Government launches new semiconductor strategy to mixed reviews from industry

Fri 19 May 2023
Posted by: Phillip Adnett
Trade News

Semiconductor being handled by gloved scientists

The UK government released its much-anticipated semiconductor strategy today (19 May) in an effort to secure the future of the UK technology industry.

However, the announcement has received a muted reaction from industry, with several commentators criticising the scale and scope of the plans.

National strategy

The National Semiconductor Strategy promises to “double down on design, research and advanced chip leadership”, as the government seeks to position the UK as a “global science and technology superpower”.

The Department for Science, Innovation and Technology is promising £1bn over the next decade.

The strategy focuses on the several areas that the UK is said to already have a strategic advantage in: that of semiconductor design, compound semiconductors and research and development.

Compound semiconductors combine two or more elements from the periodic table to form a single, compound chip.

According to CSA Catapult, a company that helps develop compound chips, these are more complex to produce but more powerful able to transmit data at greater speeds.

Three objectives

Central to this ‘strategic’ approach are three new key objectives, which are:

  • Growth of the domestic sector
  • Mitigating supply chain disruptions
  • Protection of the UK’s national security

Chloe Smith, secretary of state for science, innovation and technology, said the strategy would create “more skilled jobs, grow our economy, boost our national security and cement the UK’s status as a global science and technology superpower.”

Critics

However, many in industry are critical of the plan.

And the Guardian notes that MPs have also said the domestic semiconductor industry is “relatively small” when compared to Asian countries and the US, with Labour criticising the £1bn price tag as being “£200m over the next three years.”

Paragraf, a Cambridge based chip producer, said that the money from the government would not cover a single basic chip plant, with its CEO Simon Thomas describing the strategy as “frankly flaccid”.

Scott White, founder of Pragamatic Semiconductor, wanted further clarity on where exactly the money would be applied, as reported by Sky News.

‘Dwarfed’ by US

US president Joe Biden’s CHIPS Act involves $52bn in financial support, while the EU’s European Chips Act will hand out €43bn.

The FT reports that Amelia Armour, partner at venture capital firm Amadeus Capital Partners, described the government as “lacking 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,” she said.

“£200m spread over many initiatives won’t achieve much and will need to be allocated in a very targeted way to have impact.” 

Government officials have said that the sums involved were proportionate and said that the investment required to build a full microchip foundry was not justified by the returns.