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UK Government must do more to support our Semiconductor Industry

The latest report from the parliamentary Business, Energy and Industrial Strategy Committee concludes that more must be done to support the UK Semiconductor industry and spells out, in fairly robust terms, the multi-faceted argument for protecting UK interests.

Image of a silicon wafer a critical base for all semiconductor manufacture
Silicon wafer used in semiconductor production

As everyone in the electronics industry is well aware, Semiconductors are the critical building blocks which essentially keep modern life ticking along in the background, enabling communication, navigation, robotic manufacture, healthcare, military technology, quantum and cloud computing, and everyday consumer devices. They are crucial technology for any modern economy. Clearly without an end-to-end supply chain the UK is at the mercy of other countries to maintain supply of these components. The effects of recent lockdowns are still being felt in many industries, not least Automotive, whilst the threat of geo-political factors like the tensions between China and Taiwan, mean that the UK's position is extremely vulnerable to future disruption.

Despite the obvious red flags that the pandemic and headlines have delivered, thus far the UK has done precious little to mitigate any future supply risks, falling way behind other developed nations (and even many of them are taking inadequate measures!). The BEIS report concludes that failure act could result in significant economic shocks to UK businesses.

It is true that the UK has a relatively small semiconductor industry compared with the US or much of Asia, but our world-class capabilities in engineering, intellectual property, product development and advanced materials research mean that the number of businesses both dependent on and driving the semiconductor argument as a whole is significant.

The Department for Digital, Culture, Media and Sport (DCMS) was due to publish a semiconductor strategy in Q3 of 2022 and we're still waiting. The fact that the future of such a fundamentally critical infrastructure industry is lumped in with the interests of Culture, Media and Sport is, itself, a rather worrying indicator of how much importance the UK PLC really attributes to Semiconductor Support and Security!

One exception, which we previously reported on, is the decision to reverse the 'Chinese' takeover of the Newport FAB. However, this is an isolated incidence of pragmatism in the face of such compelling arguments for taking action.

In summary, the BEIS report recommends the following as 8 basic tenets of the UK semiconductor strategy:

  • Protecting Intellectual property and design

  • Supporting the design chain for leading edge node chips

  • Matching UK manufacturing capability to UK design capability (not a small ambition!)

  • Developing manufacturing processes for silicon semiconductors

  • Development of existing strengths in compound and advanced material semiconductors, to meet demand in emerging markets

  • Facilitating the construction of new fabs, including consideration of an open access fab in the South Wales cluster

  • Establish a risk and resilience strategy for the semiconductor industry alongside its Semiconductor Strategy - urgent!

It is clear that we are missing out on inward investment at a crucial time for the semiconductor industry. Every effort should be made to develop more proactive partnerships with US and EU counterparts and engage with Taiwanese companies, as well as a diversity of Asian powerhouses to secure significant inward investment in the UK.

The BEIS report was published on 28th November 2022. You can download the full report below:

UK Semiconductor industry
Download PDF • 444KB


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