Over the last year, the world’s major tech economies have invested heavily in their respective semiconductor strategies.
As recently as last week, for example, South Korea unveiled a $19bn package of incentives.
The UK’s own £1bn investment, and commitment to a national semiconductor strategy in May last year, sought to follow this global trend.
Global Tech Advocates (GTA) along with techUK and others led the charge with an open letter calling for the prime minister to deliver a national strategy for chips.
One year on – and with a new Semiconductor Institute announced earlier this month – it feels like an appropriate moment to reassess where progress has been made in the sector, and where there is still work to be done.
Public and private sector alignment
Grade: A – The Semiconductor Institute gives cause for optimism
Shortly after the publication of the government’s semiconductor strategy, GTA joined forces with techUK and TechWorks to establish the Chips Coalition.
Our message remains the same as it was a year ago – it’s strategically vital that the UK’s semiconductor sector is well supported. While there is room for improvement, the steps taken over the last year to align the interests of the public and private sectors are cause for cautious optimism.
Most notably, the new Semiconductor Institute will act as an official voice for the industry and bridge the gap between the private and public sectors.
The Chips Coalition stands ready to ensure this institute is supported in its objectives to bring the two sectors together, and ensure it acts as the single point of contact to promote the UK’s semiconductor capability to investors and attract foreign investment in British research expertise and manufacturing.
R&D capacity
Grade: C+ – An imperative for UK semiconductors
Strong R&D credentials are the UK’s best chance at establishing itself in the global semiconductor supply chain.
While it is very difficult to compete with the manufacturing capabilities of chip behemoths such as Taiwan, the US and China, the UK’s potential to develop world-leading R&D facilities, in partnership with our well-established educational institutions and research facilities, is important.
Policymakers are showing signs of realising this, but a £22m investment into two new ‘Innovation and Knowledge Centres’ fell short of the financial backing many were hoping for.
Indeed, it is no coincidence that Arm – the UK’s shining light in the industry – was established in Cambridge and is one of the university’s most famous spinouts.
For the UK to grow beyond a peripheral role in the industry, attention to – and increased funding of – R&D provides a strong opportunity to find a leading position in the global supply chain.
Engagement with international partners
Grade: B – Signs of improvement
As the mammoth investments by the EU and US reminded us, the UK economy is not financially equipped to match the commitments of others to their respective semiconductor industries.
The case for international engagement is therefore critical.
While the decision to join the EU’s ‘Chips Joint Undertaking’ initiative earlier this year may not lead to a huge injection of capital, the thousands of UK companies that can access the grants will feel encouraged by a renewed commitment to engagement with our neighbours, and the wider world.
Further abroad, the UK-Japan semiconductor partnership buoyed many in the industry. Japan has huge potential in this sector but, like the UK, has perhaps underperformed in recent years. For two tech powerhouses, cooperation will be vital to punch above their weights.
At home, Taiwan Semiconductor companies will return during London Tech Week in June, supported by NARLabs and Semi Impact Ventures – one example of the potential for the UK to engage with the international semiconductor ecosystem.
Key takeaways
Overall Grade: B – A rosier picture despite setbacks
The UK has steadily moved forward in the 12 months since publishing its semiconductor strategy. The government, led by the Department for Science, Innovation and Technology (DSIT) has heeded many of the calls from the industry – a positive reminder that engagement between the private and public sectors can deliver tangible returns.
There is, however, still work to do. In R&D in particular, the UK has the potential to carve out a world-beating niche – it must take full advantage of its higher education system and the research capabilities it possesses.
On a more technical point, an assessment around manufacturing capability and the current wafer fab capacity to support future growth needs to be undertaken – relying heavily on overseas partnerships for building chips could leave the UK in a vulnerable position.
Abroad, the UK must enhance its engagement with other leading tech ecosystems. The semiconductor supply chain is uniquely global, making it impossible for any one country to act on their own.
The UK undoubtedly has the potential. Now is the time to further strengthen it, underpinned by healthy public/private sector engagement as the rest of the world is not standing still.
Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates, and a regular UKTN columnist.
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