The UK needs to support its semiconductor industry without entering into a “subsidy arms race”, according to a new report from the Centre for Policy Studies (CPS).
The ‘Cashing in our Chips’ report, which looks at how the UK can protect the domestic supply of semiconductors ahead of the government strategy, advised a series of moves to help the UK catch up with foreign powers that have already ironed out microchip policies.
The report’s co-author, Gerard B. Lyons, wrote that the UK should play to its strengths rather than scrambling to emulate the subsidy policies already implemented by the US and EU.
“The US and EU – among others – have put their cards on the table with their subsidy arms race, but a market-led, investment-friendly, approach is the ace Britain can – and should only – play to support our fledgling domestic semiconductor sector,” Lyons said.
The report encouraged tax and investment incentives for high-intensity R&D industries. While the UK has already implemented a tax credit system for R&D, the government has recently been criticised for rolling back the eligibility and scope of the policy.
CPS suggested the establishment of an Emerging Technologies Strategic Investment Fund (ETSIF) as part of the British Business Bank to target companies within the “families of UK strength and opportunity”.
Tech visa improvement
The report also called for an improved immigration system for highly skilled tech workers. The tech visa scheme, which was created to simplify the process of tech workers moving to the UK, is currently handled by Tech Nation. The future of the scheme was put into doubt after the startup network announced it would have to close after losing its government funding to Barclays Eagle Labs in an open procurement process.
Writing in the foreword, MP Alicia Kearns stressed the importance of moving quickly with the strategy.
“We can either choose to think strategically about developing a cutting edge, growth-boosting, secure and next-generation chip industry, or we can carry on with business as usual and find ourselves dependent on volatile and geopolitically-vulnerable supply chains,” she said.
Alicia Kearns recently called for a national security review into the acquisition of British semiconductor company Flusso after UKTN revealed it had become wholly owned by a firm with ownership ties to the Chinese government.
Scott White, CEO of Pragmatic Semiconductor, told UKTN: “The report highlights the need to focus on key areas that play to the UK’s existing advantages, the government should prioritise areas of the industry where innovation is the driving factor for success.
“The government would be remiss not to take advantage of this potential to become a world leader in next-generation semiconductors, but it needs to take action now, or else it risks losing UK manufacturers to the enticing incentives overseas.”
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