Innovation and design excellence keep leading fabless companies in the UK.
With more than 30% of Europe's fabless semiconductor companies and independent design houses located in the UK, it's no surprise that some are world leaders. But customers for these companies are, in the main, anywhere but the UK. So why are these companies here when they could be closer to their customers? Simon Knowles, vp strategy for Icera and a cofounder of the company, said: "Our biggest site and our headquarters are in Bristol. Why? Because Bristol is probably the best place for digital design in Europe." And the reason for this goes back to the 1980s. "It's all because of Inmos." "How do you build a successful company?," he asked rhetorically. "Get the best people you can." He said digital designers in the Bristol area were now sufficiently valued by the industry that they could put lifestyle at the top of their agenda. Tudor Brown, president of ARM Holdings, said: "We started in the UK, our management is in the UK and you tend to stay where you are." Interestingly, he added: "An important reason why ARM is still in the UK is because most of our business is outside Europe." That might seem a bit cockeyed, but Brown noted: "Being based in Europe is a huge advantage when your customers are in the US and the Far East. Being based in the UK makes you look elsewhere. Historically, logistically and culturally, it's good to be in the UK." Peter Claydon, co founder of femtocell pioneer picoChip, is another successful Bristol based entrepreneur. "There's a lot to be said for doing development work in the UK. There's a lot of expertise available and, in the early stages of picoChip, 80% of our staff didn't need to move when they joined the company." Matthew Phillips, senior vp of CSR's handset business, said the company was still headquartered in the UK because its value and strength is in the expertise of its staff. "UK engineers have skills which are not easy to find in other places," he said. Claydon highlighted the benefit of the UK's design expertise. "In China, we could employ a reasonably experienced engineer for $20k. In the UK, that's going to be £50k. But the people we hire in the UK are not used to doing what they're told – they're innovators and most innovative things happen when people have a good idea. They move things on, rather than doing what they've been told to." Brown is a 'fan' of UK design skills. "The UK has been incredibly innovative over the last few hundred years and it's still true today. That's not to say the rest of the world isn't as clever, but the UK has always come up with different solutions to problems." But Brown can't explain exactly why. "Some of it has to do with necessity, some of it has to do with going back to basics. There are a lot of UK engineers behind today's 'killer' products and there are a lot of UK engineers in big US companies." Taking rather more of a global perspective, James Foster, ceo of XMOS, said: "The days of a company thinking of itself as being of one country have gone. Semiconductor companies today are born global." But he acknowledged the Bristol area was 'as good a place as you can get for engineering talent – and that includes Oregon. Our designers are doing custom layout and optimisation: these are 'full on' techniques and there are other companies in the Bristol area doing the same." Nevertheless, Foster believes the UK is a nation of innovators. "And I think we challenge ourselves. XMOS has a wealth of creative people looking at problems and solving them. That's healthy; there's a lot of great innovation and some disruptive change. But XMOS has to think globally and if the skills we need aren't available in the UK, then we have to hire those skills where they are available." Claydon added: "A lot of the early development work for CDMA (code division multiple access) was done in the UK. Qualcomm took a lot of those ideas and commercialised them, but the fundamental work was done in the UK." "Innovation is a UK strength," said Phillips. "We still have people who can come at problems in a new way. However, a related challenge is exploiting ideas to their full extent because, when it comes to innovation, the competition will usually be larger and have considerable resources. This means UK companies must hold the markets they're successful in as larger companies try to enter them." Knowles noted a business reason for being based in the UK. "Most of the people who buy our chips are based in the Far East, but not the people who make the buying decisions. It's more common that mobile operators decide what they want in the bill of materials – specifying an Icera chip, for example. And most operators are based in the west." He returns to engineering skills, however. "We differentiate ourselves by out engineering the opposition. We build chips on leading edge processes – we'll probably be one of the first on TSMC's 40nm process – and you can't find engineers with that kind of experience in places like China." Looking at the UK electronics industry in general, all contributors see strengths. Brown pointed to analogue design. "We have always been good at analogue, which is partly a hangover from World War II. It's possible to serve niches with analogue and mixed signal skills and be successful." "Engineering and communications," said Claydon. "There's a lot of people with expertise across the board, but there are not so many people coming through today." Phillips also noted that CSR has a lot of expertise in Cambridge in digital design for signal processing. "The site is also strong in embedded firmware, where designers have to work within memory footprint and power constraints." CSR has been a pioneer of mixed signal on cmos technology. "We believe we have a lead in this area and a lot of that is down to the knowhow and knowledge of UK engineers," Phillips said. "There is a lot of understanding, in general, on how to do analogue on cmos." What's to be done? All contributors pointed to the lack of emerging talent as a weakness. Claydon said something needs to be done about the lack of young people coming into the industry. "That comes down to getting to children at a younger age." Phillips said he would like to see more graduates with analogue design skills. "We don't have enough people doing science, technology and maths and we need to attract more people into this area." "It's not so much the UK has weaknesses," Brown observed, "as not enough engineers – and I don't see companies setting up big digital design teams in the UK because it will be too hard." He added that ARM has had to set up design centres overseas. "If the UK had been stronger, it might have been different. The challenge is to encourage kids into the profession; we need success stories." But Foster reiterated his global view. "We should realise we're building globally competitive businesses and should get the skills in the most effective places," he concluded.