Tech industry reacts to UK semiconductor strategy

The long-awaited UK semiconductor strategy, worth up to £1bn, has been met with criticism around a lack of ambition

The new National Semiconductor Strategy, launched today by the government, aims to boost resilience of the UK chip manufacturing industry against supply chain disruption — as seen during the pandemic — by bolstering R&D, access to infrastructure, and international collaboration.

Up to £200m in funding has been announced for the years 2023 to 2025, with the remaining £800m expected to be provided to semiconductor vendors by the end of 2033.

Ditching onshoring to create a secure semiconductor supply chainA report from Imagination Technologies and Global Counsel calls for the UK to leverage its R&D and IP advantages to create a secure semiconductor supply chain.

Three key objectives have been identified in the governmental announcement:

  • mitigation of supply chain disruption risks;
  • protection of national security;
  • sector growth across the country.

“Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage,” said Prime Minister Rishi Sunak.

“By increasing the capabilities and resilience of our world-leading semiconductor industry, we will grow our economy, create new jobs and stay at the forefront of new technological breakthroughs.”

Rene Haas, CEO of UK semiconductor company Arm, commented: “Arm welcomes the UK Government’s new semiconductor strategy, which will support the UK’s effort to play a part in global supply chains for next generation technology.

“The UK is a significant hub of innovation and talent both for Arm and the wider industry and we look forward to working with the Government and other partners to help make this a reality.”

Funding amount criticised

Semiconductors have the capability of powering emerging technologies including artificial general intelligence, quantum and 6G, with the global market projected to reach $1tn in value by 2030.

However, the $1bn announced by the government is dwarfed by similar strategies in the US ($52bn under the US Chips Act), and the EU (€43bn announced in a “European Chips Act”), and has been criticised for a lack of ambition.

“The level of investment announced for the next two-year period is disappointing, especially considering the UK needs to try to keep pace with the investment levels announced as part of the EU and US Chip Acts,” said Amelia Armour, partner at UK venture capitalists Amadeus Capital Partners, which invests in semiconductor start-ups.

“£200m spread over many initiatives won’t achieve much and will need to be allocated in a very targeted way to have impact. The strategy also comes across as lacking compared to the £2.5bn which has been announced for quantum technologies.”

According to the announcement release, the government opted to focus on areas of “strategic advantage” such as compound semiconductors, as well as collaboration with other regional hubs across the world.

Ministers involved in the drafting were reportedly unable to justify the construction of new production facilities, which can cost up to $10bn.

UK Government announce 10-year quantum funding scheme worth £2.5bnA decade-long programme has been launched by the UK Government, entailing £2.5bn in funding towards quantum computing initiatives.

Regional innovation

It was also cited in the government release that universities across the country, including those in Cambridge, Edinburgh and Cardiff, are set to play a key role in chip research and development, under the new strategy.

Ben White, CEO and co-founder of University of Sheffield spin-out Phlux Technology — developer of compound semiconductors — said of the scheme: “In order to be effective, this investment will need to be carefully deployed and well aligned to the compound semiconductor industry needs in terms of access to research facilities, talent and trade links.

“I expect the National Semiconductor Infrastructure Initiative to play a critical role here, and I hope to see significant investment in facilities such as the National Epitaxial Facility for III-V compound Semiconductor Research in Sheffield that give rise to innovative IP rich companies Phlux, and enable them to be competitive on a global level.”

More on UK tech industry funding:

What the 2023 Spring Budget means for UK techUK Chancellor Jeremy Hunt today announced his 2023 Spring Budget, which included R&D funding and governmental investment in quantum.

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Aaron Hurst

Aaron Hurst is Information Age's senior reporter, providing news and features around the hottest trends across the tech industry.