The UK will invest $1.2 billion in its own production of semiconductors

The UK has announced up to £1bn ($1.24bn) of support for its semiconductor industry in a bid to expand its domestic chip manufacturing capabilities and prevent further supply disruptions.

The investment will be part of a long-delayed 20-year strategy for the semiconductor industry that outlines the UK’s plan to secure chip supply and protect against national security threats.

The strategy sets out a series of measures to develop the UK’s own chip manufacturing sector, reduce the risk of supply chain disruptions and protect national security.

The UK will seek to increase cooperation with international partners as part of its strategy. This week, the UK struck an agreement with Japan to expand cooperation in the fields of defense and semiconductors.

The government will initially invest up to £200m between 2023 and 2025 and then expand its commitment to £1bn over the next decade, the government said. The funding will be used to improve the talent pool and access to prototypes, tools and business support.

“Semiconductors are at the heart of the devices we use every day and will be critical to the advancement of tomorrow’s technology,” said the British Prime Minister. Rishi Sunak.

“Our new strategy focuses our efforts on where our strengths lie, in areas such as research and design, so that we can strengthen our competitive edge on the global stage,” the prime minister explained.

“By increasing the capacity 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,” he added.

To prevent disruptions due to supply shortages in the future, the government said new guidance will be issued to inform businesses about the risks of supply disruptions, while the UK will look to increase collaboration with international partners to improve the resilience of global chip supply chains.

An advisory group made up of industry, government and academia has also been established to work closely on common solutions and their implementation.

Instead of meeting some of the mega-spending commitments presented by regions such as the US and the EU, the UK is taking a different approach to expanding the areas in which it has experience.

Officials have acknowledged that it does not make sense for the UK to build its own large facilities, such as those of Taiwan’s chip giant TSMC, to produce the most advanced chips.

Instead, the focus will be on other areas of the semiconductor industry, such as intellectual property and the design and manufacture of non-silicon chips.

The UK’s semiconductor strategy was expected to be published last year. But there were a number of delays due to political instability in the country. British semiconductor executives have expressed dissatisfaction with the government’s lack of a specific strategy for the industry.

While the US and European Union have pledged billions of dollars to support their respective chip manufacturing sectors, the UK strategy has faced delays and setbacks amid multiple government changes due to the resignations of former prime ministers. Boris Johnson And Liz Truss.

Pragmatic Semiconductor, a Cambridge-based non-silicon chip start-up, warned earlier this year that it could be forced to move overseas if the government doesn’t release a plan for the industry soon. IQE, a microchip company in a semiconductor “cluster” in Newport, Wales, has also warned it could be forced to relocate to the US or the EU if the government doesn’t act soon.

Scott White, founder of British chipmaker Pragmatic Semiconductor, said the government’s £1bn pledge – though small compared to US and EU commitments – “actually seems like the right number” that British industry needs. However, he warned that the funding needed to be “applied in the right way”.

“Equally, if it’s just a repackaging of other existing stuff, it won’t be particularly useful,” White told CNBC.

The UK is an underestimated player in the global microcircuit market, specializing in the development, intellectual property, research and production of advanced composite semiconductors.

It houses one of the most coveted semiconductor-related assets, chip designer Arm. Arm-licensed chips are used in about 95% of the world’s smartphones.

The country is also known for its role in developing the thinnest graphene semiconductor wafers.

Semiconductors and supply chains, mostly based in East Asia, have become a burning issue for world governments after global shortages led to supply issues for major automakers and electronics makers.

The Covid-19 pandemic has exposed an over-reliance on semiconductor component manufacturers from Taiwan and China. This dependence is fraught with growing tensions between China and Taiwan.

TSMC, a Taiwanese semiconductor giant, is by far the largest microchip manufacturer. Its chip performance is the envy of many developed Western countries, which are taking measures to increase domestic chip production.

In the USA the President Joe Biden signed the Chips and Science Act, a $280 billion package that includes $52 billion to fund its own semiconductor manufacturing.

Meanwhile, the EU has committed 43 billion euros ($45.9 billion) to the European semiconductor industry, with the goal of producing 20% ​​of the world’s semiconductors by 2030.

UK legislators said the lack of a similar strategy from the government reduces the country’s competitiveness. On Feb. 3, lawmakers from the Business, Energy, and Industry Strategy Committee (BEIS) called on the government to take action on the semiconductor industry, calling the lack of a coherent microchip strategy “an act of national self-harm.”

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