fraunhofer Information Center for Planning and Building IRB joined with further partners to kick off a series of so-called open innovation challenges open innovation challenges. The challenges invite people all over the world to develop ideas for simple, sustainable solutions. The project puts special effort into motivating and empowering marginal- ized groups, such as older people, to participate. The first idea competition, which covered the topic of the culinary world and home care and was aimed primarily at three countries — Ger- many, Turkey, and India — was concluded in August 2023. The top three placements went to a personalized furniture concept, a bed-making device, and a clever recycling system. Sustainability management at non-university research organizations (PDF only available in German) Employees At year-end 2023, Fraunhofer had 31,942 employees, 23,543 of whom were research, technical or administrative staff (RTA staff), 7,887 were students and 512 were trainees. The goal of knowledge transfer via individuals is for excel- lently trained Fraunhofer employees to take on positions of responsibility in industry or the research sector or to start their own businesses after a few years. Fraunhofer added 1,113 people in scientific, technical and administrative roles in 2023. In fact, 3,300 people were newly brought on board, while 2,200 left the organization. This turnover is intentional, and especially amid today’s shortage of skilled workers, it requires professional recruitment and onboarding, structured career support, and high levels of lead- ership and management skills. Since autumn 2022, the Fraunhofer Corporate Culture Vision of the Future project has been working on an analy- sis of current framework conditions and on levers to develop the Fraunhofer culture even further. This is to establish pro- cesses and structures that promote ongoing cultural dialogue. Two closely coordinated participatory dialogue formats were implemented starting in late August 2023: Meet the Executive Board This open discussion format centering on current overall conditions and future prospects is based on personal discus- sion between employees and at least two executive board members. It is a way for the executive board to address internal and external dynamics at the Fraunhofer-Ge- sellschaft by meeting people where they are, taking note of their needs, and giving employees as a broad group an opportunity to share their personal experiences and wishes with the board. A total of 7 workshops were held, one each at 7 different Fraunhofer locations. Cultural Dialogue Fraunhofer employees met for 16 target group-specific workshops where they mapped out positive changes they would like to see in Fraunhofer’s culture going forward. Representatives from each Cultural Dialogue will discuss their findings with the executive board afterward and synthesize them into a vision of the Fraunhofer corporate culture of the future. With the dialogue events concluded, the final phase of the project involves developing and establishing tools and formats to support the continuation of cultural dialogue and feedback and consequently the evolution and further development of the culture. 26

Executive board’s report | 2023 mangement report program supports the institutes in developing a strategy, analyzing the status quo, and identifying actions to take to promote equal opportunity. TALENTA, launched in 2013, is a key component of equal opportunity in research and leadership positions. The support and development program transitioned from project start-up financing to a permanent funding model in 2023. In this time, 812 female researchers at Fraunhofer have been able to take advantage of the program, which includes support for career and research time alongside qualification and networking formats to achieve their career goals, such as completing their doctorate, further developing their leadership skills or strengthening their scientific visibility. Fair career opportunities are heavily influenced by unconscious bias. The Unconscious Bias pilot initiative was launched in 2023 to help institutes introduce measures to counter bias. Nine institutes utilized the analysis, training, and communica- tion package developed toward this end in 2023. For the past 12 years, the Diversity funding program has been assisting institutes in implementing new measures to promote equal opportunity and diversity. Since then, a total of 240 applications from institutes have been funded at a total cost of € 2.3 million. The institute-specific initiatives funded in 2023 include strategies for raising awareness about diversity, predominantly focusing on unconscious bias, innovative acces- sibility measures for people with disabilities and workshops to promote intercultural collaboration. In October 2023, the Fraunhofer-wide framework agreement with pme Familienservice (emergency childcare, home care and eldercare, and life coaching) was extended for two years. Since then, the use of the pme Akademie, which includes webinars, e-learning programs and suggestions for living mindfully, has also been included. In 2023, in addition to 9 cases where childcare was used and 70 requests for home care and eldercare, life coaching was used most frequently, with 130 requests. The FamilienLOGO certification process, which Fraunhofer supports, serves to review the status of work-life balance within an institute through dialogue between the institute management or administration and the equal opportunities officer. The certification process focuses on the following aspects: information and communication, flexible working arrangements, institute-specific care options, parental leave and returning to work, Fraunhofer support options, and budget for work-life balance. In 2023, 6 institutes took advan- tage of the opportunity to obtain the certification for the first time. Of those institutes, 4 were granted the Familien-LOGO for their outstanding family-friendly conditions. In all, 24 units have received the FamilienLOGO since 2019. organization at their own request, at 26 percent (compared to 49 percent in 2021 and 27 percent in 2020). Positive ratings for support with development planning among departing employ- ees stood at 51 percent in 2023. That represents a significant increase from previous years (40 percent in both 2021 and 2020). This positive trend was apparent across all groups of employees during this reporting year. These working conditions are one of the reasons that Fraunhofer is ranked in the top employers list every year. In 2023, the Fraunhofer-Gesellschaft was also one of the most popular employers in the Trendence and Universum employer rankings. Fraunhofer placed first in the Trendence barometer of gradu- ates in the research category and second, also in the research category, in the professional rankings. Diversity Achieving innovative strength through scientific excellence is a core part of the mission of the Fraunhofer-Gesellschaft. With that in mind, Fraunhofer’s objective is to foster a research and working environment in which all employees experience equal opportunity as a result of the support provided for diversity and the creation of overall conditions of inclusivity. A comprehen- sive approach to diversity management supports a cultural shift toward equal career opportunities for women and men, appre- ciation for the diversity of all employees, and development of inclusive overall conditions. In this regard, grant initiatives at Fraunhofer are congruent with the objectives of the Pact for Research and Innovation and with the Gender Equality Plan implemented by the European Commission in 2022. Equal opportunities in the workplace are central to the overall approach to diversity. A holistic concept strengthens the ambitious goals of gender equality. To bring about equal opportunity and family-friendly structures and processes, Fraunhofer has embraced an overall plan that systematically combines six fields of action: recruitment, career progression, communication, cultural transformation, monitoring and gen- eral conditions. The equal opportunities support program was continued in 2023 as a centerpiece of these efforts. The 28

Executive board’s report | 2023 mangement report 2023 brought another significant increase in business travel. Business travelers logged 9.3 million more passenger kilome- ters traveled by train than in 2022, for a total of 27.5 million passenger kilometers. That is approximately 75 percent of the figure for 2019, before the coronavirus pandemic. By using the framework agreement between the German federal govern- ment and Deutsche Bahn, train journeys for Fraunhofer contin- ue to be regarded as carbon-neutral. Air travel also noticeably increased, rising 50 percent year over year. That brought the CO2e total for 2023 to exactly 16.315 metric tons (data and calculation by AirPlus/atmosfair).* This represents 71 percent of the emissions for 2019. Emissions from flights taken in 2022 were neutralized in 2023 via a biogas project in Nepal con- ducted with atmosfair. Plans also call for emissions from flights taken in 2023 to be offset. Total waste figures are available with one year’s delay, so they are currently only available for 2022. According to these figures, the Fraunhofer institutes generated 5,349 metric tons of non-hazardous waste and just under 579 metric tons of haz- ardous waste in 2022. Fraunhofer distinguishes between haz- ardous and non-hazardous waste in keeping with the German Waste Classification Ordinance (Abfallverzeichnisverordnung, AVV). This works out to another slight decrease in non-hazard- ous waste and a decrease of more than 100 metric tons in haz- ardous waste compared to 2021. Many institutes maintain leas- ing arrangements in which traditional non-hazardous municipal waste (paper, residual waste, plastics, etc.) is disposed of in part by the landlord or, in the case of collaborations, by higher edu- cation institution partners. Rough estimates are prepared for these cases. The data transmitted do not cover all Fraunhofer research units and institutes. The reduction in non-hazardous waste is a result of the efforts made at the individual institutes. The fluctuations in hazardous waste can largely be explained by research project parameters. Most waste generated by projects cannot be controlled directly. * Since the decision to offset air travel in 2019, flight-related emissions have been calculated using the VDR standard with a Radiative Forcing Index (RFI) of 2.7 in order to take into account the total climate impact of flights taken by Fraunhofer employees. In the interests of transparency, these are reported accordingly. 30303030 CO2 emissions from business trips by Fraunhofer employees, in metric tons 23,007 16,315 10,817 3,142 1,427 0 0 0 0 0 2019 2020 2021 2022 2023 Flight emissions calculated according to the VDR standard + RFI 2.7 (recorded from 2019) Rail travel: carbon-neutral due to inclusion in the framework agreement between the federal government and Deutsche Bahn, according to the information given by Deutsche Bahn Volume of waste produced by Fraunhofer institutes, in metric tons 5,632 5,954 5,694 5,505 5,349 XX 818 801 710 711 579 2018 2019 2020 2021 2022 Non-hazardous waste Hazardous waste

Executive board’s report | 2023 mangement report of the financing. Due to the current tension with the German federal budget and the need for budget consolidation, potential budget cuts by the grant authority or restrictions in budget flexibility may lead to a decrease in public funding. The amount of base funding also creates tension on Fraunhofer’s funding, as the rate of inflation exceeds the increase in base funding agreed as part of the Pact for Research and Innovation, so there has been a reduction in real terms. In these challenging times, it is essential for the institutes and the research portfolio to be financially sustainable within the Fraunhofer model, including in the long term. The necessary measures are apparent from the consolidation course. The rel- ative share of industrial revenue stands at 29.7 percent, slightly below Fraunhofer’s target of about one-third, as revenue from publicly funded projects remained high in 2023. Actions taken to consistently implement Fraunhofer’s mission of economic cooperation include optimizing the range of services offered and adjusting the research portfolio. Nevertheless, efforts to increase industrial revenue do depend on the overall economy. The Fraunhofer funding model has proved to be highly resilient in past crisis periods, with the result that the Fraunhofer-Ge- sellschaft continues to assume it will achieve balance among its sources of funding. In order to maintain the share of base funding in the fund- ing mix in the long term, Fraunhofer proactively pursues forward-looking economic management and promotes mission-oriented, success-based institutional funding from the federal and state governments along with business management conditions appropriate to the research sector. The current financial statutes enable Fraunhofer to operate in a flexible, efficient and autonomous way. If these options were curtailed, it would limit Fraunhofer’s liquidity and safeguards against risks, thereby sharply restricting its flexibility and capacity to respond to new developments. Fraunhofer-Gesellschaft has various challenges to contend with. In the energy segment, for example, service interruptions and price increases are risks that cannot be ruled out. The Fraunhofer-Gesellschaft continues to take measures aimed at enhancing a resilient and sustainable energy supply and bolstering general resilience in the face of crisis situa- tions. Efforts toward efficient design of business processes in research management have been ongoing since 2022. There are still challenges associated with the shift to the SAP S/4HANA system, especially in terms of the throughput times for individual business processes. Measures have been put in place to enhance the efficiency of business processes, such as purchasing processes, and ensure compliance. Work to refine the customized SAP tools used to account for documenta- tion-heavy public projects with highly variable formal require- ments is ongoing. The reputation of the Fraunhofer-Gesellschaft and its brand is a valuable asset and forms the basis for long-term collabora- tions and economic success. Responsible corporate governance is a top priority for Fraunhofer. As a matter of course, this includes compliance with all applicable laws, including the spec- ifications of funding legislation, and with requirements set by customers and cooperation partners. Good scientific practice likewise forms the basis for all research activities undertaken at Fraunhofer. This means the potential for reputational harm resulting from negative media reports and delays in business dealings is a threat that must be taken seriously. Fraunhofer is aware that individual missteps cannot be ruled out entirely and can also tarnish the organization’s reputation. To identify risks like these as soon as possible and minimize their impact, Fraunhofer focuses on ongoing further development of compliance, communication, and brand management and on consistent monitoring (see p. 23, “Sustainability aspects, realignment of the compliance management system”). Projects for building and equipping new facilities that are co-financed by the federal and state governments and the EU (ERDF) are subject to restrictions concerning how long the funds are made available. Significant delays in project progress can lead to a delayed outflow of funds or even forfeiture of the funds provided. Fraunhofer has a construction control unit in place to monitor the progress of projects for building and equipping new facilities and to continuously explore possible means of expediting such projects. Strategic measures are also taken with an eye to determining construction volumes and setting priorities. Investments and maintenance of research infrastructures are key factors for Fraunhofer in maintaining its ability to operate successfully in the future. Resources risk encompasses those types of risk that may affect the availability of tangible and intangible resources needed to successfully carry out research activities. Ongoing macroeconomic and geopolitical uncertainties mean that the Business operations risk comprises those types of risk that may arise from research and administration processes, or from conducting specific research projects. Increasingly stringent regulatory requirements pose a challenge for an applied research organization with a very broad industry portfolio. They also tie up capacity needed to shape the future viability of industry and society. Sustainability is growing more and more important, not only due to the increasing impact of climate change, but also as a result of requirements established by society as a whole, customers, and specific regulations. As a result, efforts toward holistic coordination of all three dimensions of sustain- ability (environmental, social, and governance) undergo further development and integration into the overall strategy and organizational structure. Clear responsibilities, job descrip- tions, and resources for operational execution of the planned regulatory requirements such as the Corporate Sustainability 32

Executive board’s report | 2023 mangement report expects total business volume to increase by a significantly smaller margin than last year. On the funding side, Fraunhofer has solid orders for 2024 at this point. The planned revenue increase in publicly funded projects is a near certainty due to a large backlog of orders. The industrial revenue situation remains challenging. Amid growing uncertainty in the overall economic situation, the increase in absolute terms that has been planned by the institutes would be a win. The share of funding from industrial revenue is unlikely to rise significantly given the current situa- tion. It is difficult to foresee at this point how rising geopoliti- cal tensions (the war between Russia and Ukraine, the Middle East conflict) and the risk of a lasting recession in Germany will affect the development of Fraunhofer’s business. At the same time, the need for transformation in Germany and Europe is increasing and requires more speed if interna- tional competitiveness and prosperity are to be maintained in the future. Challenges include the global competition for monopolies on resources and technologies and for skilled workers, a sharp increase in geopolitical conflict, the worsen- ing climate crisis, the destabilization of entire societies through targeted disinformation, cyberattacks, and infrastructure attacks, and last but not least, disruptive changes brought about by generative AI and the platform economies. With its mission of applied research and accelerated transfer, Fraunhofer has a special role to play in harnessing holistic solutions to help make industry and society more resilient and forging ahead with the digital and sustainable transformation. Next-generation computers and microchips hold out spe- cial promise for Europe as a whole and Germany specifically. The next big technology cycle will be based on research-inten- sive technologies such as quantum and neuromorphic com- puting (QNC). Advances in these fields are being made under the umbrella of the Research Fab Microelectronics Germany (FMD) in tandem with other partners with the goal of ensuring that Germany and Europe not only remain competitive, but also can build access to production sites, for example within the framework of the QNC Space module. A broad techno- logical basis within that module ensures that a wide range of approaches to quantum computing — superconducting, neutral atom, ion traps or quantum dots and other approaches such as memristors for neuromorphic computing — can all be tested. Fraunhofer researchers are involved in a range of activ- ities to develop solutions and methods geared toward making information and communication technology less resource- intensive, such as the GreenICT@FMD initiative. Beyond digital solutions, sustainability and resource efficiency are critical considerations for all key technologies right from the start. This includes relying on renewable raw materials, reclaiming and recycling critical materials through a 34 circular economy, and eliminating substances harmful to health and the environment. There is also an increasingly urgent need for strategies and technologies to combat climate change and its effects. Germany in particular and Europe in general have a significant edge in this field, known as green tech, thanks in no small measure to Fraunhofer technologies. The task now is to seize the first mover advantage on the international stage and swiftly bring developments and business models to market. For Fraunhofer’s research findings to have an impact as they make their way into industry and society via a diverse range of pathways, it is crucial to establish overall conditions that are innovation-friendly. This includes experimental spaces where researchers work shoulder to shoulder with industry under market-driven conditions while EU state aid law, aspects of nonprofit status, and other regulations are also considered — in pursuit of topics such as generative AI solutions to alleviate the shortage of skilled workers. The “twin transformation” — that is, the simultaneous shift toward digital solutions and sustainability — can only be a success in today’s tough environment if it is achieved and implemented faster. The only way to accelerate the pace of change from initial concept to proposed solution will be to ease the burden of bureaucracy and foster greater coopera- tion between the research sector, business and industry, and government. New business and funding models, such as the expansion of regulatory sandboxes and new forms of cooperation for shared use of cutting-edge research infrastructure, especially by private-sector companies, are possible approaches for Fraunhofer. The executive board would like to thank the members, supporters, friends and, most of all, the employees of the Fraunhofer-Gesellschaft for their support, dedication and hard work in 2023. Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V. The executive board Prof. Holger Hanselka Elisabeth Ewen Dr. Sandra Krey Prof. Axel Müller-Groeling

Executive board’s report | The senate’s report The senate’s report on the financial year 2023 Hildegard Müller, Chair of the senate of the Fraunhofer-Gesellschaft The main theme of 2023 was change. Amid today’s tense economic environment and need for internal change, the Fraunhofer-Gesellschaft faced a variety of challenges, as did many other organizations. Thanks to the active, com- mitted and combined efforts of its nearly 32,000 employ- ees, Fraunhofer was able to maintain a steady course and stay on track toward its objectives. This course includes numerous internal change processes that the senate has been instrumental in initiating and supporting. This approach is helping to safeguard the Fraunhofer- Gesellschaft’s future viability so it can continue to per- form its full role as an important partner in ensuring that Germany and Europe as a whole remain an innovative, sustainable, and prosperous hub of economic activity. The Fraunhofer-Gesellschaft continued on a steady financial course in the financial year 2023, as previously. Total business volume increased by a moderate amount, to €3.4 billion. The contract research area grew to €3.0 billion. Industrial revenue (including licenses) reached a high of €836 million — a trend that is expected to continue going forward as well. Prof. Holger Hanselka, newly elected by the senate in 2023 to serve as the president of the Fraunhofer-Gesellschaft, worked with the 3366 executive board and in close coordination with the institutes to realign the entire organization toward the twin aims of expanding and strengthening the role of the Fraunhofer- Gesellschaft, primarily with an eye to values-driven research, and successfully transferring ideas and innovations to the German and European industrial sectors. In the spirit of what makes the Fraunhofer model unique, Fraunhofer is renewing its focus on industrial revenue from contract research and licensing and on spin-offs as well in an effort to transfer Fraunhofer research and development into the market through sustainable and innovative business models. This represents a substantial contribution to the ability to innovate within Germany and throughout Europe. In its role as an innovation driver, Fraunhofer is especially pivot- al in transferring research focused on the digital and sustain- able transformation. Starting with the OpenGPT-X initiative for large European language models for use in artificial intelli- gence (AI), Fraunhofer is involved in value-based generative AI developments. The goal is for future models to offer reliable fact checks, accurate and reliable sourcing, and data control, especially for industrial applications. Further growth opportu- nities for Europe and Germany lie in next-generation com- puters and microchips based on quantum and neuromorphic computing (QNC). Participating in shaping technological devel- opments is at the forefront there. An alliance of Fraunhofer and Leibniz institutes is advancing innovation in this area under the umbrella of the Research Fab Microelectronics Germany (FMD). For example, the GreenICT@FMD initiative is exploring ways to reduce resource consumption in the information and communication technology sector. n n a m z t u B k n m o D i i : o t o h P

The senate’s report | New senate members New senate members Otto Fricke Attorney at Law | Bundestag Member | Member of the Free Democratic Party (FDP) Federal Executive Board | Budget Policy Spokesperson of the FDP Bundestag Parliamentary Group Otto Fricke completed his studies of law at the University of Freiburg in 1992 and passed the second state examination with honors in the state of North Rhine-Westphalia in 1995. A practicing attorney, Fricke served briefly as an advisor for the FDP parliamentary group in the North Rhine-Westphalia Landtag and then became a parliamentary advisor to the FDP Bundestag parliamentary group until 2002. Born in Krefeld, he has worked at law firm Fricke & Fricke since 1995. From 2014 to 2017, Fricke practiced law while also holding a position as a partner at international corporate consulting firm CNC — Communications & Network Consulting AG. He has been a member of the Bundestag since 2002 and has served on the budget committee during five legislative periods to date, including chairing the committee during the 16th legislative period, which ran from 2005 to 2009 (the first cabinet under Angela Merkel as chancellor). Fricke recalls that a number of crises have been successfully navigated through budget policy in recent years, and he is an outspoken 38 proponent of returning the German federal budget to its normal scale, in keeping with the constitution. With a brother who is a mechanical engineer, Fricke views technology as the key to solving many of the problems we face today: “We need to combine a drive to innovate with government support to benefit our future. We often underestimate the influence of private investment, but it accounts for about 80 percent of the total. Unleashing this private appetite for investment on the government side is the only way we will overcome the challenges to come.” In addition to his role on the budget committee, Fricke is a member of the FDP federal executive board. He also sits on the Bundestag legal affairs committee, finance committee, trust panel, and the special panel on the European Financial Stabilisation Mechanism (EFSM). Fricke, who is a father, also holds other positions, including chairing the German–Dutch parliamentary group and serving as a member of the board of trustees of World Vision Deutschland e. V. and of the Leo Baeck Foundation. He was awarded the Cross of Merit of the Federal Republic of Germany in 2020 in recognition of his achievements. He is also a Grand Officer of the Order of Orange-Nassau. s l e f u a K n a i t s i r h C / e k c i r F o t t O : o t o h P “We need to combine a drive to innovate with government support to benefit our future.”

The senate’s report | New senate members New senate members Sönke Rix Early Childhood Educator | Bundestag Member | Deputy Chair of the Social Democratic Party (SPD) Bundestag Parliamentary Group Sönke Rix, born in Eckernförde, has been a member of the Bundestag since 2005, representing the Rendsburg-Eckern- förde electoral district. He was a member of the family affairs, senior citizens, women and youth committee from 2005 to 2021. Today, he is the deputy chair of the SPD Bundestag parliamentary group for the areas of family affairs, seniors, women and youth and of education and research. He is also a member of the board of the Parliamentary Left group within the SPD. Rix’s years of work on the family affairs, senior citizens, women and youth committee were informed by his experience as a state-accredited early childhood educator. During his edu- cation, he attended the Vocational School of Social Pedagogy in Kiel. During that time and afterward, he worked at Inte- grierte Gesamtschule Eckernförde (now Peter-Ustinov-Schule), a comprehensive school. Rix completed his mandatory civil service and probationary year at inclusion organization Eckern- förder Werkstatt, part of charitable organization Norddeutsche Gesellschaft für Diakonie. He also worked there as a specialist in work and vocational development. In addition, Rix was involved in the body representing employees at Werkstätten Rendsburg-Eckernförde, another organization dedicated to fos- tering inclusion. He remains a member of the ver.di trade union. Rix believes vocational training is the ticket to a self-deter- mined life, including working life. He is a proponent of a basic income to support children with a focus on social justice, the Startchancen program, which is geared toward supporting schools with high percentages of disadvantaged students, a legal guarantee of a spot in vocational training or education, and the opening up of student financial aid to allow for broad- er participation. Rix argues that education, whatever the end goal — from master’s degree to master craftsperson’s certifi- cation — should be decoupled from a person’s original family circumstances. “We need an education system that gives all young people the chance to live up to their full potential. That would help with the shortage of skilled workers, too,” Rix notes. “After all, when we skimp on education, all of society ends up paying a high price.” Community engagement and protecting minorities are also top priorities for Rix. He has volunteered as a legal guardian with the Local Court of Eckernförde since 2000. 40 t d m h c S a d n L : i i o t o h P “When we skimp on education, all of society ends up paying a high price.”

Review of Fraunhofer research | Fraunhofer world records Fraunhofer world records Organic solar cell with 15.8 percent efficiency At the Fraunhofer Institute for Solar Energy Systems ISE and the Materials Research Center FMF of the University of Freiburg, the record last set by the team in September 2020 for a 1-square-me- ter organic solar cell was beaten in July 2023. The new solar cell established a new world record in this category again with an efficiency of 15.8 percent. The improvement of the record solar cell was primarily achieved by using an anti-re- flective coating through which more light is absorbed into the photo-active layer of the cell, thus generating a higher current. The thin coating system required for the coating — deposited using a sputtering process — was also devel- oped at Fraunhofer ISE. Organic solar cells could open up new fields of appli- cation for solar energy, as these cells are ecofriendly and inexpensive to produce as well as being flexible, plus they can be made transparent. Anti-reflective coating for higher efficiency Setting standards for heat pump systems worldwide Power electronics for innovative heat pumps Fraunhofer researchers have been working on the ElKaWe flagship project since 2019 with the goal of developing high-efficiency electrocaloric heat pumps as an alternative to the currently wide- spread technology involving compressors and refrigerants. An ultra-efficient circuit topology for voltage converters based on gallium nitride (GaN) transistors with 99.74 percent electrical efficiency was finalized at the Fraunhofer Institute for Applied Solid State Physics IAF in July 2023. The GaN-based multilevel DC/DC converter is setting standards world- wide. Increased electrical efficiency leads directly to a higher coefficient of performance for the entire heat pump system, making it a milestone on the road to more-efficient heat pumps. Realizing a high coefficient of perfor- mance in electrocaloric heat pumps requires very high efficiency in materi- als, electronics, and heat transfer alike. Further research is still needed, but in the future, electrocaloric heat pumps could become a more efficient, fully emission-free solution for heating and cooling. 42 Cryogenic drive inverter for electric drives in aviation Drive inverter for electric flight Compact, lightweight electric drives are essential to the electric aviation of the future. Superconductive systems, in which electrical current flows with almost no resistance and barely any losses, would be a good solution. This enables maximum performance in terms of efficiency, weight, and installation space. Many electrical conductors do not become superconductive until they reach cryogenic temperatures. And that means all of the drive components, including the complex inverter, must be designed for these kinds of conditions. The Fraunhofer Institute for Integrated Systems and Device Technology IISB in Erlangen has demonstrated a cryogenic- capable 500 kW drive inverter for the first time. It is cooled with liquid nitrogen at 77 Kelvin (K), corresponding to –196 degrees Celsius. The cryogenic inverter is the result of a cooperation with Airbus UpNext. As part of its ASCEND program, Airbus is now build- ing a prototype of a fully cryogenic electric aircraft powertrain. The Fraunhofer IISB drive inverter has made this possible in the 500 kW power class for the first time. B S I I r e f o h n u a r F , E S I r e f o h n u a r F , F A I r e f o h n u a r F : s o t o h P

Review of Fraunhofer research | Projects and results Projects and results Five social goals for a future worth living 44

Review of Fraunhofer research | Projects and results Digital Transformation Real-world production machine (left) in the metaverse The industrial metaverse at your fingertips The metaverse is made up of interactive, immersive 3D environments. Extended reality (XR) technologies such as smart glasses, VR headsets and gesture input enable seamless interaction between the real and digital worlds. The industrial metaverse focuses on professional applications in industry and society, spanning fields such as transportation, plant engineer- ing, urban development, and medicine. It can be viewed as the next stage of the digital transformation, following Industry 4.0. Key technological building blocks of any metaverse include digital twins, simulations, XR technologies, artificial intelligence (AI), blockchains, and data spaces. Because the industrial metaverse offers such a wealth of technological potential, the Fraunhofer ICT Group has dedicated an entire strategic roadmap to this topic within its research portfolio. The 20 insti- tutes that make up the group act as technology suppliers and advisors on the planning and execution of use cases involving industrial metaverse technologies. The 5G Troisdorf IndustrieStadtpark (Troisdorf 5G industrial park) project, which received funding from the German federal government, realized metaverse applications for remote main- tenance and training in mechanical engineering and produc- tion applications. A technology demonstrator was presented at the Hannover Messe in 2023 and at the German federal government’s 2023 open house event. The technological basis comprises 5G Internet, remote rendering of CAD data, and mobile mixed reality and virtual reality headsets. A digital twin was developed for the production machine operated by project partner ZWi Technologies, which is used on the pro- duction line at Kuraray Europe, another partner in the project. The machine’s digital design data are custom-displayed in the user’s field of vision by the headsets, which also present additional information. Communication among geographically dispersed users is supported by avatars, pointing gestures, direct manipulation, and audio and video communication. This enables distributed learning scenarios for the operation and maintenance of the machine, for example, including active dialogue in virtual space. The project coordinator is the Fraunhofer Institute for Applied Information Technology FIT. 46 Energy-efficient heterogeneous high-performance computing Saving electricity with top digital performance The digital transformation is opening up promising possibilities, but the underlying systems need to be made more energy-effi- cient. That is the goal of the NAAICE joint research project. The project is developing network-attached accelerators for energy- efficient heterogeneous high-performance computing (HPC). This type of computing is used in fields such as climate model- ing, astrophysics, and biology. It requires powerful processors, which in turn need a lot of energy. The NAAICE consortium is working to harness capacity in HPC data centers more effi- ciently. Conventional data centers generally use computers that are built on a base of homogeneous standard components and used for many different processes. For HPC applications, they typically utilize only specific parts of a standard computer, so a lot of capacity is lost. By contrast, the NAAICE partners are developing a heterogeneous system architecture in which computers are flexibly equipped for specific applications. To achieve this, the team is working with special integrated circuits known as field programmable gate arrays (FPGAs), which allow for new functions to be added continuously. The project’s core technology is the novel concept of the network-attached accel- erator (NAA), which is based on FPGAs. It was developed at the Fraunhofer Institute for Telecommunications, Heinrich-Hertz-In- stitut, HHI, Berlin. Unlike in previous concepts, in which FPGAs are integrated into data centers, NAAs are decoupled from the server processors. They are connected via the network instead, making them dynamically usable. Ultimately, they offer both more flexibility and lower energy consumption due to improved capacity utilization. The partners’ current development targets include software for integrating NAAs into HPC data centers. NAAICE was launched in 2022 with funding from the GREEN HPC line provided by the German Federal Ministry of Educa- tion and Research (BMBF). Along with Fraunhofer HHI, the University of Potsdam, the Zuse Institute Berlin, the Helmholtz Centre Potsdam GFZ German Research Centre for Geosciences, and PERFACCT GmbH are involved in the project. The results will be made available as open source software at the end of the project. i i L P a d e m a / k c o t s r e t t u h s , T I F r e f o h n u a r F : s o t o h P

Review of Fraunhofer research | Projects and results Fully circular economy Development of bioplastics made of polybutylene succinate Finger orthoses made from fully compostable plastic More types of PBS bioplastic Recyclable and biodegradable plastics made from locally avail- able plant residue instead of petroleum: That is the goal for the 18 partners working on the RUBIO project, which is funded by the German Federal Ministry of Education and Research (BMBF). The Fraunhofer Institutes for Applied Polymer Research IAP and for Microstructure of Materials and Systems IMWS are participating in the project. Fraunhofer IAP is developing new types of a bioplastic called polybutylene succinate (PBS) that will be more versatile than before. Fraunhofer IAP worked with POLIFILM EXTRUSION GmbH, in the state of Saxony-Anhalt, to develop a PBS film suitable for shipping pouches. The German company produces plastic films for the construction, agricul- ture, and automotive sectors as well as other industries. Coop- eration between the applied research sector and businesses has made it possible to produce these films using standard extrusion systems, unlocking options for further development geared toward the needs of industry. The polymer experts at Fraunhofer IAP are providing support in terms of the methods used to synthesize new types of bioplastic, but that is not all. They are also transferring the results from the laboratory and pilot plant to the industrial pilot scale at the Fraunhofer Pilot Plant Center for Polymer Synthesis and Processing PAZ. At the Processing Pilot Plant for Biopolymers Schwarzheide, newly developed PBS types and mixtures are being studied with an eye to various criteria, such as thermoplastic processing, biode- gradability, recyclability, and printability. Few plastics processors have been bold enough to switch to bioplastics so far. Issues with supply chain reliability, higher costs, too little choice of different types of bioplastics, and questionable suitability for certain applications pose serious obstacles. Recycling, too, is only worthwhile for plastics that are present in large quantities in waste streams. With all this in mind, the RUBIO project consortium is continuing to develop PBS bioplastic. In the future, the goal is to source the raw materials for the plastic from local residue and waste — from biogas plants, agricultural operations, or paper production. If they are successful, shorter transportation distances could then even lower the prices. 48 The biological side of Industry 4.0 How can automotive manufacturing be made sustainable? A consortium led by the Fraunhofer Institute for Production Systems and Design Technology IPK has developed pilot pro- cesses for sustainable value creation as part of the BioFusion 4.0 funding project (German Federal Ministry of Education and Research, BMBF). Partners included Mercedes-Benz AG, Werner-von-Siemens Centre for Industry and Science e.V., and Technische Universität Berlin. The 13 entities involved devel- oped solutions to support workers through biointelligent assis- tance systems and solutions for the use of biogenic materials, for example. As one use case, an orthosis for component assembly in automotive production was developed: Intelligent algorithms are used to produce individual 3D bioplastic orthoses for workers’ hands. The bioplastic is made from grease or fat, making it 100 percent compostable. The consortium also devised a multi-agent system that can be used to automatical- ly control the distribution of production orders. Workers can use a dashboard to track how far along orders that have been received are in the process, visualize any workstations that are down, and get support with automatic adjustment of produc- tion steps. This kind of self-organized process control allows production companies to operate with greater flexibility and resilience. A product’s individual lifetime carbon footprint is also calcu- lated. The aim is to incorporate these data into the Catena-X nonprofit organization via the Fraunhofer network. This collaborative, open data ecosystem represents the largest automotive industry project in relation to future production concepts: trusted data exchange among all stakeholders in the automotive industry — from the initial supply stage right through to the original equipment manufacturer (OEM). This exchange is based on the software services of International Data Spaces (IDS) and Gaia-X. l n e s s a K a s s i r a L / K P I r e f o h n u a r F , M L I F I L O P : s o t o h P

Review of Fraunhofer research | Projects and results Complete Energy Transition Drilling to explore geothermal energy Modeling the expansion of the electrical grid Drilling to harness geothermal energy Water from decommissioned mines can contribute substantually to municipal heating and cooling needs. “Cold local heating net- works” can be used to distribute heat to surrounding buildings. Heat pumps there are a very efficient option for heating the water to domestic hot water levels, as they supply heat pumps in surrounding buildings at even low working temperatures. Many of the decommissioned coal mines in Germany’s Ruhr region contain large reservoirs of water. The D2Grids project, located on the grounds of a former Opel plant in Bochum, offers a blue- print for grid-connected low-temperature heating and cooling solutions in northwestern Europe. The former Dannenbaum coal mine is to be used to provide a climate-friendly supply of warm and cold water for the urban district being developed on the former Opel grounds (approximately 70 hectares). Pump- ing tests conducted in the spring of 2023 confirmed that the geothermal potential is sufficient. That marked the start of construction of an energy center. Going forward, warm water at temperatures of 27–28 degrees Celsius is to be pumped from a depth of 807 meters, then heated to approximately 48 degrees Celsius using heat pumps, and finally fed into the network. For cooling supply purposes, “cold” water at a temperature of about 17 degrees Celsius will be pumped from a depth of some 340 meters. This will be enough to cover about 75 percent of local needs. The Fraunhofer Research Institution for Energy Infrastructures and Geothermal Systems IEG was responsible for the under- ground activities, such as drilling through a substrate packed with old mine parts, and the logistics for the extensive pumping tests. It also advised local utility company Stadtwerke Bochum on the overall energy concept, including geothermal systems, heat networks, underground reservoirs, and large-scale heat pumps. Using the water from the mine as an energy source is expected to reduce carbon emissions by about 3,200 metric tons a year compared to a conventional supply involving natural gas and electric compression chillers. D2Grids is supported by the programs Interreg for northwestern Europe and Wärmenetze 4.0 (Heating Networks 4.0). Electrical grid development — down to the block Transmission system operators 50Hertz, Amprion, TenneT, and TransnetBW presented the first draft of the electrical grid development plan for 2037/2045 to the German Federal Net- work Agency in the spring of 2023. For the first time, the plan describes an electrical grid with which climate neutrality can be achieved by 2045. To do this, the Fraunhofer Institute for Energy Economics and Energy System Technology IEE modeled the regionalization of renewable energy using specific maps for the expansion of wind and solar energy facilities. The plan expects present-day electricity consumption levels to double to more than 1,000 terawatt-hours. Serving that level of demand will require installed output from renewables to approx- imately quintuple to as much as about 700 gigawatts in 2045. Incorporating this high level of output into the electrical grid while also ensuring safe and reliable operation requires accel- erated action to expand the grid. The regionalization study by Fraunhofer IEE models right down to the postal code level how the construction of additional wind turbines and solar farms will be distributed around Germany in the future. With separate areas for onshore wind energy and for solar arrays in open areas and on rooftops, various data sources were used to localize existing and planned facilities and set their output in relation to the power specifications for each federal state designated in the grid development plan. Known potential and areas identified in potential analyses were weighted according to various parame- ters, such as availability, suitability, soil quality, and potential for conflict and then assumptions were made regarding develop- ment with new installations until the relevant output specifica- tions were reached. The results are summarized in map form for the existing status as of 2022 and then for the two scenarios underlying the grid development plan, which are set for 2037 and 2045. This means the study by Fraunhofer IEE gives transmission system operators a detailed basis for developing the network with an eye to the future and bringing renewable energy to wider areas of the country. 50 i r e d e n h c S m h c A i / m o c . k c o t S i , r e f o h n u a r F / l u a k e r K a h c s a S : s o t o h P

Review of Fraunhofer research | Projects and results Affordable healthcare Doctor’s letters drafted with natural language processing (NLP) Using AI to combat billing fraud in healthcare AI to help with doctor’s letters Around 150 million doctor’s letters are written every year in Germany, a time-consuming process. And yet, a large portion of the medical information involved is already present in text form. In the future, the laborious process of analyzing and fur- ther processing this information will be handled by natural lan- guage processing (NLP), a combination of algorithms and artifi- cial intelligence (AI). To accomplish this, the method involves extracting information from texts and providing it in structured form. Processes like quality assurance, preparation of statistics, support for clinical decisions, and billing can all be streamlined in this way. RightCoding (RICO), a software program devel- oped by the Fraunhofer Institute for Intelligent Analysis and Information Systems IAIS, is already in use. It greatly simplifies the coding and billing process at many hospitals. Doctor’s let- ters will soon be generated automatically as well. A team from Fraunhofer IAIS plans to test a prototype for discharge papers at Universitätsmedizin Essen as early as 2024. The project is part of the SmartHospital.NRW flagship project, which itself is part of the KI.NRW expertise platform. Text, speech, and signal processing technologies are being studied in particular. Scientists at Fraunhofer IAIS wrote a white paper titled “Nat- ural Language Processing in der Medizin” (Natural Language Processing in the Medical Sector) that summarizes the overall possibilities that NLP opens up for the field of medicine. The paper highlights recent developments and current uses for AI in document-based processes in the medical field. Health data is currently one of the fastest growing data sets. At the same time, the healthcare sector faces numerous challenges, such as staff shortages, cost pressure, and information overload. The goal now is to work with healthcare institutions to tap into the full potential of AI-based automation, with particular attention to patient wellbeing and easing the workloads of healthcare professionals. AI uncovers fraudulent healthcare billing Billing fraud in the healthcare sector adds up to several billion euros in losses every year. The digital transformation of pro- cesses gives rise to new possibilities for systematically identi- fying fraud — whether in nursing care, hospital settings, or public administration. In the PflegeForensik project, researchers from the Fraunhofer Institute for Industrial Mathematics ITWM in Kaiserslautern joined forces with the office of the public prosecutor general in Dresden and the white-collar crime unit of the Leipzig police department to tackle billing fraud in the healthcare sector. The partners created a software solution that uses artificial intelligence (AI) to help with investigations. First, image processing was used to develop algorithms to automatically scan the mountains of paper and analyze them intelligently. The algorithms can do things like find signatures and associate them with the correct individuals. Comparing the rounds and schedules for nursing staff against billing data can flag potential instances of fraud. To find these and other anomalies and analyze them digitally, the researchers worked with users to translate typical investi- gations into mathematical models. Training the AI algorithms involved first anonymizing several hundred documents and then manually marking them with particular properties. Working from this data as a basis, AI algorithms can then learn problem-related patterns. The solution was specifically developed to allow it to be adjusted to new data and improved or corrected over time. A workshop held to mark the project’s conclusion, in 2023, gave representatives of law enforcement agencies, the judiciary, and health insurance funds an oppor- tunity to try out a software demonstrator. The work received support from Germany’s Federal Ministry of Education and Research (BMBF) under the Research for Civil Security program. The partners plan to continue the project and ideally create live software that offers maximum intuitiveness and ease of use while at the same time supplying results that can be used in court proceedings. 52 M W T I r e f o h n u a r F , i m a g n n p a y n i r a s / m o c . k c o t S i : s o t o h P

Review of Fraunhofer research | Projects and results Security and a resilient society Key cash supply points identified for emergency situations Infrared imager in the ERNST small satellite Supply of cash in a crisis The global polycrisis of recent years has made it clear that people should be prepared for sudden emergencies such as widespread power outages or the failure of the IT and communication network — including the case of electronic payment systems, which typically stop working when these kinds of situations arise. In early 2023, an alliance of research- ers and key stakeholders in the cash cycle published a security concept containing recommendations for how the cash cycle can be made more resilient. A project titled Resilience of Cash Supply — Security Concepts for Emergencies and Crises (BASIC) was coordinated by the Brandenburg Institute for Society and Security (BIGS). Researchers with the Supply Chain Services working group of the Fraunhofer Institute for Integrat- ed Circuits IIS have developed an optimization algorithm to identify key cash supply points in Germany. Working on specific scenarios, they used mathematical opti- mization to pinpoint the optimum supply of cash to supply points that should be able to maintain operations in a crisis. These specific ATMs or bank branches should be equipped with emergency power generators to keep them operational in a crisis, for example. Another area of focus for the project was harmonizing the specific emergency and crisis plans for all stakeholders in the cash cycle and further safeguarding working processes, especially those of cash and valuables service providers. The project partners were Brandenburgische Institut für Gesellschaft und Sicherheit gGmbH (BIGS), Bundesvereinigung Deutscher Geld- und Wertdienste e.V. (BDGW), Cash Logistik Security AG, and the Supply Chain Services working group of Fraunhofer IIS. The consortium project received a three-year grant from the German federal government’s Research for Civil Security program along with support from the German Federal Ministry of Education and Research (BMBF). Small satellite detects hypersonic flying objects The first small satellite mission for the German armed forces is due to launch into low Earth orbit in June 2024. Its mission is to detect the launch of ballistic missiles or hypersonic flying objects into low Earth orbit early on. To achieve this, several Fraunhofer institutes led by the Fraunhofer Institute for High-Speed Dynamics, Ernst-Mach-In- stitut, EMI developed a nanosatellite called ERNST. A cryogen- ically cooled infrared camera is the centerpiece of the satellite, which is about the size of a crate of beer. For effective early warning to enable interception measures, the surface of the planet is monitored in different short- to medium-wavelength infrared ranges. The detection concept, which was developed by the Fraunhofer Institute for Optronics, System Technolo- gies and Image Exploitation IOSB, combines various spectral ranges to detect and track a rocket’s infrared signature, which changes during the different phases of flight. For ERNST and its mission, Fraunhofer EMI combined and mod- ified available products from New Space and the defense seg- ment with elements developed in-house. One special feature is the bionic-seeming optical table where the camera compo- nents are placed, which was made using generative manufac- turing. Among other things, a radiator with a three-dimension- al structure was incorporated. It discharges heat over a much smaller surface area than conventional flat radiators. To carry out its mission, the small satellite is equipped with a visual camera for georeferencing and a radiation monitor developed by the Fraunhofer Institute for Technological Trend Analysis INT. The monitor uses detector elements with various types of shielding to measure the total dose of radiant energy hitting the satellite, along with the influence of protons and neutrons. If all goes well with ERNST’s 2024 launch, the small satellite will then carry out its three-year mission and return to Earth afterward by unfurling a braking sail. The goal here is to demonstrate sustainable use of the space environment. 54 I M E r e f o h n u a r F / t r a h d e o g n o e l , r s e r d n a / m o c . k c o t S i : s o t o h P

Review of Fraunhofer research | Awards Awards Fraunhofer research prizes Fraunhofer Prize for Human- and Environment-Centered Technology This prize is presented by the Fraunhofer- Gesellschaft, the Fraunhofer-Zukunfts- stiftung (Fraunhofer Future Foundation), and the former executive board mem- bers, institute directors, and associated supporters of the Fraunhofer-Gesell- schaft. It is awarded every two years for achievements in research and develop- ment that improve people’s quality of life or help make our world more sustain- able. In 2023, the Fraunhofer-Zukunfts- stiftung (Fraunhofer Future Foundation) contributed for the first time to the prize money, which amounts to €50,000. The Fraunhofer-Zukunftsstiftung (Fraunhofer Future Foundation) supports research projects of the Fraunhofer-Gesellschaft that facilitate and accelerate the trans- formation to a sustainable economy and way of life. Its activities are guided by the United Nations’ Sustainable Develop- ment Goals (SDGs). Joseph von Fraunhofer Prize Since 1978, the Fraunhofer-Gesellschaft has awarded the Joseph von Fraunhofer Prize to its employees for outstanding scientific achievements that solve prac- tical problems. Criteria for awarding the prize include how new and innovative the scientific-methodical approach is, the advancement of knowledge, and the implementation of the scientific results in applications. Three Joseph von Fraunhofer Prizes were awarded in 2023, each one with €50,000 in prize money. Hugo Geiger Prize The Bavarian Ministry of Economic Affairs, Regional Development and Energy awards the Hugo Geiger Prize for outstanding doctoral theses written in collaboration with Fraunhofer insti- tutes. The award is named after the Bavarian secretary of state Hugo Geiger, who sponsored the inaugural assembly of the Fraunhofer-Gesellschaft on March 26, 1949. Fraunhofer Prize for Human- and Environment-Centered Technology 2023 Satellite technology: Sustainable use of water in agriculture A new satellite technology has made it possible to irrigate plants on a targeted, as-needed basis. It detects radiant heat from orbit and measures land surface temperatures. This allows researchers to deduce how much water a plant needs. Researchers from the Fraunhofer Institutes for High-Speed Dynamics, Ernst-Mach-Institut, EMI and for Applied Optics and Precision Engineering IOF, together with the companies constellr GmbH and SPACEOPTIX GmbH (both spin-offs of these institutes), have taken inspiration from the founding principle of constellr GmbH to develop the infra- red camera LisR — short for Longwave infrared sensing demonstratoR. LisR was successfully tested on the International Space Station (ISS) in 2022. Based on these discoveries, constellr now plans to launch its own satellites into orbit. Lever- aging the satellite network would make it possible to save 180 billion metric tons of water and 94 million metric tons of CO2 annually starting from 2026 and increase global harvests by up to four percent. 56 Cassi Welling, Dr. Henrik von Lukowicz, Dr. Matthias Beier and Clemens Horch (from left)

Review of Fraunhofer research | Awards Hugo Geiger Prize 2023 First place Hugo Geiger Prize 2023 Second place Hugo Geiger Prize 2023 Third place New material for semiconductor memory Efficient 3D audio with superior sound quality A novel approach to early detection of cancer In his dissertation with the Fraunhofer Institute for Photonic Microsystems IPMS, Dr. Maximilian Lederer developed methods of producing hafnium oxide. This makes it possible to realize faster, energy-saving and secure RAM or USB storage and neural networks for artificial intelligence. The ferroelectric capabili- ties of hafnium oxide, a material used in semiconductor technology, were not fully understood previously, so it could not be used reliably in non-vol- atile ferroelectric memory (FeRAM). Lederer used new methods to study the material’s crystalline microstructure and find out how physical processes taking place at the molecular level and depo- sition and process conditions affect the ferroelectric switching behavior of HfO2. Using this as a basis, he developed new production processes that optimize the material’s growth or composition, such as the electric field-induced crystalliza- tion that he showed for the first time. Globalfoundries, a chip manufacturer based in Dresden, is currently testing ferroelectric storage components in a research and development line. Through his dissertation with the Fraunhofer Institute for Integrated Circuits IIS, Dr. Sascha Dick has con- tributed to the high-quality, efficient transmission and processing of 3D audio signals. He conducted extensive listening tests and discovered that the accuracy of localizing spatially distributed sound sources can also be determined through data analysis. The psycho-acoustic model he developed on this basis describes how the spatial distribution of the volume emitted by different sound sources is perceived. This can be used as a foundation for aggregating the sources that are indistinguishable and reducing their number by a factor of ten — all while maintaining excellent sound quality. This makes it possible to develop efficient 3D coding algorithms that enable not only high-quality cine- matic conversion for home theater use, but, thanks to significantly reduced data rates, real-time applications in virtual reality and gaming as well. Intelligent aggregation of sound sources can also help improve the intelligibility of speech, and thus improve acoustic accessibility. In her doctorate with the Fraunhofer Institute for Cell Therapy and Immu- nology IZI, Dr. Susann Allelein laid the groundwork for simpler liquid biopsies for faster cancer diagnosis by means of extra- cellular vesicles. Thanks to these particles, long viewed as mere cellular waste, liquid biopsies involving blood or urine samples could take the place of tissue biopsies in the future, eliminating the disadvantages of that method. Cells exchange informa- tion on their properties and components with each other via the extracellular vesicles in bodily fluids. In her ground- breaking dissertation, Allelein studied how these particles can be used for early detection of prostate cancer. She devel- oped new methods to efficiently charac- terize the vesicles, which are about the size of viruses, and isolate the relevant ones among them from the many cellular information packets moving around the body. Although the protein specific to prostate cancer that she originally studied turned out to be unsuitable as a marker, Allelein laid important foundations for further research involving extracellular vesicles, whose potential extends beyond cancer diagnosis to precision treatment monitoring and development of vaccines. t r e n u r G a e a h c l i M / I Z I r e f o h n u a r F , t r e k u P l u a P / S l I I r e f o h n u a r F , k a s s a L n a i t s a b e S / S M P I r e f o h n u a r F : s o t o h P Dr. Maximilian Lederer Dr. Sascha Dick Dr. Susann Allelein 58

Review of Fraunhofer research | Awards Prof. Karl Mandel (Fraunhofer ISC) and Dr. Oliver Höhn (Fraunhofer ISE) (from left) European Research Council Consolidator Grant The European Research Council (ERC) awards five-year Consolidator Grants valued at up to €2 million to promising postdoctoral researchers. Two Fraunhofer scientists will be able to intensify work on their projects starting in 2024. Prof. Karl Mandel from the Friedrich-Alex- ander-Universität Erlangen-Nürnberg and the Fraunhofer Institute for Silicate Research ISC is pursuing a project called SmartRust with the goal of transforming objects into material that can sense and communicate environmental influences. Mandel’s aims include ensuring product safety and material reliability, enabling predictive maintenance, and making the complex recycling status of materials transparent. Dr. Oliver Höhn from the University of Freiburg and the Fraunhofer Institute for Solar Energy Systems ISE plans to advance his research on resource-friendly, ultra-thin, and high-efficiency solar cells as part of the PHASE project. Among other things, the funding will be used for a plasma etching system for semiconductor materials in main chemical groups III and V of the periodic table. PHASE aims to extend the concept of ultra-thin single solar cells to tandem solar cells, thus signifi- cantly reducing the cost and amount of materials used for the resource-intensive semiconductor part. Across Europe, 2,130 researchers had applied for the current ERC grant round. Just over 300 Consolidator Grants were awarded. i g r u b e r F f o y t i s r e v n U i there for transporting live cells or organ- oid systems at external temperatures and not frozen, as before, is increasingly important these days for applications such as treating severely ill patients with cell therapies (CAR-T therapies or with ATMPs) or for alternatives to toxicologi- cal animal testing in drug development. Previously, the cells or tissue had to be frozen with liquid nitrogen before being transported, for example from a hospital to a lab or between biotechnology and drug companies. This can harm sensitive cells. Cellbox is the first ever transporta- tion system available to preserve these materials without freezing them. The Cellbox team currently has 15 members. They sell the company’s transportable cell incubator worldwide, serving customers from Germany, elsewhere in Europe, the United States, and Asia, with a particular focus on China. In 2023, the European Innovation Council granted the Fraunhofer spin-off its Accelerator Award, one of the lines of funding under the EU’s Horizon Europe program. The award comes with €2.5 million in base funding with the option of matching an additional €10 million in equity capital over the next few years. The spin-off plans to work with a number of other Fraunhofer institutes to further develop the Cellbox shipper for other applica- tions, including the advanced therapy medicinal product (ATMP) market. Prof. Kathrin Adlkofer is the founder of Cellbox. Cellbox wins EIC Accelerator Award Cellbox was spun off from what is today the Fraunhofer Research Institution for Individualized and Cell-Based Medical Engineering IMTE in 2016 with the idea of shipping live biological material for the first time. The solution developed 60 , m a s l e S n i r t a K / C S I r e f o h n u a r F , n n a m r h e W s r a L / s n o i t u o S x o b l l l e C : s o t o h P

Review of Fraunhofer research | Awards Sustainable Award in Automotive Corporate consulting firm Arthur D. Little presented the third Sustainability Award in Automotive in 2023 in cooperation with Springer’s professional publications focusing on automotive and engine technology. EDAG Engineering GmbH was recognized for its modular vehi- cle concept in the “Technology: Full Vehicle” category. The idea traces back to collaboration with the Fraunhofer Institute for Machine Tools and Forming Technology IWU. The goal of the joint project was to develop a vehicle platform for electric cars that is durable and offers protection in the event of a collision. The modular vehicle concept design makes it possible to replace individual compo- nents and reuse others multiple times. The judges pointed out that this extends the vehicle’s life. Vibro-acoustic metamaterials bring significant improvement in vibration behavior and are versatile in use 62 Science Prize for Operations Research The German Operations Research Society (GOR) awards a science prize every two years. The prize for 2023 went to Prof. Anita Schöbel, head of the Fraunhofer Institute for Industrial Mathematics ITWM and a professor at the University of Kaiserslautern-Landau (RPTU). The field of operations research supplies mathematical models for decision making. Schöbel stressed that she wanted to raise the profile of these methods across society at large, govern- ment, and industry and pointed out that distribution of energy and planning of mobility are challenges that operations research can help with. Prof. Anita Schöbel Best idea ever entered in INNO- space Masters competition In 2023, the vibro-acoustic metamaterial (VAMM) technology from the Fraunhofer Institute for Structural Durability and System Reliability LBF was selected as the best idea from a research organization ever to have been submitted since the INNOspace Masters competition was first inaugurated, in 2015. The Fraunhofer LBF team has placed in the top three several times over the years. For example, Fraunhofer researchers began working with project partners MT Aerospace and OHB-System AG in 2017/18 to build three space demonstrators. Their work took the stresses involved in launch- ing carrier rockets into account and Prof. Peter Liggesmeyer German Prize for Software Quality The German Prize for Software Quality for 2023 (DPSQ23) was awarded to Prof. Peter Liggesmeyer in June. Liggesmeyer, the head of the Fraunhofer Institute for Experimental Software Engineering IESE and holder of the chair of Soft- ware Engineering in the Department of Computer Science at the University of Kaiserslautern-Landau (RPTU), works on the topics of safety, security, reliability, and availability, particularly in the auton- omous systems segment. The German Prize for Software Quality has now been awarded three times by the Working Group Software Quality and Training (ASQF), a specialist group of the German Informatics Society (GI-TAV), and the German Testing Board (GTB). showed how suitable the materials are for use in space. The findings of the Silent Running research project showed that VAMMs can be used in space and that the technology opens up new options for lightweight construction and vibration reduction. VAMMs contribute to lightweight construction solutions in the costly field of space systems, but that is not all. They also help to ensure that optical assemblies are not adversely affected by micro-vibration, so they can function without disruptions. Metama- terials display behaviors not found in nature. Along with optical and electro- magnetic metamaterials, these kinds of materials can also be used to reduce noise and vibration. e d y e H s a h t t a M i / E S E I r e f o h n u a r F , M W T I r e f o h n u a r F , e k p a a R l a u s r U / F B L r e f o h n u a r F : s o t o h P

People in research “The transformation of the energy system over the next two decades will be based mainly on technologies that are fairly well known today.” 64 / l e g n o d r u n o m o c . k c o t S i , r e a m b A e k M i i / r e f o h n u a r F : s o t o h P

Review of Fraunhofer research | People in research Prof. Liliana da Silva Ferreira Computer Scientist | Member of the Executive Board of Associação Fraunhofer Portugal Research | Director of the Fraunhofer Center for Assistive Information and Commu- nication Solutions AICOS, Porto | Invited Full Professor at the Faculty of Engineering, University of Porto Returning to excellent research conditions Prof. Liliana da Silva Ferreira led what is now the largest inde- pendent foreign Fraunhofer affiliate in Europe, the Associação Fraunhofer Portugal Research (or Fraunhofer Portugal for short), from 2017 until the end of November 2023. The first Center for Assistive Information and Communication Solu- tions AICOS was created in her hometown, Porto, under the umbrella of the newly formed nonprofit Fraunhofer Portugal in 2008, and Ferreira joined in the role of senior scientist not long after, in 2011. Her doctorate, which dealt with automated information extraction for medical reports, was an excellent fit for the topics covered by the new research institution. The subject was very current then, as it is now. Natural language processing (NLP) is a subfield of artificial intelligence (AI). While NLP relates to the analysis of natural language by computers, human-like content can now be produced by generative AI, such as ChatGPT. Ferreira accepted an offer from an industrial group in 2016 and moved to the Netherlands with her family, including her children, who were small at the time. An insight came to her while working on the other side of the development and trans- fer equation: “It wasn’t until | worked in development on the industry side that | realized that we at Fraunhofer AICOS were already operating at the highest international level in terms of science, right up there with top industry players.” That reali- zation has stayed with her to this day, giving her fresh drive. In 2017, Ferreira returned with her family — to Porto, and to Fraunhofer. The reason was that the Portuguese research ministry was planning to build another Fraunhofer center. Its themes were to be water and resource management. Both are pressing issues that demand solutions in Portugal, as they are across the whole of southern Europe. The populace and economy alike are already greatly suffering from the effects of climate change; one ministry employee Ferreira negotiated with about the Portuguese part of the base funding went without running water at home for several weeks in December 2017 — which should actually be the season when Portugal’s many reservoirs are refilling. Ferreira brought a number of partners on board to develop the second Fraunhofer Portugal Center, especially the National Foundation of Science and Tech- nology, the University of Évora, and the University of Trás-os- Montes and Alto Douro. Another objective was to raise funds for equipment and infrastructure for the Center for Advanced Water, Energy and Resource Management. Her move to become the President of the Executive Board of Associação Fraunhofer Portugal Research marked a definitive shift for Ferreira as she transitioned from science to research management. She was able to present impressive figures during the successful evaluation of Fraunhofer AICOS in Octo- ber 2023: External project revenue rose from €1.91 million in 2018 to a projected €3.84 million for 2023. Fraunhofer AICOS has been involved in 19 EU projects since it was first founded. It maintains partnerships with over 400 organizations in 37 countries and has been granted 18 patents based on the 38 applications filed to date. The head of Fraunhofer Portugal was awarded the Fraunhofer Thaler at the internal International Day event in 2023 in recognition of her years of work in various positions. Ferreira stepped down as executive board president at the end of 2023. She has remained a board member and will be focusing more on Fraunhofer AICOS in her role as its director going forward. She was succeeded as the President of the Executive Board of Associação Fraunhofer Portugal Research by Pedro Almeida. Ferreira is happy to be moving back to a famil- iar range of duties, as it will give her an opportunity to work with her team as a computer scientist, creating digital applica- tions that benefit humanity in line with the motto “Proposing Futures. Impacting Lives.” 66

Review of Fraunhofer research | People in research “Transdisciplinary research will not only make it possible to achieve a sustainability transforma- tion across society, but also to bring more young people into the study of engineering with social science aspects in the future.” a c i s a B a fi a r g o t o F / m o c . k c o t S i , e k p a a R a u s r U l 68 / F B L r e f o h n u a r F : s o t o h P

Review of Fraunhofer research | People in research Katrin Klug Data Scientist | Business Analytics | International Business | Marketing and Commercial Distribution The move to generative AI From business and economics in aviation to a hotspot of generative artificial intelligence: Katrin Klug worked as a data scientist at Germanwings, then the International Air Transport Association in Montreal, and then Eurowings before making a change in 2020. She had already worked with applications and solutions relating to various aspects of data analysis when writing her master’s thesis at Hochschule Düsseldorf University of Applied Sciences. At that time, she developed an AI forecast model for Eurowings Technik GmbH to predict flight delays and cancellations, which provided effective support for fleet management purposes. Her work paid off, and Klug received a special award in 2020. Verein der Förderer des Fachbereichs Wirtschaftswissenschaften der Hochschule Düsseldorf e.V., a nonprofit association of supporters of the business school at her university, praised her model’s outstanding practical relevance. Klug applied to work as a data scientist at Fraunhofer IAIS later that year. Her first assignment was to advance knowledge and technology transfer for artificial intelligence (AI). To that end, she set up a blog on machine learning (ML) and AI named the “ML-Blog.” Researchers from the Fraunhofer Institutes for Intelligent Analysis and Information Systems IAIS and for Material Flow and Logistics IML, the University of Bonn, and TU Dortmund University all write posts there under the umbrella of the Lamarr Institute. Writing for the general public and companies alike, they explain the innovative potential of AI in robotics and illustrate what generative AI (GenAI) is all about and how it can be used. Their work is so accessible that media outlets such as heise have reported on it. These days, Klug assists companies in making the move to AI — from testing research findings through to successful implementation. She developed the “GenAI Campus” collab- oration format at Fraunhofer IAIS to support these activities. These several-day workshops bring employees of private enterprises together with scientists for close cooperation. Together, they take a deep dive into the fundamentals and potential applications of generative AI. The goal is to develop concrete use cases with the companies and test various foun- dation models or AI language models directly. The workshop concludes with a proof of concept, ideally followed by joint technological development. A GenAI Campus event is also a forum for questions surrounding the trustworthiness of AI — the famed “black box” question — and its limitations, such as hallucinations. “We show how effective artificial intelligence can be in making people’s day-to-day work easier. With our support, companies can dive into the new technologies very quickly, try them out, and gauge their benefits and suitability for their use cases. Those could be anything from form assistance features for administration and analytical tools for the financial industry to smart purchasing and quote management,” says Klug, who, as an AI expert, now works as a project manager and instructor within the Fraunhofer Big Data AI Alliance training program. She is also participating in the work to generate doctor’s letters automatically via generative AI as part of the KI.NRW flagship project SmartHospital.NRW (see p. 52). Around 150 million doctor’s letters are written every year in Germany. This takes precious time which could be used elsewhere. “Studies show,” Klug says, “that healthcare professionals in clinical settings spend three hours a day on administrative tasks. That’s three hours that could be used for patient care instead if generative AI takes care of those tasks.” 70

Review of Fraunhofer research | People in research “Safely crushing melted radioactive material at Chernobyl to collect it for interim storage is a challenge that no one has solved so far.” r r r a h a S / m o c . k c o t S i , S W I r e f o h n u a r F : s o t o h P 72 72

Review of Fraunhofer research | People in research Dr. Eva Ehrentreich-Förster Chemist | Deputy Head of the Bioanalytics and Bioprocesses Institute Branch at the Potsdam-Golm Site of the Fraunhofer Institute for Cell Therapy and Immunology IZI | Head of the Department of Molecular and Cellular Bioanalytics Diagnostics as a special case in analytics Eva Ehrentreich-Förster officially graduated in chemistry at TU Bergakademie Freiberg, in what was then East Germany, on November 9, 1989, the very day the country opened its borders. She didn’t end up joining the throngs crossing to the west the day the Berlin Wall came down, since she was happy just to get home amid the transit chaos following her gradua- tion ceremony. But her decades of work as a researcher after that would often see her straddling the line between different worlds: transcending disciplines as a project manager for lab- on-a-chip systems, navigating between the institute and exec- utive board perspectives as an elected representative of the scientific and technical council at Fraunhofer, and in the role of acting institute director until just recently. Prof. Antje Bäumner stepped in as institute director in August 2023, heading the Brandenburg part of the Fraunhofer Institute for Cell Thera- py and Immunology IZI. Ehrentreich-Förster has been happy to go back to her position as deputy institute director and department head. “The more challenging my tasks became as | moved through my career from young researcher to acting director, the more | went running,” she says. A former hep- tathlete, Ehrentreich-Förster still runs long distances. Ehrentreich-Förster’s research field is microarrays, bioanalytical platforms for diagnostic purposes — whether for foods, the environment, or people. “Knowledge of sensors, evidence of the formation of a bond, has been with me since | got my degree,” she says. After earning her secondary school diplo- ma, she worked first in the lab at the Graupa Product Toxicol- ogy Research Center. She was recommended for the chemical degree study program by her boss. She went on to postgrad- uate studies in toxicology at the University of Leipzig and then received a German Academic Exchange Service (DAAD) fellowship to go to the University of Córdoba during her doctoral studies. Her first role as a research scientist was at the Max Delbrück Center for Molecular Medicine. She then moved on to the University of Potsdam before joining Fraunhofer with her junior research group as part of a German Federal Min- istry of Education and Research (BMBF) competition, initially working at a branch lab. “I was so proud to get the job,” she recalls. She also remembers how tough the first few years were: “There’s a mindset that goes into doing research like a scientific company, and you have to learn that first. It’s not something you cover in grad school.” There was also a certain amount of cultural adjustment involved, as Ehrentreich-Förster had to become acquainted with both general public-sector guidelines and the freedom to design her own research topics. Ehrentreich-Förster moved on to managing internal Fraunhofer interdisciplinary funding projects relating to the in-vitro diag- nostics platform, and she was instrumental in the 2014 presen- tation of the very first “Taschentuchlabor” (Lab in a Hankie) for infection diagnosis, which was the result of a project funded by the BMBF. Research findings like these have continued to flow to the Fraunhofer Center for Digital Diagnostics in Potsdam, which was founded in 2021. Within the center, the Fraunhofer Institutes for Cell Therapy and Immunology IZI and for Exper- imental Software Engineering IESE work together under the leadership of the Bioanalytics and Bioprocesses branch of Fraunhofer IZI to advance medical and diagnostic care in rural areas like Brandenburg. The goal is to provide patients with good medical care now and into the future, despite the lack of general practitioners in private practice and the cost pressure affecting the healthcare system. For that to happen, however, there are some regulatory obstacles in the field of medicine that need to be overcome: equipment approvals as well as data protection and privacy solutions. Ehrentreich-Förster has been working on platforms that can automate analysis and — if the approval process goes smoothly — diagnosis as well. She is familiar with costs and affordability as factors. And she wonders whether greater funding should be put into certain questions. “Everyone knows about antibiotic resistance, and everyone also knows that very little research is being funded in this area worldwide. Health should be for everyone!” 74

Review of Fraunhofer research | Selected transfer activities Selected transfer activities Contract research Spin-offs Intellectual property Standardization Knowledge transfer via individuals Infrastructure services Science communications 1 2 3 4 5 6 7 76 Impact on industry and society Fraunhofer customers commercialize more innovations and increase their sales and returns. Fraunhofer activities have been shown to create jobs in Germany, generate investment impact in the industry sphere and increase government revenue. Impact of Fraunhofer research

Review of Fraunhofer research | Selected transfer activities By contrast, the DRYtraec® dry coating technology developed by the Fraunhofer Institute for Material and Beam Technology IWS uses no toxic solvents at all. A special roller unit is used to mechanically anchor particles of the active material and conductive carbon black by causing the binder to form fibrils, a process known as fibrillation. This means the process of creating the electrode layer is entirely dry. Energy-intensive drying is eliminated, and both sides of the electrode can be coated at the same time. The process was first developed for electrodes in lithium-ion batteries and has now been adjusted for lithium-sulfur and solid-state batteries as well. The first pro- totype system of its kind in the world has been developed with German plant engineering firms. Fraunhofer IWS has operated a full-spectrum technology platform for dry coating with a high level of technological maturity since 2020. Fraunhofer IWS and the Fraunhofer Research Institution for Battery Cell Production FFB are currently planning a scaled pilot plant on the basis of the DRYtraec® method for installation in Münster. High-quality, low-cost production of battery storage is crucial to the electrification of the German automotive industry. However, Europe is still in the process of building production capacity for battery cells and remains highly dependent on technology groups based in Asia. The patented DRYtraec® technology developed by Fraunhofer IWS (EP 3625018, IWS – 2017F59214, patents granted in Europe, Japan, and Korea) can make a crucial contribution to greater cost efficiency and ecofriendliness in cell production in the future. A license agreement with a leading German automotive company was signed in 2023. 4. Standardization Key figures for 2023 1,366 standardization activities Clearing the way for the 5G wireless standard Now in its fifth generation (5G), wireless technology has gone from voice telephony to the mobile internet and beyond, becoming a universal communication standard for linking sensors, devices, and machines. The technical specifications for this global standard are developed and adopted by the 3rd Generation Partnership Project (3GPP) and implemented as specifications by the standardization bodies in the rele- vant areas. During the time between when new functions are defined in the wireless standard and when they become available on the market, it is nearly impossible to test future applications for lack of suitable test environments and detailed knowledge based on ongoing standardization. This means closing these kinds of gaps between research, standardization, and application is crucial to rapid market entry. The Fraunhofer Institutes for Telecommunications, Heinrich-Hertz-Institut, HHI and for Integrated Circuits IIS have been involved in defining and further developing this important wireless technology 78 since 2015, when 3GPP began working on the 5G specifica- tions. They made over 900 contributions to the 5G standard between 2015 and 2023. Parallel participation in relevant industry bodies such as NGMN, 5GAA, and 5G-ACIA supports Germany’s industry in incorporating key requirements and functions into the standard, which in turn is a requirement for implementation in the mobile network and devices. The focus is on the radio access network (RAN). In their work, the insti- tutes have come to concentrate on professional applications in the area of the internet of things (IoT), satellite integration into mobile networks, production automation, and connected vehicles (V2X). 5. Knowledge transfer via individuals 5.1 Continuing professional development for external specialists and managers Key figures for 2023 Over €10 million in revenue from Fraunhofer Academy professional development courses Approx. 6,600 participants in 600 courses Customized training for companies Since 2018, the Fraunhofer Institute for Material Flow and Logistics IML has been helping Interroll Holding GmbH to meet its employees where they are in terms of knowledge transfer relating to logistical issues. Interroll Holding GmbH is a provid- er of conveyor technology and an international listed company with some 2,500 employees. Its customers are equipment manufacturers, engineering firms, or system integrators. The company has adopted a sales approach known as consultative selling. To do this effectively, sales and marketing employees need to know how innovations in logistics and intralogistics affect process organization on the end customer’s side so they can use those innovations to explore new projects. A course titled Process Management imparts current knowledge of the intralogistics market, future trends, and industry-specific know-how. The specialists from Fraunhofer IML contribute their knowledge of the intralogistics market in particular, including the latest planning tools. The course is now in its eighth cycle, which involves blended learning in the form of short webinars and supervised group work. Theoretical base content is combined with practical simulations and on-site visits to end customers. Pre-learning activities and context- specific follow-ups have also been incorporated into the overall concept to ensure that participants retain the understanding of the system that is taught in the course.

Review of Fraunhofer research | Initiatives Initiatives Generative artificial intelligence Research on, as well as the development and availability of, generative AI models and resulting applications such as chat- bots already represent key competitive factors today. The use of these models is expected to have a major influence on the digital transformation and make an even greater contribution to gross value added in the future. Fraunhofer institutes have been driving these trends in various fields for years now. For example, the OpenGPT-X initiative has created large European language models. As of 2023, the Fraunhofer intranet offers all employees access to FhGenie, an adapted internal model based on ChatGPT 3.5. The “Learning Systems and Cognitive Robotics” AI innovative center in Stuttgart helps companies unlock the economic opportunities offered by AI, especially machine learning, in applied research projects. In the summer of 2023, Fraunhofer published a concept paper titled “Analysis and Recommendations on the Subject of Language Models and Generative AI” (Analyse und Handlungsempfehlungen zum Thema Sprachmodelle und Generative KI). It recommends a three-step approach: access, adapt, and advance. The goal is to build in-depth expertise and a custom-fitted range of solutions for the use of generative AI across industry and the research sector. Access to large volumes of high-quality training data is a key prerequisite for this. The challenge after that is to link models with reliable fact checks, accurate and reliable sourcing, and data control, especially for industrial applications. The paper also includes suggestions for training AI specialists. Joint strategies with German and European partners could offer advantages, especially when it comes to the costly process of training foundation models. Fraunhofer is also involved with the draft EU Artificial Intelligence Act (AIA), which aims to create a shared regulatory and legal framework for AI. Raw material transition and bioeconomy roadmap In light of its strategic raw material dependence, the EU is increasingly focusing on bringing about a rapid transition in raw materials. Fraunhofer’s research and innovation activ- ities are making a critical contribution to this. Fraunhofer is a co-founder of the Advanced Materials Initiative 2030 (AMI2030), which serves as an integrative forum for research and innovation in this field. Subject to the approval of the Member States, the initiative is expected to yield a partnership within the Horizon Europe framework program in early 2024 to place this topic on the European research and innovation agenda on a long-term basis. Fraunhofer’s new ORCHESTER flagship project is blazing a trail in this regard with the objective of providing reliable and safe materials for the energy transition along the entire value chain. At the same time, Fraunhofer’s circular bioeconomy roadmap is helping to enable innovative methods and products, new business models, and value cre- ation networks for sustainable and resource-efficient economic activity. The roadmap was presented in September 2023 by the Fraunhofer EU Office in Brussels and the Fraunhofer Strategic Research Field Bioeconomy at a high-profile event involving the European Commission. Energy partnerships The Fraunhofer Representative Office Korea organized the fourth Germany-Korea Hydrogen Conference in late fall 2023. The Fraunhofer representative office was supported in these activities by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and the German Federal Ministry of Education and Research (BMBF). The energy part- nership between Korea and Germany has existed since 2019. With over 230 participants, the purely analog conference set a new record for attendance, drawing a large proportion of industry participants and high-ranking government officials from both countries. Multiple Fraunhofer institutes contrib- uted to the program. With four future Fraunhofer innovation platforms and two ICON collaborations, Korea is an especially desirable target country for international strategic research collaborations. Also in late fall, the Fraunhofer Cluster of Excellence Integrated Energy Systems CINES and consulting firm GHD Advisory published the National Hydrogen Strategy of the United Arab Emirates (UAE). Fraunhofer CINES and GHD Advisory had 80

Review of Fraunhofer research | Initiatives The researchers plan to show this using components such as bipolar plates for electrolyzers and fuel cells, where costs are determined to a significant degree by the proportion of nickel. Nickel is a critical element; it faces significant supply risks and is also highly important in economic terms. In a crisis scenario, the proportion of nickel would need to be reduced without jeopardizing the plates’ key functional properties. In the case of compressor wheels for hydrogen pipelines, fuel cells, and heat pumps, plans call for maximizing the secondary material pro- portion of the aluminum alloy to minimize the energy footprint. The researchers will also be looking at ways to recycle and reuse permanent magnets for applications in electric motors and wind turbines. Goals include using simulation models and machine learning to predict how material composition influ- ences the effects of materials. ORCHESTER is leveraging the experience gleaned from existing initiatives such as Gaia-X and Materials Data Space® to build its own digital ecosystem. Completed Fraunhofer flagship projects EVOLOPRO — Evolutionary self-adaptation of complex production processes and products Over 50 researchers from seven Fraunhofer institutes ana- lyzed various evolutionary biology elements of flexibility and self-adaptation and applied their findings to production of complex components. These elements served as the basis for a new generation of “biological manufacturing systems” (BMSs). Like biological organisms, BMSs independently adjust to new requirements and environmental conditions — and, thanks to Industry 4.0 technologies and principles, they do it in just a short time. To that end, the researchers developed biologically inspired algorithms and digital twins that interact with a digital environment. The concepts were validated in three pilot chains: Aviation, Optics, and Automotive. For milling blade-integrated disks, an innovative simulation environment was created on the basis of biologized algorithms, significantly reducing the time, effort, and expense that go into process planning and the insertion process. For production of complex glass optics, the team digitalized the entire manufacturing chain and developed a self-learning method for automated assembly of optical components. In the Automotive pilot chain, a model-based controlled body manufacturing system was established while tapping into the full potential offered by Industry 4.0. 82 A cloud-based data lake architecture was created to hold the huge volume of process data. It also provides standardized data interfaces and specific description models for unam- biguous identification of the data uploaded. Building on the results, further research projects will continue to pursue the digital twin and digital environment concepts. The measures from the pilot chains are to be further developed specifically in the direction of market readiness for concrete use in industry. Go to video QMag — Quantum Magnetometry Quantum magnetometers are highly sensitive sensors that can measure even the tiniest magnetic fields, so they offer tremendous potential for optimization of industrial processes. The consortium for the Qmag flagship project studied and developed quantum magnetometers. The researchers relied on two principles: nitrogen vacancy (NV) centers in diamonds, and optically pumped magnetometers. The two measurement methods are a perfect fit when it comes to achieving superior spatial resolution and extreme sensitivity. The project team succeeded in developing customized mea- surement systems for various industrial applications. Especially in terms of material characterization, both types of sensors were used to achieve goals such as detecting microscopic damage in ferromagnetic materials. In the automotive and aerospace industries, these systems can help to make materials more resilient, safer, and more reliable. Quantum magne- tometers can also be used in chip production to visualize the nanoscale magnetic fields of electronic circuits. The researchers also developed new measurement methods such as magneto- metric flow measurement, which measures the speed at which fluids move through a pipe, and the long-range magnetometer for fast imaging measurements of large areas. These methods are suitable for applications in quality and process control and in biomedicine. Go to video For more information about completed Fraunhofer flagship projects, please see p. 47 (Production architecture for the factory of the future — SWAP) and p. 53 (Ensuring that treat- ments have optimum effects — MED²ICIN).

Finances | Balance sheet at December 31, 2023 Balance sheet at December 31, 2023 Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V., Munich ASSETS A. Noncurrent assets I. Intangible assets 1. Concessions, intellectual property rights and 2. Advance payments similar rights and assets buildings on third-party land II. Property, plant and equipment 1. Land, land rights and buildings, including 2. Technical plant and machinery 3. Other plant, operating and business equipment 4. Advance payments and assets under construction III. Financial assets 1. Shares in affiliated companies 2. Shareholdings 3. Securities held as noncurrent assets 4. Other loans B. Current assets I. Inventories 1. Raw, auxiliary and operating materials 2. Work in progress — 3. Advance payments advance payments received II. Accounts receivable and other current assets 1. Trade receivables 2. Receivables from the federal and state governments a) relating to base funding b) relating to project billing, including contract research 529,330,556.60 –476,053,145.87 374,260,757.04 354,808,691.19 109,263,100.00 c) relating to pension and compensated leave provisions 3. Accounts receivable from affiliated companies 4. Other current assets III. Other securities IV. Cash and cash equivalents C. Prepaid expenses and deferred charges Trust assets 84 2023 in € 34,407,776.83 3,438,261.26 1,597,243,700.26 603,033,050.60 123,188,551.17 595,415,346.92 92,782.82 31,455,699.62 8,238,664.30 890,000.00 41,502.79 53,277,410.73 131,202.06 326,725,490.88 838,332,548.23 402,527.82 105,385,304.68 2023 in € 37,846,038.09 2,918,880,648.95 40,677,146.74 53,450,115.58 1,270,845,871.61 459,184,505.91 18,231,862.53 2023 in € 2022 in € (1,000) 38,394 1,102 39,496 1,596,631 597,863 75,441 453,751 2,723,686 93 9,136 8,239 1,245 18,713 2,781,895 102 523,039 –404,279 118,760 266 119,128 271,741 27,835 335,161 106,515 469,511 7,627 130,984 879,863 2,997,403,833.78 1,801,712,355.63 56,367,938.45 4,855,484,127.86 512,137 293,416 1,804,544 30,470 4,616,909 83,371,518.07 65,669

Finances | Income statement for the financial year 2023 Income statement for the financial year 2023 Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V., Munich 2023 in € 906,318,110.02 23,867,480.40 240,105,627.32 4,927,691.62 821,256,260.02 213,288,574.07 2023 in € 848,171,234.03 169,047,913.62 2,209,763,743.45 7,194,496.20 6,292,062.01 8,343,791.48 75,397,181.92 8,099,776.33 12,477,610.97 – 17,638,314.28 –579,967,938.87 378,835,088.44 59,297,920.23 – 4,298,900.00 2023 in € 1,017,219,147.65 2,216,958,239.65 110,610,422.71 3,344,787,810.01 –119,897,715.92 2022 in € (1,000) 876,651 173,603 1,050,254 767,393 29,347 265,358 9,913 756,401 192,161 2,020,573 6,706 2,027,279 –3,990 6,143 38,817 12,058 2,901 55,929 3,133,462 –23,821 34,927 –482,260 345,822 –84,233 –46 3,512 –206,099 3,224,890,094.09 2,927,363 1. 1.1 1.2 Revenue from base funding Federal government State governments C ontracts C ontracts Revenue from own activities Revenue from research and development activities 2. 2.1 2.1.1 Federal government: Project funding 2.1.2 State governments: Project funding 2.1.3 Industry, business and trade associations 2.1.4 Research funding organizations and other sources 2.2 Other revenue Total revenue 2.3 2.4 Other internally constructed and capitalized assets 2.5 Other operating income 2.6 2.7 Other interest and similar income Total of base funding and revenue from own activities Increase in work in progress (2022: decrease) Income from shareholdings Change in extraordinary items License-fee revenue reserve for statutory purposes 3. 3.1 3.1.1 Allocations 3.1.2 Reversals 3.2 Grants relating to noncurrent assets 3.2.1 Allocations (capital expenditure) 3.2.2 Reversals (depreciation and amortization) 3.3 Grants released from financing current assets (2022: grants used to finance current assets) For financing restructuring measures Allocations Reversals 3.4 4. Total of base funding and revenue from own activities available to cover expenditure 8686

Finances | Excerpts from the notes to the 2023 financial statements Excerpts from the notes to the 2023 financial statements 1. General disclosures Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V., headquartered in Munich, is a non-profit organization registered with the local court of Munich under the reference code VR 4461. The annual financial statements for the year ending December 31, 2023, were prepared voluntarily and in accordance with the requirements of the German Commercial Code (Handels- gesetzbuch, HGB) as applicable to large corporate entities. The income statement was prepared in accordance with the total cost method. The basis of the Fraunhofer-Gesellschaft’s accounting method is the performance statement, from which the annual financial statements are derived. The performance statement is adapted to the requirements of the public funding authorities in terms of format and rec- onciliation. It provides a breakdown of operating expenses and capital expenditure at three different levels: individual institutes, headquarters and the organization as a whole. The components of the operating budget are presented as income or expenses in accordance with generally accepted accounting principles. Capital expenditure on property, plant and equip- ment and on financial assets, on the other hand, is recognized at cost on acquisition of the assets. Therefore, the operat- ing budget does not include any depreciation/amortization expenses on these items. In order to account for grants received from grant authorities, the performance statement for the organization as a whole is reconciled to the revenue and expense statement format used in single-entry bookkeeping by eliminating the effect of cash-neutral income and expense items. The income statement includes these changes in payables and receivables compared with the previous year as well as depreciation/amortization charges. In the balance sheet, these reconciliation items are included under the extraordinary items “Grants used to finance current assets” and “Grants relating to noncurrent assets.” The figures in the performance statement are explained in the management report, where they are broken down into the three areas of contract research, additional research funding and major infrastructure capital expenditure. Reconciliation to the income and expense statement format used in single-entry bookkeeping Balance sheet Management report Notes to the financial statements 88 Annual financial statements of the Fraunhofer-Gesellschaft Income statement Reconciliation between income statement and performance statement Performance statement Budgeted operating expenses and capital expenditure at Fraunhofer-Gesellschaft “Total business volume” level Separate financial statements of the institutes/headquarters Operating budget – Costs (excluding depreciation and amortization) – Income Capital expenditure – Expenses – Income

Finances | Convenience translation of the German independent auditor’s report Convenience translation of the German independent auditor’s report This is a convenience translation of the German inde- pendent auditor’s report. Solely the original text in the German language is authoritative. The indepen- dent auditor’s report is based on the balance sheet at December 31, 2023, the income statement for the financial year 2023 and the full notes to the 2023 finan- cial statements and the 2023 management report. “To Fraunhofer-Gesellschaft zur Förderung der ange- wandten Forschung e. V., Munich Audit opinion We have audited the annual financial statements prepared by Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V., Munich, comprising the balance sheet as at December 31, 2023, the income statement for the financial year from January 1 to December 31, 2023, and the notes to the financial statements, including the presentation of the applied recognition and measurement methods. In addition, we have audited the management report of Fraunhofer-Ge- sellschaft zur Förderung der angewandten Forschung e.V., Munich, for the financial year from January 1, 2023 to Decem- ber 31, 2023. According to our opinion, as based on the results of the audit: The attached annual financial statements comply in all material respects with the provisions of the German Commercial Code (Handelsgesetzbuch, HGB) as applicable to large corporate entities and those of German generally accepted accounting principles (GAAP). Together, this infor- mation presents a true and fair view of the organization’s net assets and financial position as at December 31, 2023, and of its operating results for the financial year commenc- ing January 1, 2023, and ending December 31, 2023. The attached management report provides a true and fair view of the organization’s current operating situation. In all material respects, the management report is consistent with the annual financial statements, complies with German statutory requirements and provides an appropriate picture of the organization’s future opportunities and risks. In accordance with section 322 (3) item 1 HGB, we declare that our audit of the annual financial statements and manage- ment report did not lead to any reservation/observations. Basis for opinion We conducted our audit of the annual financial statements and the management report in accordance with section 317 HGB and the German generally accepted standards for the audit of financial statements set by the Institute of Public Auditors in Germany (IDW). Our responsibilities under those standards are further described below under the heading “Auditors’ responsi- bility for the audit of the annual financial statements and man- agement report.” We declare that we are independent auditors as defined by German commercial law and that we exercise our other duties in Germany in compliance with the relevant profes- sional code of conduct, with no other connection to or interests in the Fraunhofer-Gesellschaft. It is our considered opinion that the audit evidence we have obtained is sufficient and appro- priate to provide a basis for our opinion on the annual financial statements and the management report. Responsibility of the legal representatives and the senate for the annual financial statements and management report The legal representatives are responsible for preparing the annual financial statements in accordance with the provisions of the HGB as applicable to large corporate entities, and for ensuring that they comply with German generally accepted accounting principles (GAAP) and present a true and fair view of the organization’s net assets, financial position and operat- ing results. Furthermore, the legal representatives are respon- sible for carrying out internal audits to the extent that these are considered necessary to comply with German GAAP, as a basis for preparing annual financial statements in such a way that they are free of material misstatements, whether due to fraud (i.e., fraudulent accounting manipulations and financial losses) or error. In preparing the annual financial statements, the legal representatives are also responsible for determining the 90

Finances | Convenience translation of the German independent auditor’s report Confirm that the management report complies with the annual financial statements, meets legal requirements and conveys a true image of the organization’s situation. Perform audit procedures on the prospective information presented by the legal representatives in the management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the prospective informa- tion and evaluate the proper derivation of the prospective information from these assumptions. We have not provided an independent audit opinion on the prospective informa- tion or the data on which it is based. There is a substantial unavoidable risk that future events will differ materially from the prospective information. We communicate with those charged with governance regard- ing, among other matters, the planned scope and timing of the audit and significant audit findings, including any signif- icant deficiencies in internal controls that we identify during our audit. Nuremberg, April 18, 2024 Rödl & Partner GmbH Wirtschaftsprüfungsgesellschaft Signature: Grässle Auditor Signature: Hahn Auditor (End of convenience translation of the German independent auditor’s report.)” 92

Services | Members, constituent bodies, committees Members, constituent bodies, committees Members The Fraunhofer-Gesellschaft has 1,199 members, comprising 44 legal entity members, 63 natural person members, 95 former executive board members and institute directors, 989 ex officio members and 8 honorary members. Some members have multiple functions. Honorary members Dr. Peter Draheim Dr. Horst Nasko Dr. Dirk-Meints Polter Prof. Ekkehard D. Schulz Dr. Markus Söder Prof. Erwin Sommer Prof. Klaus-Dieter Vöhringer Dr. Hans-Ulrich Wiese Senate Representatives from science, industry and public life Hildegard Müller Chair of the Senate of the Fraunhofer- Gesellschaft, President of the German Association of the Automotive Industry (VDA) Prof. Oliver Zipse Deputy Chair of the Senate of the Fraunhofer-Gesellschaft, Chairman of the Board of Management of BMW AG Dr. Oliver Blume Member of the Board of Management of Volkswagen AG, Chairman of the Executive Board of Dr. Ing. h.c. F. Porsche AG Grazia Vittadini Rolls-Royce Chief Technology Officer and Member of the Executive Team Dr. Anna-Katharina Wittenstein Member of the Supervisory Board of WITTENSTEIN SE Prof. Ulrich Rüdiger Rector, RWTH Aachen University Dr. Roland Busch President and Chief Executive Officer of Siemens AG Anja-Isabel Dotzenrath Executive Vice President of Gas and Low Carbon Energy and Member of the Board of Directors of bp p.l.c. Sabine Herold Managing Partner of DELO Industrie Klebstoffe GmbH & Co. KGaA Reiner Hoffmann Chair of the German Council for Sustainable Development (RNE) Pär Malmhagen Senior Advisor Prof. Vanessa Wood Vice President of Knowledge Transfer and Corporate Relations at ETH Zürich Members representing government institutions Representatives at federal level Parliamentary state secretary Mario Brandenburg German Federal Ministry of Education and Research (BMBF) Undersecretary Dr. Ole Janssen German Federal Ministry for Economic Affairs and Climate Action (BMWK) Undersecretary Alexander Schott German Federal Ministry of Defence (BMVg) Bernard Meyer Managing Director of MEYER WERFT GmbH & Co. KG Rita Schutt German Federal Ministry of Finance (BMF) Dr. Katrin Sternberg President Medical and Member of the Management Board of CeramTec GmbH Representatives at federal state level State Secretary (Ret.) Ayse Asar Hessian Ministry of Higher Education, Research, Science and the Arts Kerstin Grosse Deputy Chair of the Senate of the Fraunhofer-Gesellschaft, Managing Director of DEROSSI Invest GmbH Dr. Karl Tragl Chairman of the Executive Board and Chief Executive Officer of Wacker Neuson SE State Secretary Dr. Henry Marx Berlin Senate Department for Higher Education and Research, Health and Long-Term Care 94

Services | Structure of the Fraunhofer-Gesellschaft Structure of the Fraunhofer-Gesellschaft Constituent bodies and their duties The executive board consists of the president and several other full-time members. Its duties include managing the Fraunhofer-Gesellschaft and representing its interests both within and outside of the organization. It formulates the basic principles of the Fraunhofer-Gesellschaft science and research policy, plans its growth and its finances, acquires its base funding, organizes the distribution of funds among the individual institutes and appoints the institute directors and senior managers. Although the Fraunhofer- Gesellschaft is basically a decentral- ized organization, its structure also allows for strategy and effective management to be implemented centrally. Various constituent bodies and committees are responsible for coordination, consultation and leadership across the organization as a whole. A total of 76 institutes and research units at locations across Germany operate under the umbrella of the Fraunhofer-Ge- sellschaft. Each cultivates its own market presence and manag- es its own budget. They are organized into nine Fraunhofer groups, each with a dedicated research focus, and tasked with coordinating this research within the Fraunhofer-Gesellschaft and harmonizing the market presence of the respective group members. The chairs of the Fraunhofer groups, together with the members of the executive board, make up the presidential council of the Fraunhofer-Gesellschaft. The presidential council participates in executive board decision-making processes and, as such, is entitled to make proposals and recommendations to and has the right to be heard by the board. The senate comprises a total of 26 voting members from the worlds of industry, science and public life, representatives of the federal and state governments, and members of the Sci- entific and Technical Council (STC). The senate’s duties include appointing members of the executive board, defining the basic principles of the Fraunhofer-Gesellschaft science and research policy, and formulating decisions concerning the establish- ment, transformation or dissolution of research units belong- ing to the Fraunhofer-Gesellschaft. The general meeting is made up of the members of the Fraunhofer-Gesellschaft. Ex officio membership is open to members of the senate and the executive board, institute directors and senior managers, and members of the advisory boards. Ordinary membership is open to individuals and legal entities who wish to support the work of the Fraunhofer-Ge- sellschaft. 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 meeting elects the members of the senate, discharges the executive board of its functions and formulates decisions concerning amendments to the Statute. The STC is the organization’s internal advisory body. It consists of the directors and senior managers of the institutes and an elected representative of the scientific and technical staff of each institute. The STC provides advice to the executive board and other constituent bodies in matters of fundamental importance. It makes recommendations concerning research and HR policy, expresses its opinions regarding the establish- ment of new institutes or the closure of existing institutes, and participates in the appointment of new institute directors and senior managers. The advisory boards are external advisory bodies of the institutes. They consist of representatives from science, busi- ness and public life. For each institute, approximately twelve members are appointed to the advisory board by the executive board with the approval of institute management. The advi- sory boards act as advisors to institute management and the executive board on matters concerning the research focus and any structural changes to the institute. 96

Services | Fraunhofer Germany Fraunhofer Germany Fraunhofer Germany Main locations Secondary locations 98 Schwarzheide Passau