Fishing for chips: Semiconductor industry demands UK strategy to attract investment
The semiconductor industry has urged the government to outline a semiconductor strategy, and commit taxpayer funding to prevent the UK losing out on investment to rival markets.
Richard Price, chief technology officer of Pragmatic, welcomed the inclusion of semiconductors as one of the five technologies named in the £370m science and technology framework announced yesterday.
However, he told City PM the continued absence of the long-awaited semiconductor strategy is “felt across the industry.”
“Without a robust and clear plan, the UK risks slipping further behind in the global market while countries like the US continue to announce incentives and subsidies,” he explained.
In his view, pledges for further funding were essential to boosting the industry, and that the government should be looking to help generate demand for the industry.
Price said: “Improving visa access policy simply isn’t enough to make a noticeable difference at this point. The government must provide an adequate level of capital investment to maintain a level playing field with other countries, as well as play a more active role in driving local demand.
“Adopting significant public sector procurement initiatives could help create revenue opportunities for UK semiconductor firms to work with organisations like the NHS, making it easier for innovative businesses to scale with strong domestic demand.”
Dr Simon Thomas, chief executive of semiconductor rival Paragraf, was pleased the government had announced a new framework, which could help address challenges with hiring expertise from overseas.
However, he told City PM the government was still not taking the industry seriously compared to other sectors and markets.
He said: “Semiconductors are at the heart of every industry and technology development in the world. While the government has recognised them as one of the five ‘Technologies of Tomorrow’, it is disappointing that this industry has been relegated immediately in the funding outlines and is ranked under quantum, AI and engineering biology.
“We are also concerned about the lack of mention of the Horizon Europe programme, which has a budget of nearly €100bn. The UK stands to lose global advantages if we are not given adequate chances to compete.”
Paragraf is the first company in the world to mass produce graphene-based electronic devices using conventional semiconductor processes.
The company has previously threatened to move its operations Stateside if more support is not offered to the industry.
Meanwhile, Pragmatic produces wafer thin, disc-shaped semiconductor devices made out of metal oxide as an alternative to the dominant silicon players on the market.
The product has been used as a replacement for silicon when there are supply shortages, but its key growth market is the extension of electronics into new products that never included silicon chips.
This includes smart packaging for fast-moving consumer goods.
In its latest funding round, over 80 per cent of Pragmatic’s support came from international investors – raising the prospect of the company turning its attention to potential new homes overseas.
However, Price believed flexible semiconductors such as Pragmatic’s could ensure the UK was a leading player in the industry and the companies such as his remained as domestic businesses.
“This is a crucial window in time – the UK has a unique opportunity to build a thriving domestic semiconductor industry that could make us a global leader in this space. Take flexible semiconductors, for example, in which investments of tens of millions would achieve significant benefits for the UK’s ability to compete on a global level,” he said.
UK awaits semiconductor strategy
The newly established Department for Science, Innovation and Technology (DSIT) announced plans yesterday to invest £370m in technology such as semiconductors alongside other buzzy innovations.
DSIT has also published its Science and Technology Framework paper, which sets out how the UK can work towards becoming a “science and technology superpower”.
Its plans gained a mixed reception from the investment community, with the level of funds well below the money offered by rival markets.
For context, 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 last year, 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.
Meanwhile, the UK awaits a semiconductor strategy – which had been expected ahead of the budget.
The government has been approached for comment on the state of play for the strategy.