The UK government has announced an investment of up to £1bn in the domestic semiconductor industry, but has been criticised for declining to join the spending race that has seen the US and EU announce significantly bigger programmes.
Labour accused the government of lacking ambition in its announcement, while one UK startup said the £1bn figure was less than the cost of one basic semiconductor plant.
The UK’s long-awaited national semiconductor strategy would focus on the country’s existing strengths in the technology. Semiconductors, or microchips, are the “brains” of electronic devices, formed by wafers of silicon that are key to most forms of modern technology, from cars, smartphones and kitchen devices to power stations.
Under the strategy, the planned decade-long investment would be targeted at areas such as design, research and development.
“Semiconductors underpin the devices we use every day and will be crucial to advancing the technologies of tomorrow,” said the prime minister, Rishi Sunak. “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.”
Concerns over the fragility of the global semiconductor industry have been heightened by the Covid pandemic, when a surge in demand for electronic devices triggered a chip shortage, and by fears that China planned to invade Taiwan, the world’s largest manufacturer of semiconductors.
The strategy, to be released in full on Friday, avoided committing to the huge subsidies announced by the US and EU. China also committed multi-billion-dollar sums to boosting semiconductor production.
The US pledged $52bn (£42bn) in subsidies for semiconductor manufacturing and research, while the EU drew up a €43bn (£37bn) investment plan for the sector, which included member state subsidies and contributions from the private sector. The EU’s competition commissioner, Margrethe Vestager, has warned against a “subsidy race” over semiconductors.
According to details released by the government ahead of the full document release, up to £1bn in funding would be spent over the next decade, with an initial spend of up to £200m in 2023-25. Other areas of focus will be compound semiconductors, which are made from different elements.
MPs have described the UK semiconductor industry as “comparatively small” when measured against Asian countries and the US, with clusters in Scotland, south Wales, Cambridge, and the north-east and south-west of England.
The government said the funding would be used for projects such as improving access to specialist equipment, investing in the industry “talent pipeline”, and other business support. This would be aided by new bodies, including a UK semiconductor advisory panel and an incubator to assist new semiconductor businesses. The strategy also planned to mitigate supply chain threats by working with other countries such as the US, Japan and South Korea.
Labour said the government had shown a lack of ambition. “Rather than the £1bn headline, the reality is £200m over the next three years – significantly less ambition than our competitors,” said Lucy Powell, the shadow secretary of state for digital, culture, media and sport.
Cambridge-based startup, Paragraf, which claims to be the only company in the world capable of manufacturing graphene to mass-produce semiconductors, said the taxpayer commitment would not cover a basic chip plant. Its founder and chief executive, Simon Thomas, said the content of the strategy revealed so far was “frankly flaccid”.
“The strategy continues the trend of this Conservative administration proclaiming superlatives like ‘becoming a technology superpower’ without defining what ‘superpower’ actually means or delivering a plan of how we will even begin to reach this objective,” he said.
However, one UK semiconductor manufacturer described the strategy as a “meaningful step forward”. David Moore, the chief executive of Cambridge-based Pragmatic Semiconductor, which makes compound chips, said: “It’s a really good start in terms of looking at how we take this strong pedigree in many respects in the UK and how we drive it forward.”
Sunak stressed the importance of semiconductors as he flew to Japan for the G7 summit, where he agreed a new partnership on the technology with the Japanese prime minister, Fumio Kishida. The UK and Japan are concerned by the threat to the semiconductor supply if China invades Taiwan, the world’s largest producer. Japan is also a major player and the UK would like to boost its own sector.
As part of a new agreement, the Hiroshima accord, the UK and Japan will launch a “semiconductors partnership”, with new commitments to pursue ambitious research cooperation and planning to prevent shortages.
Sunak said: “The closer cooperation between our armed forces, our cyber agencies, and indeed, our semiconductor companies and researchers will all strengthen our security at home.”
