The National Semiconductor Strategy, which includes £1 billion of government investment over the next ten years, looks to boost the UK’s strengths and skills in areas of competitive advantage such as IP design, R&D and compound semiconductors, while helping to grow domestic chip firms here in the UK.
Semiconductors are critical to almost every industry worldwide, and over one trillion devices are manufactured globally each year with a market value north of $1trn. They also play a critical part in enabling cutting edge technology such as artificial intelligence and quantum technology.
The strategy focuses on the UK’s areas of strategic advantage as well as the wider R&D ecosystem which includes work being undertaken at UK universities, while the funding will also be used to improve the talent pipeline and make it easier for British firms to access things like prototyping, tools and business support.
Chloe Smith, the Science, Innovation and Technology Secretary, said that the new strategy would, “Double down on the UK’s core strengths to create more skilled jobs, grow our economy, boost our national security and cement the UK’s status as a global science and technology superpower.”
Beyond those fine words, however, what does the document actually deliver for the industry?
The headline figure of £1 billion is intended to support growth in the sector and aims to improve industry access to infrastructure, support research and development and facilitate greater international cooperation to mitigate supply chain risks and protect the UK’s national security.
However, the strategy was said by a number of critics to lack clarity and while the Department of Business and Trade is working to support business in attracting investment into key sub-sectors – such as compound semiconductors – and is supporting the international expansion of UK companies via the National Science and Technology Council, that work is still not being well communicated to industry.
Dr Andy Sellars, Strategic Development Director, Compound Semiconductor Applications Catapult, said that while the delay in publication had been frustrating, he was, “Broadly pleased with the strategy – which is both selective and targeted - and the decision to focus on specific key strengths here in the UK. I think where the strategy has positioned the UK is sensible – I don’t think our going head-to-head with the US and Europe would have worked.”
The US and Europe have announced plans to spend billions on direct subsidies to repatriate semiconductor production that has been done overseas.
”The UK can’t play at that level and while the funding announced is very similar to that of the past ten years, I believe it’s a good start,” said Sellars.
According to David Clarke, Technology Manager, Clas-SiC Wafer Fab, “While the £1bn investment was great to see and if implemented effectively could deliver for the existing semiconductor industry, the scaling up of the industry remains a massive challenge.”
In response to that challenge the government has launched a National Semiconductor Infrastructure Initiative that will look at the potential of British chip firms in several key areas including silicon prototyping, advanced packaging, compound semiconductors and design IP, and it will report in the autumn with plans on how to best focus future manufacturing investment.
“The project is intended to build an economic case for those four areas and will largely inform where investment takes place,” explained Sellars.
While Americo Lemos, Chief Executive Officer of IQE, welcomed the strategy and its focus on those areas where the UK retains a global lead, such as the manufacturing of advanced compound semiconductors, he warned that with significant investment now being allocated to semiconductor manufacturing in places like the US, Europe and Asia, “there was no time to lose in bolstering the UK’s capabilities.”
Clarke said that the Infrastructure Initiative was going to be critically important but expressed concern that the industry was still waiting for a “clear, effective strategy.”
“The National Semiconductor Strategy demonstrates a clear vision for our position in the sector,” said the government. But does it?
Critics have suggested that the strategy not only lacked ‘clarity’ but also ‘ambition’ and while the government highlighted the £1bn commitment the reality is that it is spending just £200m over the next three years – which is significantly less than many of our other competitors.
According to Jamie Potter (above), Flexciton co-founder and CEO, “the government does still appear to be in the throes of working out its strategy.” However, de did think that fundamentally, though, “the UK has got this one about right. Focusing on the UK’s specialisms makes sense. The obvious one here is chip design, which was detailed in the strategy. ARM has been at the forefront of this market for many years and, along with the spin-offs coming out from the University of Cambridge, it’s a sector where the UK could be considered at the forefront.
“Other nations, such as China, have been offering a greater deal of support to their design companies for many years now, so it makes sense to match them if we want to remain competitive.”
However, he pointed out that the UK’s strengths in innovative new software and technology were not detailed in the government’s strategy.
One vocal critic of the government’s approach to the semiconductor industry has been Paragraf CEO and Founder Simon Thomas (pictured opposite), who was widely quoted as saying that the content of the strategy revealed so far was “frankly flaccid”.
“It wasn’t all I said,” Thomas explained when he spoke with New Electronics, “but I have been a critic of government and its approach towards the industry for some time. They talk about the UK ‘becoming a technology superpower’ but never actually define what ‘superpower’ means or how they intend to reach that goal.”
According to Thomas, “A strategy that worked for UK business would be one that delivered on trade, that helped close the skills gap, made it easier to recruit talent from abroad and made the construction and planning process of new factories and warehouses simpler, in the process supporting the infrastructure necessary for a successful semiconductor industry.
“That £1bn figure quoted across the media is neither here nor there to business, there are plenty of easy wins that could really help the industry and make it easier to operate here in the UK, but the government doesn’t seem interested – there just isn’t any joined up thinking at its heart.”
The strategy document did include several practical steps such as the setting up of a UK Semiconductor Advisory Panel, the creation of a specialist incubator pilot that will focus on removing obstacles which tend to hold back semiconductor startups and the provision of industry-led learning that will ensure people can gain the skills the semiconductor industry needs.
“While broadly welcoming these initiatives my criticism is essentially that too much was left unsaid,” said Thomas. “Business needs certainty and nothing was said, for example, about trading with countries like China which could be prevented on security grounds. I think there were too many questions left unanswered or not even addressed.”
International co-operation and security
The strategy did highlight the importance of collaboration with international allies to develop secure supply chains and called for the UK to increase its cooperation with close partners, to better manage a coordinated approach to supply chain resilience but also to address national security threats and drive growth in the sector.
Just recently, the UK and Japan committed themselves to establishing a semiconductor partnership, which will be led by the UK’s Department for Science, Innovation and Technology (DSIT) and Japan’s Ministry of Economy, Trade and Industry (METI).
The partnership aims to deliver new R&D cooperation, skills exchanges, and improve the resilience of the semiconductor supply chain for both countries. UK Research and Innovation will work with the Japan Science and Technology Agency on a joint investment of up to £2 million in early-stage semiconductor research next year, helping researchers to work together on fundamental semiconductor technologies.
“This type of partnership is very positive,” said Sellars. “We need to align with likeminded countries at a time of growing decoupling from China. Supply chains are incredibly complex because of globalisation which over the past 30 years has seen countries becoming increasingly specialised. The UK will also need to forge strong relationships with rapidly growing markets like India, for example, where the government is currently investing $10bn to create a semiconductor industry.”
For many critics of the strategy there is one key question: does the UK government truly understand the semiconductor industry and what it needs to thrive?
“We have a faster growing tech hub here than anywhere else in Europe, putting the UK in a prime position to establish itself as a global leader in smart manufacturing technology, for example,” said Potter. “Yet even with this opportunity sitting directly under their noses, I don’t think the government has yet realised its potential.”
Many of those interviewed for this article suggested that the UK government would certainly work better if technologists and scientists were represented in government – perhaps, being embedded across departments.
“It would certainly aid dialogue in terms of policy formulation and delivering investment,” said Sellars, “but that’s not to say that there aren’t some very bright and talented people in government who do understand what the industry needs.”
Sellars also made the point that the industry is complex with many different interests.
“I think the setting up of the Advisory Panel as a champion or representative body will make engagement with policy makers easier. A few years ago, we had the Electronics Systems Council which raised the profile of the industry and saw increased ministerial engagement,” he added.
By contrast Paragraf’s Thomas didn’t think government understood the industry at all. “I think we need less headline grabbing announcements, many of which are meaningless, and government needs to start looking more at what’s happening around the world. Earlier this year, for example, they announced they were going to invest £2.5bn in quantum. That’s great but Microsoft invests $3bn a year in developing quantum technology - there’s a bubble mentality.”
While many welcomed the National Semiconductor Strategy even its supporters have been concerned at the delays and the failure to deliver more substantive proposals.
The focus on IP, design and cutting-edge technologies like compound semiconductors is certainly sensible, but the UK needs to deploy as much of that £1bn investment as quickly as possible as it will take time to build the deeper capabilities that the sector needs.
The National Semiconductor Infrastructure Initiative has been broadly welcomed and could provide a platform for future investment in key manufacturing capabilities here in the UK, but the government needs to act and deliver over the next ten years – whether in supporting research and development, expanding the talent pipeline, and investing in the country’s manufacturing infrastructure.
The UK currently has the third largest digital economy after the US and China. Historically it’s been home to great innovation, but more and more investors are looking at the UK and wondering how companies can progress.
Only time will tell whether the National Semiconductor Strategy will deliver, but does the UK really have the luxury of time on its side?