UK’s £1bn new strategy for semiconductors ‘disappointing’

National Semiconductor Strategy details £1bn government investment to boost UK’s strengths in design, R&D and compound semiconductors while helping to grow domestic chip firms across the country. But critics say it isn’t nearly enough. 

As we’ve reported before, semiconductors are an essential component of almost every electronic device we use in our daily lives. From phones and computers to power stations, nearly all technology depends on them. More than 1tn (1,000,000,000,000) semiconductors are now manufactured each year.

Most semiconductors are silicon ‘chips’ but an estimated 20% now comprise two or more elements. Such compound semiconductors are more expensive to produce but often outperform silicon, and different compounds produce semiconductors with unique, specific properties.  

For example, the range extension of electric vehicles (EVs) relies on efficient silicon carbide. The high-speed datalinks needed for 5G use chips of gallium-nitride. It’s thought that compound semiconductors will underpin future technologies such as AI, quantum and 6G. 

The government’s new National Semiconductor Strategy aims to support what are seen as UK’s strengths in this sector: semiconductor design, new cutting-edge compound semiconductors and the R&D ecosystem supported by UK universities.  

In launching the report, Prime Minister Rishi Sunak 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. 

‘By increasing the capabilities and resilience of our world-leading semiconductor industry, we will grow our economy, create new jobs and stay at the forefront of new technological breakthroughs.’ 

Although there has been support for the strategy, critics say the investment won’t go very far when compared to the investment worth $52bn (£46bn) announced by the US government last summer or the €43bn (£38bn) included in the EU’s European Chips Act agreed in April. 

Earlier this month, a single private-sector company, Analog Devices, Inc (ADI), announced new investment worth €630m (£548m) in its European HQ in Limerick, Ireland. 

Labour MP Darren Jones, who chairs the House of Commons Business Select Committee, welcomed the strategy in principle but says, ‘the initial £250m is a very small amount of subsidy compared to other countries.’ 

Dr Simon Thomas, Chief Executive of UK-based semiconductor company Paragraf, went further, telling the BBC that the offer was ‘frankly flaccid.’ 

Ben White, founder of Phlux Technology in Sheffield, told UKTN that the £1bn, ‘is not significantly higher than the amount spent over the previous 10 years.’ Others in the industry have also voiced concerns.

It doesn’t help that the strategy has been a long time in coming. Just last week, Welsh Economy Minister Vaughan Gething warned the government that delays in publishing the strategy meant tech companies and investors were more likely to look to US and EU. ‘It is crucial that the strategy sets out how the UK can support companies in a way that prevents the leakage of activity overseas,’ he said. 

Photo by Maxence Pira