Analysis

UK National Semiconductor Strategy: a fab-less fable?

21st June 2023
Harry Fowle
0

Following the UK National Semiconductor Strategy, the UK remains a semiconductor power in its own right, but it must branch out to be successful in the future.

Last month the UK Government delivered its semiconductor strategy, a 60+ page document that spearheads the UK’s approach to the global chip environment. Whilst it most certainly represents a step forward, it simultaneously misses the mark in some areas, specifically in regard to alignment with the EU and confronting China.

The good

Looking at the more positive aspects of the UK’s strategy, it focuses primarily on ‘growing the domestic sector’ present within the nation, one of its strongest aspects. This aims at prioritising funding towards startups and wider innovations whilst consciously making the decision to avoid subsidising established companies, something that rival US and EU approaches are committing to.

This approach aims to maximise the impact of the relatively limited UK funding budget of just £1 billion allocated for research and development in startups and SMEs, compared to the US’ $11 billion in the same sector provided by the US CHIPS Act. On top of the R&D allocations, the UK’s plan also includes dedicated semiconductor competitions and offers startups access to a non-dilutive funding seed of up to £20 million under specific conditions.

The bad

However, whilst there is a considerable amount of good to be had, the negative side of the argument is hard to ignore with many touting room for greater ambition in both supporting startups and the strategy as a whole. The strategy fails to mention the incentivisation of pension funds or profitable large domestic and foreign companies to invest in UK tech. Most notably, there is no mention of collaboration with the EU, despite the potential synergies with the highly skilled base of engineers within the EU ecosystem. This is being deemed as a waste of a potentially valuable source of skilled workers that the UK is in dire need of. Instead, the focus of collaboration is being pushed overseas, with increased partnerships with Korea, Taiwan, and Japan that include exchanges of research, academics, and engineers between the nations.

One of the most crucial concerns that arose from the strategy was over the UK’s semiconductor supply chain. The strategy almost entirely overlooks the opportunities presented by big publicly subsidised chip plants in production in Germany and France. It is possible that the sensitivity of the political landscape prevents mentioning these countries and collaboration with them – if it might take place at all. Consequently, the plan for ‘mitigating supply chain disruptions’ lacks the substance required to make a significant difference, as there are, as it stands, no new investments or policy changes regarding this topic proposed.

The ugly

Then comes the matter of approaches towards China, something that was a massive feature for both the US’ and EU’s Chips Acts. Whilst the EU and US saw clear-cut approaches to moving away from Chinese partnerships, the UK’s approach remains foggy. The only mention of China within the strategy was its dominance over the world’s gallium production and its huge state investment programmes – nothing regarding the genuine concerns China arouses in the UK. The UK has notoriously had a mixed record when it comes to dealings with China, something that rings true with the semiconductor strategy, applying the principles outlined inconsistently. Concerns over Chinese firms mass-acquiring UK startups and SMEs remain and the new strategy fails to answer many of these problems. The issues remain as a ‘balancing act’ of sorts, how can the UK Government play a coherent role in economic resilience yet block growing foreign ownership? The UK Government clearly desires the nation’s semiconductor sector to grow but fails to provide significant subsidy itself.

Both the US and EU have passed very ambitious Chips Acts, something that leaves the UK’s strategy seeming a bit lacklustre at times. However, overall, the UK strategy represents an improvement of sorts on the EU’s ‘overreaching’ plans by targeting its strongest assets with limited taxpayer funding but certainly lags behind the momentous US plans.

The UK is in a challenging position, caught between the EU and US. Europe naturally appears as the UK’s most suitable partner due to its close ties and the UK’s chip design being more than compatible with growing chip investments seen in Germany and France. Whilst the UK’s semiconductor strategy is certainly a positive step in the right direction, it overlooks the chance for a significant win-win collaboration across the English channel.

Featured products

Product Spotlight

Upcoming Events

View all events
Newsletter
Latest global electronics news
© Copyright 2024 Electronic Specifier