The British government has promised to “invest up to £1 billion in the next decade” as it releases its new semiconductor strategy – a figure immediately derided by one industry analyst as “a drop in a bucket.”
Some context: A fab that Intel plans to build in Germany will cost €20 billion (£17 billion) alone.
The US’s Chips Act meanwhile allocates $200 billion for scientific R&D and commercialisation, $52.7 billion for semiconductor manufacturing and workforce development, and $24 billion of tax credits for chip production.
Beggars, of course, cannot be choosers and the focus is on R&D and IP, not manufacturing.
HMG has promised to play to the UK’s “world-leading strengths in compound semiconductors, research and development, intellectual property and design” and looks to be taking serious steps to bring industry into a forum in which voices can be heard, not least through a new “UK Semiconductor Advisory Panel” that brings together key figures from industry, government, and academia to work together to deliver the strategy.
As Geoff Blaber, CEO at CCS Insight puts it: “Whilst the investment pales into insignificance compared to those in other strategic markets, it is a pragmatic response that recognises the need to foster investment by building on key areas rather than trying to compete across a vast, complex and capital-intensive semiconductor supply chain. Positioning of the UK as a hub for semiconductor manufacturing would be utterly impractical.”
He added to The Stack in an emailed comment: “Whilst the industry would no doubt like to see much greater investment, the approach taken is at least targeted, but success will come down to execution.”
New UK semiconductor strategy: "Without industry involvement..."
The new UK semiconductor strategy hedges HMG’s bets on the shape of investment, pending further industry engagement. The outlook “may include an expansion of the UK’s compound ‘open foundry’ ecosystem, and greater access to chip design tools/IP and prototyping facilities for silicon” it notes, but “without industry involvement, data and evidence we cannot design a potential delivery roadmap toward achieving this” – a turn of phrase that suggests civil servants may not have got the responses they wanted to earlier consultation.
Arm, AMD and Intel were among those that simply did not respond to a BEIS select committee inquiry into the semiconductor industry last year – a silence that contrasted with Intel’s pledge to invest a further €12 billion in its “Fab 34” facility in Ireland by the end of 2023. And many companies including in the defence sector would have liked to see a greater focus on building a manufacturing footprint for UK resilience.
As defence multinational Leonardo (one of the companies that did respond to BEIS) put it last year: "Alone among the world’s leading industrial economies, the UK has virtually no onshore semiconductor manufacturing capability, despite around a third of UK industry being critically dependent upon these devices.
"Global silicon supply chain issues have a significant effect on our (defence) business, compounded by the lack of diversity of supply for the latest silicon technologies" it wrote at the time, as The Stack reported.
"To make matters worse, major components of UK industry – aerospace and defence – depend upon specialist technologies which are often export controlled by the originating nation, either for reasons of security or simply for economic advantage. This carries considerable business risk to defence and the UK economy… EU sourced technology might be subject to future trade disputes as the trade relationship between UK and Europe is re-set. There has also been some prohibition in the export of German technology to UK for defence…”
We have our thinking caps on...
“We have… commenced detailed scoping with industry partners for the development of a roadmap for the UK Semiconductor Infrastructure Initiative, to determine the longer-term infrastructure requirements for the UK sector. This research is led by the Institute for Manufacturing at Cambridge in collaboration with the Compound Semiconductor Applications Catapult, the Photonics Leadership Group, Silicon Catalyst UK and Techworks. This consortium will look at the model a national initiative could take to have the most positive impact on the industry. This delivery plan will be developed during the remainder of this year” said HMG.
Sean Redmond, Managing Partner UK, Silicon Catalyst said that the chip startup accelerator was “delighted to see the launch of the UK semiconductor strategy. The UK has world leading strengths in chip design, compound semiconductors and advanced packaging… [these] policy interventions will help UK companies drink from the global fire hydrant of opportunity as this critically important industry grows to $1 trillion by 2030.”
The UK’s new semiconductor strategy should certainly make them thirsty.