A range of issues will affect how the industry develops, including relations with Government, the ability to exploit innovation and better cross sector collaboration.
So can the Government help to develop the industry?
Stephen Pattison, vp of public affairs with ARM, said: "Unlike some other major sectors, UK electronics has been slow to develop relations with Government. But that changed two years ago, with the formation of the Electronic Systems Council.
"Looking forward, we need to think carefully about what we want the Government to do for the sector. The starting point should be: 'if it ain't broke, don't fix it!' and this is a view shared by the Government.
"STEM and apprenticeships are areas where we can collaborate; another is to encourage public sector investment in research and in funding significant pilot programmes to test and showcase key new technologies."
Steve Applegate, chairman of Stadium's group technology board believes Government and the electronics industry are disconnected. "The UK electronics industry has not seen key investment nor government support for decades and is now struggling to compete with global markets and lower cost offshore alternatives. Government support is extremely important if the electronics industry is to survive in the UK."
Taking a different view, Derek Boyd, chief executive of industry group NMI, claimed: "Until the recent election, the industry's representation and connection to Government were as good as they have ever been; the ESCO report was well received and the ESCO Council was established. There were some significant breakthroughs: additional funding for IoT; approval for a Graduate Trailblazer apprenticeship scheme; and a bid through InnovateUK to increase investment in ECSEL by an order of magnitude from where it sits today."
Another business focused view was expressed by Nigel Toon, CEO of XMOS. "Governments move at a very different pace from the speed required in a small or medium sized company," he said. "It is hard for governments to keep up with and track emerging trends. Government should, therefore, create an attractive environment for entrepreneurship and for innovation."
Losing a trick?
The UK is associated with innovation, but not commercialisation. Have we lost a trick with graphene and plastic electronics and what needs to happen for us to better exploit opportunities?
Ken Ball, electronics programme manager with techUK, believes the UK has huge potential to innovate and exploit that innovation. "But it's vital that small and micro-businesses – often the most innovative – have equal opportunity to compete for government funding.
"Plastic electronics will continue to grow, driven by the need for flexible or wearable electronics and enabled by a mix of conventional and printed. True organic semiconductors are some way off and will probably only be developed for very low cost consumer items.
"Graphene has so far seen little direct application, but it has led to the research and application of 2D materials, which may well be incorporated into new semiconductors."
Antony Rix, principal wireless consultant at TTP, notes that many large UK companies and global companies headquartered here have cut their R&D budgets substantially. "This is a reflection of wider changes: they increasingly expect their suppliers to innovate and buy in a global market. Without this basic investment – whether internally or with close partners – corporations will struggle to grow and will find themselves exposed to global competition."
Cross sector collaboration
The recently published ESCO Report called for cross sector collaboration. Is it happening and what will help companies to make better use of supply chains?
Boyd points out that electronic systems are already a critical part of most industrial sectors, so industry associations have a great opportunity. "For example, NMI has established the Automotive Electronic Systems Innovation Network; increased our membership in aerospace and defence sectors; and are finding great merit in chip-to-system collaboration."
But he sees the issue of UK supply chains as tricky. "We're part of a global ecosystem and failure to recognise that would be wrong."
Applegate believes that, until the UK can develop and provide its own 'must have' products and technologies – often driven by multi industry collaboration and sharing knowledge – it is difficult to see how Government intervention can have any real effect.
But Rix thinks the government could do more through procurement to build a more diverse and resilient supply chain in the UK in both electronics and ICT. "Available tools should be used routinely to recognise the value of local research and manufacturing," he said. "Global competitor countries like the US, France and Germany do this as a matter of course."
Andrew Holland, founder of RF Module and Optical Design, observed: "The excellent ESCO report showed how the UK electronic systems industry can lead product offerings in the burgeoning IoT space. As a Cambridge start-up, we need to collaborate with companies aligned either side of our product offering. The good news is that the UK is equipped across all sectors to bring such a compelling product to bear."
Lack of new blood?
There's a lack of engineering students, but what about management talent? What might help UK companies develop over the next decade? "ARM disproves your assumption," Pattison asserted. "It has a great record of leadership and global expansion. It shows what can be done, but there is a lingering tendency for some companies to sell out early, rather than invest in long term growth. This may be a cultural thing."
techUK's Ball believes there is no underlying reason why UK based businesses cannot be global leaders. "To support small, innovative companies grow and scale, we must take a holistic approach that includes platform catalysts and skills development and supports the hunger and desire of UK entrepreneurs.
"We have called on the government to implement the recommendations in Sherry Coutu's Scale Up Report to ensure the UK remains a leading economy and a leading innovator."
In Toon's opinion, new management teams need to build their skills in high growth successful technology businesses before they jump out and start on their one. "We need more international successes to stimulate this virtuous circle.
"Silicon Valley works because successful entrepreneurs either start new businesses or go into VC and support new companies. Middle management from these successful companies gain skills and experience that allows them to lead the next wave of start-ups. Their old bosses will act as mentors, seed investors or will be sitting in major VCs."
TTP's Rix believes the German 'Mittelstand' companies are a good example for the UK. "These organisations expect to invest for the long term, helped by stable investment and taxation regimes, by benevolent (often family) owners and by a focus on global markets,". he said. "UK companies can learn from this."
Tony King-Smith, executive vp of marketing with Imagination Technologies, said he is extremely interested in getting new blood into the industry. "We work closely with universities to make sure that not only are people educated in line with real industry requirements but they are also interesting people pursuing novel ideas. We have numerous activities to promote STEM in schools and beyond to really enable universities to excel."
So will a 'new generation' be taking the industry forward in 2025 and will they be establishing global brands?
"We can see a new generation emerging already," said Pattison. "The digital revolution is enabling small start-ups to go from 'zero to hero' in even less time than it took ARM."
Holland says scale matters in manufacturing. "Just look at the gigafabs in Taiwan. But the UK has a great track record of pure innovation with small teams making a global impact over a short period. A UK global consumer brand? Yes, we can!"
Rather than establish global brands, Applegate thinks the target should be for the UK to establish itself as a centre of innovation excellence that attracts worldwide interest. "This may come from a broad range of startups, but financial support from institutions and Government is required to support research and product development at source and to assist with taking products to market and attracting the interest of global players."
NMI's Boyd suggests that PURE is already a global brand – as is Dyson. "It's not impossible for global consumer brands to emerge from the UK and having such a flagship in the UK would provide a great boost. However, this is a global industry and the amount of UK developed technology inside some leading consumer brands suggests the need for these brands to be located here is not a 'show stopper'.
Toon's view is that small companies need to focus on emerging markets, where they can deliver a big advantage. "Being 30% or even 100% better is not enough; x3 or x10 needs to be the goal."
Rix agrees that a genuinely innovative product or service, managed and marketed confidently, can be translated to a global brand. "Dyson is a great example," he notes. "Many UK electronics companies, like TTP, have always operated globally and are fostering a new generation of engineers and entrepreneurs. The UK market is large enough for a product to be launched, a good return on investment achieved and used as a stepping stone to global markets."
Where will we be in 2025?
Pattison: "Ten years is a very long time in this sector, but my hope is that the UK will be leading the way in some smart technologies, with a much bigger ecosystem of electronics companies in support!"
Applegate: "With the right government support, inward investment and commitment from the industry, the UK electronics industry has the potential to be great. However, we won't get there overnight, so we need to stop talking and start collaborating."
Holland: "I think the UK can lead new IoT product, software and business models – we're a nation of innovators and are nimble enough to move quickly onto the next big thing."
Boyd: "UK industry is well positioned to take advantage of the permeation of electronic systems that will increase over the next decade."
Toon: "If we look back 15 or 20 years, there have been some massive changes. I expect the same level of change looking forward over the next 15 to 20 years. By 2025, some of the most valuable companies listed on the London, New York or Shanghai stock markets will be ones we have never heard of – if just one of these new mega businesses can emerge from the UK, that will be great."
Rix: "There will continue to be a diverse ecosystem of start-ups, design specialists, contract manufacturers and global companies with R&D and manufacturing in the UK. The decline of some global brands with significant presence in the UK will hit us and a significant risk is that emerging technology 'unicorns', including well known US companies and some emerging from China, will have no base here and will erode some of our major export markets."
King-Smith: "If we bring the electronics community together to focus in key areas such as health, energy, industrial and agriculture, then we can have a strong industry that punches above its weight on the world stage."
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