Speaking on the eve of the opening of the world's biggest high-tech fair, German Chancellor Angela Merkel on Wednesday underlined plans to polish Germany's image as a global innovator.

Merkel told hundreds of IT and telecommunications executives gathered in the northern city of Hanover for the CeBIT that her left-right coalition government would hammer out a program by the summer to spur technological development.

One prong of "High-Tech Strategy Germany" will entail working with business to expand digital infrastructure, with more DSL and cable Internet connections that offer high-speed service, according to an advance copy of the speech.

Merkel also touted existing plans to invest six billion euros
(seven billion dollars) in "future technology" over the next four
years. The program will advance the goal of committing three percent of gross domestic product to research and development by 2010.

"With coherent policies, we will create better conditions for
the research and innovation process," she said. Merkel said she also planned a "national IT summit" at which the public and private sectors would look at where the government could
foster growth in the sector.

"But I tell you quite openly, not only the government but
industry as well must intensify its efforts in this area to ensure Germany is fit for the future," she said, noting that business
contributed two-thirds of the national research and development budget.

Booming industry

The CeBIT, running March 9-15, will this year host more than 6,200 exhibitors from 71 countries and some 474,000 visitors eager to take in new advances in digital and information technology.

Now celebrating its 20th anniversary, the fair has recovered its stride after a difficult five years marked by uncertainty in the sector after the burst of the Internet bubble.

The ripple effect throughout the hardware, software and telecommunications industries is only beginning to smooth out, but a new optimism is catching hold as new gizmos to capture consumers' imaginations prepare to hit the market.

"CeBIT shows how digital solutions for work and leisure are now rapidly converging -- from software and electronic devices for business, via communications solutions for home and office, to the complete 'digital lifestyle'," said Ernst Raue of the event's organizing team.

Turnover in the electronics and telecommunications industries in the European Union is expected to increase 3.2 percent to 643 billion euros ($772 billion) this year and another 3 percent in 2007, according to the European Information Technology Observatory.

"Our sector is again growing faster this year in the EU than the economy as a whole," vice president of the German industry group BITKOM, Heinz-Paul Bonn, said.

Among the most eagerly awaited trends are new applications for Radio Frequency Identification (RFID) technology, which is slated to wipe the traditional bar code off the map.

Developers see hundreds of uses for the tiny antennae planted in chips the size of a postage stamp. Shoppers in future will be able to pull their carts up to the supermarket counter and with one "beep!" have all the products registered and billed in an instant. Bookworms will be able to run through a similar scanner and, with a chip in each volume, skip long check-out lines at the library.

And patients will eventually be able to have RFID chips implanted in their bodies, allowing any attending doctor to call up his or her personal health history at the touch of a button.

"The CeBIT is focusing on RFID this year because in the future, all processing, for example in the field of logistics, will be changed beyond recognition," Raue said.

The global market for RFID chips is expected to go through the roof in the coming years, with turnover likely to quadruple to 5.5 billion euros by 2008, according to independent research firm IDTechEx.

Sea-change in telecommunications

Willi Berchtold, the president of BITKOM, which represents more than 1,000 German IT, telecommunication and consumer electronics companies, told reporters that a sea-change in telecommunications was having a ripple effect throughout the industry, noting that land-line services -- a 20-billion-euro industry in Germany -- were giving way to mobile and Internet telephony.

"Mobile phone calls have become so cheap that many people are even using them at home," he said, noting the price had dropped an average of 10 percent in the last year.

Meanwhile high-speed Internet servicess via DSL or TV cable are skyrocketing, with the number of connections climbing 56 percent to 10.7 million.

"In the future, the Internet, telephony and television will converge," he said. "That is not a dream but the next step."

Intelligent robots

Meanwhile Germany's renowned Frauenhofer Institute and the neurology clinic at Berlin's Charite hospital are to unveil a "mental typewriter" that will allow people incapacitated by injury or disease to communicate.

Using 128 electrodes fastened to the cranium, the invention literally reads minds as the patient uses his thoughts to type out messages.

But CeBIT would not be complete without a few rather gimmicky gee-whiz inventions including "intelligent" vacuum cleaners and lawn mowers that take care of household chores and return themselves to the charging station.

The fair has seen the biggest growth among Asian exhibitors, with China, Hong Kong and South Korea all reporting a major jump in companies taking part.

Next year's event CeBIT is expected to attract 1,700 exhibitors from the Asian-Pacific region -- unmatched by any other trade fair in the world, including in Asia, according to organizers.