The UK has announced an investment of up to £1bn ($1.24bn) for the semiconductor industry to boost business with the US and mitigate supply chain disruptions.
The announcement forms part of a 20-year semiconductor strategy, to secure the UK’s chip supplies through cooperation with international partners. Most recently, the UK’s Prime Minister, Rishi Sunak, announced a deal with Japan in Hiroshima to bolster collaboration on defence and semiconductors.
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Between 2023-25 £200m will be offered to British chip companies and £800m ($996m) will be distributed by the end of 2033, according to the government’s National Semiconductor Strategy.
In a report by the BBC, the £1bn figure was criticised as it is dwarfed by US and EU government support plans of closer to $50bn (£40bn). The investment was described as “flaccid” by Dr Simon Thomas, chief executive of UK based graphene semiconductor start-up Paragraf. Thomas said, “It is a long way from addressing the needs of UK chipmakers”.
However, many experts have welcomed the announcement saying that collaboration is key to safeguarding against disruption from semiconductor shortages. Alex Saric, Smart Procurement Expert at Ivalua, told Verdict: “Working with suppliers to solve shortages, rather than trying to drive down costs and demand to be at the front of the queue, will help position UK businesses as partners of choice during times of shortage.”
Every year millions of devices and equipment containing chips are scrapped or thrown away. Circular economy will also play a role in boosting the UK economy by encouraging regenerative design to ease the stress on supply chains.
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By GlobalData“Each year, in the UK, there’s an average of 23.9kg of eWaste per person, with 38% of this waste not being recycled – these chips could help to boost supply. Not only would this help ease the burden on supply chain during times of shortages, it will also have a positive impact on the economy, and encourage regenerative design to reduce reliance on finite resources,” Saric added.
UK semiconductor industry may never be self sufficient
James Williams, head of Telecoms, Media and Technology at NCC Group told Verdict that the timing is right for investment in semiconductors, “It’s also particularly important given the recent spending commitments the government laid out for the likes of quantum computing and AI in its budget, too. If the UK is to reach its potential as a science superpower, ensuring the supply and security of semiconductors – which underlie so many aspects of these technologies – is critical.”
Contradicting the critics, Williams argues that the UK’s semiconductor industry will never be wholly sovereign because completely onshoring chip production is likely to be economically unviable.
“We must therefore identify and build partnerships with allied nation states who can produce the volume, the quality, and with the required levels of trust to support the UK’s domestic markets, whilst promoting and enhancing areas where the UK can take a leading position such as R&D and the commercialisation of British intellectual property,” Williams said.
The strategy is about more than getting return for investment but about protecting UK infrastructure.
“The recent supply constraints have shown how vital the industry is to the functioning of the economy and the UK’s infrastructure. We recently witnessed a devastating cyber-attack on a key semiconductor supplier that significantly constrained global supply,” he explained.
