UK risks exodus of semiconductor firms without an industry strategy

UK risks exodus of semiconductor firms without an industry strategy

3 Feb    Finance News, News

The government risks endangering the UK’s semiconductor industry unless it urgently publishes a strategy for the sector, a leading Westminster body has warned.

MPs on the Business, Energy and Industrial Strategy (BEIS) Committee have expressed disappointment over the government’s failure to publish a strategy to help support the sector.

BEIS Committee Chair Darren Jones said: “Countries across the globe have grasped the importance of securing semiconductor supply chains for their futures, why haven’t we? While others race ahead, ploughing billions into setting up fabs or industry support, we’re not even at the starting line.”

“Two-years in the making but still no strategy. Further delay would be an act of national self-harm. With 40 days until the budget, the strategy must be published urgently so that sufficient funds can be put behind it and used effectively,” he said.

The committee published a report in November detailing recommendations to help the UK safeguard the supply of chip and to secure inward investment into UK semiconductor firms, but the government has not responded.

It also expressed doubt over whether government support for the industry was sufficient to have any meaningful effect.

Jones’ comments follow calls from semiconductor firm Pragmatic for the government to offer more funding to ensure companies in nascent industries have a true pathway to growth and scaling up manufacturing.

Pragmatic chief executive Scott White told media: “It’s effectively far cheaper for us to go build our next fabrication line anywhere else in the world other than the UK – because there are government support programmes in the US, EU, China, Taiwan and pretty much any other country in the world.”

There have been fresh media reports that the government plans to subsidise semiconductor companies in a bid to support domestic chip manufacturing and ward off overseas giants.

The taxpayer funds will include financing for start-ups, help for existing groups and new incentives for private venture capital, according to Bloomberg.

However, there have been fresh delays in the publication of the UK’s semiconductor strategy, which was expected to be released at the start of this year – having already been postponed from its initial autumn 2022 date.

By contrast, the US Chips Act was passed last summer and includes £42.3bn worth of support for any semiconductor businesses operating in the US.

The EU Chip Act, which was launched in February 2022, will funnel around £39bn worth of investment into the sector.

China dwarfs them both, boasting over £105bn worth of state and private funds to be issued out between 2020 and 2025.

A spokesperson for The Department for Digital, Culture, Media and Sport said: “We are reviewing our domestic capabilities to develop a new semiconductor strategy, which will grow the sector further and make sure we have a resilient supply chain. Our strategy will be published as soon as possible.”

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