UK Government Unveils Long-Awaited £1 Billion Semiconductor Strategy

jeremy waterhouse semiconductor chip

Long-awaited government strategy for UK semiconductor strategy unveiled, but some critics argue it is not enough

The British government has unveiled its long-awaited strategy to bolster the semiconductor sector in the United Kingdom.

The government on Friday announced the £1 billion strategy for UK’s semiconductor sector that will span 20 years, and is designed “to secure the world-leading strengths of the UK’s semiconductor industry.”

But some critics point out the government is spending is significantly less than the massive chip investments of the United States ($52 billion) and the European Union (€45 billion).

Houses of parliament

Semiconductor strategy

Last November a group of MPs had urged the government to publish its delayed semiconductor strategy and to bolster support for the chip industry in order to avoid putting the British economy at risk.

The government had initially said it would publish a semiconductor strategy in “autumn 2022”, but now over six months later it has finally revealed the ‘National Semiconductor Strategy’ that seeks “to double down on design, research and advanced chip leadership – securing the UK’s position as a global science and technology superpower.”

The government said that its chip plan sets out how the country will build on the UK industry strengths, safeguard supply chains from disruption, and protect tech against national security risks.

To do this, the government said it will invest up to £1 billion in the next decade to improve access to infrastructure, generate more research and development, and facilitate greater international co-operation, with up to £200 million over the years 2023-2025.

The government noted that its chip strategy will focus on the UK’s particular areas of strategic advantage in the semiconductors sector – which is says is semiconductor design, compound semiconductors, and its R&D ecosystem – all of which are supported by UK universities.

Compound semiconductors for example can do things silicon chips can’t the government said, with use cases in evolving technologies such as autonomous driving and future telecoms. Their creation requires expertise in advanced materials, an apparent area of UK science leadership.

The government also noted that it has provided “consistent support” for the semiconductor industry, having provided £539 million in grants for research and £214 million directly to SMEs in the sector across the last 10 years, as well as funding 450 PhD students since 2017.

“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,” said Prime Minister Rishi Sunak.

“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,” said the Prime Minister.

“Britain is already a world leader when it comes to researching and designing semiconductor technology – our new strategy will double down on these core strengths to create more skilled jobs, grow our economy, boost our national security and cement the UK’s status as a global science and technology superpower,” added Science, Innovation and Technology Secretary Chloe Smith.

Japanese agreements

The government announcement comes as the Prime Minister attends the G7 leaders’ Summit in Japan.

In Hiroshima this week, the UK and Japan committed to establishing an ambitious semiconductor partnership.

This will be led by both the UK’s Department for Science, Innovation and Technology (DSIT) and Japan’s Ministry of Economy, Trade and Industry (METI).

This partnership seeks to deliver new R&D co-operation, skills exchanges, and improving the resilience of the semiconductor supply chain for both countries.

Meanwhile UK Research and Innovation will work with the Japan Science and Technology Agency on a joint investment of up to £2 million in early stage semiconductor research next year.

This will support UK and Japanese researchers to work together on fundamental semiconductor technologies, both governments stated.

Industry reaction

There has been some critical reaction to the government’s announcement, especially because the UK strategy has not mirrored the huge chip subsidies announced by the US and EU.

Unsurprisingly the Labour party accused the government of lacking ambition in its announcement.

Meanwhile Cambridge-based startup, Paragraf, which claims to be the only company in the world capable of manufacturing graphene to mass-produce semiconductors, was quoted by the Guardian newspaper as saying the taxpayer commitment would not cover a basic chip plant.

Indeed, its founder and chief executive, Simon Thomas, said the content of the strategy revealed so far was “frankly flaccid”.

Important step

But others have been more welcoming of the government’s semiconductor strategy.

Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates for example the strategy was an important step in ensuring the UK continues to strengthen its position as a world-leading tech and innovation superpower.

“The semiconductor industry is central to the growth of the global economy, and only through a strategic approach and substantial investment will the UK be able to retain a seat at the table as a leading tech hub,” said Shaw.

“Along with other leading industry groups, we have called for the government to prioritise this strategy for some time, and are therefore delighted to see it land with a significant funding boost for the sector, and a clear plan of action to further develop research and commercialisation,” said Shaw.

“This is a positive step, and the industry will now look to government to deliver on this plan over the next decade and beyond,” said Shaw. “Crucially, the UK needs to deploy as much of this investment early as the industry requires longer time horizons to build deeper capabilities in this vital sector.”

“It’s important the UK now uses the strategy as a basis to strike up key international partnerships and areas of collaboration with like-minded economies – such as the newly announced partnership with Japan – which will not only strengthen the domestic tech sector, but also bolster the development of British industry more broadly and drive wider economic growth,” Shaw concluded.

Flexible semiconductors

Meanwhile Scott White, founder and executive director for strategic initiatives at Cambridge-based Pragmatic Semiconductor, also welcomed the strategy.

Pragmatic is one of the largest semiconductor manufacturers in the UK and makes compound chips.

“I welcome the fact that the government has recognised the potential of more sustainable semiconductors, by committing to build on our existing research base,” said White. “I was also pleased to see the strategy references our UK manufacturing capabilities to produce flexible semiconductor devices, an area where the UK can truly lead the world.”

“However, there still are some question marks raised over the strategy when looking at the funding allocation,” said White. “There needs to be further clarity around exactly what the £1 billion will be applied to, as well as how and when it will be applied.”

“When you look at the areas the UK is focused on there is a valid question to be asked over whether that’s enough money to make a difference – is it too much of a dilution to spread the amount over 10 years?” questioned White. “That can only be answered with more detail.”

“Ultimately, you could invest £100 million annually into something that really moves the needle for the industry,” said White. “You could equally waste £1 billion in a year by focusing it on areas that won’t have an impact.”