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UK Innovation Strategy: the critical importance of semiconductors

As the UK emerges from the Covid-19 pandemic, the government has begun to turn its attention towards addressing other pressing global challenges, from turning the tide on climate change to tackling regional inequality by “levelling up”

Companies at the forefront of innovation - such as Imagination Technologies - have a crucial role to play in helping provide novel solutions to these challenges while delivering on the improvements in productivity and prosperity that underpin societal progress. But to unleash industry’s full innovative potential, a clear vision and coherent set of policy measures is needed from government.

The government’s Innovation Strategy, published last month, begins to set out that vision for the country. It pays heed to the UK’s established global strategic strengths - areas in which the UK already plays a leading role worldwide – and seeks to build on these further to ensure continued growth and innovation in the future. The Strategy identifies semiconductors – specifically chip design – as a notable British strength, noting that billions of devices worldwide are already driven by technology developed by British firms such as Imagination.

The Strategy’s emphasis on the critical importance of semiconductors is undoubtedly informed by the ongoing global chip shortages that have underscored, like never before, the strategic role played by microchips in today’s increasingly digital and globalised economy. Cutting-edge semiconductors will be fundamental to practically every single innovative technology of the future, from quantum computing and AI to driverless cars and virtual reality. Governments worldwide have taken note, with the EU, US, China, Japan all having announced recent measures to strengthen their respective domestic semiconductor industries through investment, incentives, public-private partnerships, and other measures.

The UK has finally seen the light, with the Strategy revealing that the government is carrying out a review to explore how public backing for the sector could augment UK technological capabilities. Imagination strongly supports the government’s intention to get behind the British semiconductor industry. We believe it is essential for the UK to take a more strategic approach to aiding the sector’s growth by focusing on chip design and innovation rather than onshoring manufacturing, given the UK’s existing track record in the former and the prohibitive cost of building the latter.

In practice, this should include measures to increase R&D investment in the sector, be it through direct public funding for semiconductor research – including through the existing Compound Semiconductor Applications Catapult – or greater incentives for firms to invest themselves, for example through a new R&D tax credit targeted at advanced technologies or intellectual property. The government should also reflect the sector’s importance in its policy programme, both by developing a bespoke plan for the sector’s growth and accounting for the sector’s needs in the wider skills, business, trade, and environmental agenda.

With the Strategy published, the focus must now turn to its successful implementation. The government’s sizeable majority in Parliament provides it with an excellent opportunity to pursue an ambitious, coordinated, and long-term approach to supporting innovation, ideally with a degree of cross-party consensus to lock in even greater longevity. It will be equally important to avoid undermining innovation through policies that restrict or disincentive trade, investment, immigration, and business creation – all of which are fundamental ingredients of the innovation mix. Finally, ongoing engagement with industry will be key to implementation, with the Business Innovation Forum announced as part of the Strategy providing the ideal vehicle for this.

As a business at the cutting edge of UK innovation, Imagination Technologies is optimistic about the country’s long-term future. Our IP already underpins devices used by billions of people across the world, from the latest cars and phones to the most advanced gaming consoles, and we see countless opportunities for growth. With the support of the Innovation Strategy and the Chancellor’s Plan for Growth, we have confidence in our ability to continue delivering world-leading technological solutions to help the UK respond to tomorrow’s challenges.

Author details: Tim Mamtora, Chief of Innovation, Imagination Technologies

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Tim Mamtora

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