Tech strategy

Sunak’s £1bn chip package still short of rivals

Rishi Sunak meets Fumio Kishida Prime Minister of Japan

A 20-year plan to boost the UK’s semiconductor industry has been unveiled by the Westminster government, but it has already drawn criticism for being not nearly enough to compete with global rivals.

The National Semiconductor Strategy sets out how up to £1 billion of government investment will boost the UK’s strengths and skills in design, R&D and compound semiconductors, while helping to grow domestic chip firms across the UK.

It comes as the Prime Minister Rishi Sunak is in Japan for discussions on strengthening Britain’s tech collaboration with other economies and strengthening supply chains for critical technology such as semiconductors.

Rene Haas, CEO of UK chipmaker Arm, was among those who welcomed the strategy from the Department for Science, Industry & Technology (DSIT), saying the company looked forward to “working with the Government and other partners to help make this a reality.”

Julian David, techUK CEO, said: “This strategy has the opportunity to fire the starting gun on a bright future for the UK semiconductor industry.”

But he warned that “delivery will be key, and it is vital the Government moves quickly with the industry and our international partners to turn the strategy into action.”

There is deeper concern from those who believe the new funding falls well short of the support being provided elsewhere.

The UK’s total 10-year funding commitment – up to £200 million by 2025, extending to £1 billion by 2033 – is less than what the world’s leading chip foundry company Taiwan Semiconductor Manufacturing spends every two weeks.

The US has put $50 billion behind its microchip industry and the EU is investing more than €43 billion, with the aim of doubling its global market share in semiconductors to 20% by the end of the decade.

Simon Thomas, chief executive and founder of Paragraf, a Cambridgeshire-based firm that manufactures graphene, said UK government’s top-line figure for the whole industry is less than what it would cost to establish a basic microchip fabrication plant.

“It is a long way from addressing the needs of UK chipmakers,” he said.

Garner consultant Gaurav Gupta said the £1bn was “insignificant” if the goal was to create a British company able to compete with the likes of Nvidia, Qualcomm, Broadcom and AMD.

The DSIT says the strategy focuses on the UK’s particular areas of strategic advantage in the semiconductors sector – semiconductor design, cutting-edge compound semiconductors, and our world-leading R&D ecosystem – supported by UK universities from Cambridge to Cardiff and Manchester to Edinburgh demonstrating global leadership in this space.

Mr Sunak said: “Semiconductors underpin the devices we use every day and will be crucial to advancing the technologies of tomorrow. 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.

“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.”

In Hiroshima this week, the UK and Japan committed to establishing an ambitious semiconductor partnership, led by the DSIT and Japan’s Ministry of Economy, Trade and Industry (METI). It seeks to deliver new R&D cooperation, skills exchanges, and improving the resilience of the semiconductor supply chain for both countries.

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