Based on interviews with policymakers and industry leaders the report calls for the UK to reject the onshoring approach taken by the US and Europe, where policymakers have been rushing to develop new strategies to increase supply chain resilience and expand local manufacturing capabilities deploying both subsidies and tax incentives to shore-up domestic resilience.
By contrast Imagination has argued that the UK should take a different path and has called on the UK government, which is currently reviewing its strategic approach to the semiconductor industry, to reject this onshoring approach for both strategic and economic reasons.
It points to the cost of full onshoring semiconductor production to the UK which it argues is simply not viable given the capital available and economies of scale required. In addition, such a strategy would result in the UK being dependent on domestic production which would work against the UK’s existing comparative advantage.
What the report calls for is for the UK to double down on areas where it has a competitive advantage and suggests a microchip strategy with three core aspects: enhancing research & development, promoting and protecting intellectual property and championing diversification.
The UK is certainly a clear leader in Europe when it comes to semiconductor design, with the likes of Arm, Imagination, Agile Analog and Sondrel – in fact the a unique science and technology ecosystem now supports over 100 design firms.
Government institutions like the new ARIA (Advanced Research and Invention Agency) and British Business Bank could be used to channel new private and public investment into the most cutting-edge areas of semiconductor R&D, according to the report.
Imagination also calls for trade diplomacy which it says has a vital role to play in the UK’s approach, and that the UK should only work with trusted, like-minded partners who have common approaches to trade policy and IP protection.
Playing to our strengths and prioritising strategic interdependence seems eminently sensible.
However, there are doubts about the UK government’s approach and there are certainly questions as to whether those pulling the levers of power truly understand the semiconductor industry.
This is an interesting report and it should be read by those framing the discussions currently taking place that are looking to shape the future of semiconductor design, manufacture and trade here in the UK.