The UK government has unveiled its long-awaited semiconductor strategy, which will provide funding of up to £1bn over the next 10 years in a bid to boost the country’s microchip sector.
The government said it would spend £200m on improving infrastructure, increasing research and development and encouraging overseas collaboration between now and 2025.
The government hopes the UK semiconductor strategy will expand the domestic market, remove supply chain issues and shield the country’s security.
Prime Minister Rishi Sunak, who announced the semiconductor strategy early Friday morning during a visit to Japan, said: “Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage.”
However, critics have pointed out that the UK’s investment pales in comparison to the $50bn earmarked by the US government to “revitalise” its semiconductor sector, along with the €43bn allocated by the EU.
“The level of investment announced for the next two-year period is disappointing, especially considering the UK needs to try to keep pace with the investment levels announced as part of the EU and US Chip Acts,” said Amelia Armour, partner at Amadeus Capital Partners.
Armour added that the “£200m spread over many initiatives won’t achieve much” and that it will “need to be allocated in a very targeted way to have an impact”.
The £200m will partly be used to fund the National Semiconductor Infrastructure Initiative to review areas such as prototyping, tools and help for businesses.
Already commissioned research for the initiative in December will be published by The Department for Science, Innovation and Technology in the autumn.
Along with the research the government says it will release more information on semiconductor manufacturing investment, “particularly where they are critical to the UK tech ecosystem or the UK’s national security.”
A critical sector
Various stakeholders in the UK tech industry have long been calling for a national semiconductor strategy. Semiconductors are the ‘brains’ powering many of the world’s electronic devices, from computers to cars to fridges.
It is also an area fraught with geopolitical complexities. Taiwan Semiconductor Manufacturing Company (TSCM) is the world’s largest chip manufacturer, but tensions with neighbour China have sparked fears that an escalation could impact global supply chains.
The UK government’s strategy aims to protect semiconductor supply chains by safeguarding “critical sectors” from national security or any impact on lives by issuing new guidance and international partnerships.
Further details will be released on how the National Security and Investment Act, used to unwind Nexperia’s takeover of Newport Wafer Fab, could be deployed where there are concerns.
This week the UK and Japan entered a science and technology agreement, which included strengthening the semiconductor supply chain. UKRI and the Japan Science and Technology Agency will work on up to £2m in semiconductor research in 2024.
In addition to the funding, the government will put in place a UK Semiconductor Advisory Panel to oversee the strategy.
Semiconductor strategy: startup impact
Delays to the strategy’s publication have drawn criticism from the UK’s semiconductor startups, along with larger firms.
Companies such as flexible circuit chip firm Pragmatic have threatened to move to the US if the government fails to provide sufficient support.
“The supply chain challenges of the past few years may be cyclical, but continued growth in demand will ensure that they do not go away,” said Scott White, executive director and founder of Pragmatic.
The strategy also revealed an incubator pilot for semiconductor startups that will provide technical resource access, mentorship and networking.
Programmes centred on learning about semiconductor-related skills like computer science are expected to receive support from the government.
“Arm welcomes the UK government’s new semiconductor strategy, which will support the UK’s effort to play a part in global supply chains for next-generation technology,” said Rene Haas, CEO of Arm.
Arm recently opted for a US listing for its upcoming IPO, with Haas stating at the time “is the best path forward”.
However, the chip designer will continue to have an active presence in the UK with its headquarters remaining in Cambridge, along with plans to open a new Bristol site.
The UK tech sector will now be watching to see how the semiconductor strategy investment will be deployed.
Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates, said: “Crucially, the UK needs to deploy as much of this investment early as the sector requires longer time horizons to build deeper capabilities in this vital sector.”
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