The IOE&IT Daily Update brings you a roundup of trade news in one of the tech industry's most important manufacturing sectors, including an update on the UK’s strategy, a possible revival of UK-China relations and Asian investment in European production.
UK investment in semiconductors
Amid a global race to build up semi-conductor production, Politico reports that Paul Scully, technology and digital economy minister, has offered an update on government funding for the industry.
Following the release of the National Semiconductor Strategy in May, in which £1bn of support for UK industry was met with a mixed response, Scully said the upcoming Autumn Statement would provide an update from his ongoing consultations about “specific funding support”.
Chancellor Jeremy Hunt is expected to deliver the government’s autumn statement 22 November.
Going against industry criticism, semiconductor maker Pragmatic’s founder, Scott White, told Politico in September the support package “doesn’t need to be as large as people think… we can build commercial scale fabs for tens of millions rather than tens of billions”.
Firms eye Dresden
Subsidies released under the European Chips Act have succeeded in attracting Taiwanese semiconductor firms.
The FT reported last week (October 10) that the world’s largest chip-maker, Taiwan Semiconductor Manufacturing Co (TSMC), is considering opening a €10bn fabrication plant in Dresden, Germany.
Cleaning agent and solvent firm, LCY Group, which supplies TSMC, is also eyeing European investment opportunities, with president and chief executive, Vincent Liu, confidently telling reporters: “We are planning investments in Germany, and the European market is going to be ours”.
Intel is also committing €30bn to building two new semiconductor plants in Magdeburg.
The investment marks a response to research from the German Economic Institute finding that, even prior to the US’ Inflation Reduction Act and Chips and Science Act coming into force, in 2022 foreign direct investment was flowing out of Germany at the highest rate on record.
Drop in Chinese imports
China has experienced a significant drop in chip imports from the US.
The Economic Times reported an almost 15% fall in the number of semiconductors imported from the US in the first nine months of this year. Only 355.9bn units of integrated circuits were recorded this year, down from 416.7bn over the same period in 2022.
The fall has been attributed to export controls introduced by the US in October last year in response to fears about the security implications of China bolstering its AI sector with the technology.
The decision received criticism from US commentators, such as JPMorgan CEO Jamie Dimon.
Speaking to the Economist in July, Dimon said a small amount of industrial policy is required to balance the playing field with China, but also added “it’s the only way to do some of the things we need to do on national security", he also emphasised that it was important the US doesn’t aim to “keep China down” economically.
UK-China trade talks back on the table?
In contrast to fraying US-China ties, Politico reports that the UK has begun drawing up plans for trade talks with China, which have been put on hold since 2018, amid souring UK-China relations.
James Cleverly’s trip to China in August – which was met with criticism from 'hawks’ within the Conservative Party – has been described as creating “a sense [that] the economic relationship can be put back on a more formal footing” by a senior UK official.
It has been suggested that a revival of the Joint economic and trade committee (JETCO) could represent the first step towards a deal.
JETCO, which also ceased meeting in 2018 following China’s response to Hong Kong political protesters, brought together political and corporate leaders to discuss how to increase UK-China trade.