Series 15 – Episode 8 – The future of the UK tech sector under a new Labour government

The potential impact of the new Labour government on the technology landscape, especially AI and the semiconductor industries, has generated considerable discussion.

Sturman began by contextualising the current technological landscape. He remarked: “We are at a unique time in history with innovation and new technologies driving significant changes. The impact of these advancements will be transformational to society.”

He explained that technology, particularly electronics and semiconductors, fuels all industry sectors today. This broad influence is set to expand further, with advancements in AI, quantum computing, cyber security, photonics, robotics, and more.

Sturman discussed the geopolitical concerns surrounding semiconductor supply chains. He pointed out that countries like the US are investing heavily in domestic semiconductor manufacturing to safeguard their supply chains. However, he emphasised that the importance of semiconductor technology extends beyond supply chain security. He stated: “The companies that have ownership of semiconductor industries will be the ones at the top table in 20 years, in terms of global economic power.”

Sturman highlighted the need for long-term thinking and a cohesive industrial strategy from the government. He appreciated Labour's emphasis on industrial policy but stressed the importance of looking beyond a single administration period.

“Semiconductor development cycles can take four to five years, and policies need to reflect that long-term horizon,” he noted.

Sturman identified several key opportunities for the UK, including digital transformation and the move towards net zero. Digital transformation, driven by AI, machine learning, and wireless technology, is crucial for developing new services and products. However, the cost of deployment and cyber security concerns remain significant barriers. The move towards net zero, on the other hand, presents both a necessity and a business opportunity.

“Electrification and the development of a smart national grid infrastructure are areas where the UK has significant capability, particularly in power electronics,” he noted.

Sturman expressed concern over the funding landscape for startups in the UK, particularly in deeptech and semiconductor sectors. He acknowledged the buoyant startup community but pointed out the challenges in securing series A and later-stage funding.

“In the UK, it is challenging to raise the necessary funds to scaleup, which often leads startups to seek lead investors from the US or Asia,” he explained.

This situation can result in promising UK startups relocating abroad, leading to a loss of potential economic benefits for the UK. Sturman called for increased UK-based investment across all funding stages, emphasising the importance of long-term investment with a higher risk profile.

Sturman highlighted the need for strategic funding and closer collaboration between government and industry at a senior level. He suggested that cabinet-level collaboration is necessary to develop policies that address the needs of the industry and the opportunities it presents.

“Technology and semiconductors should be a top priority for the government, given their potential to address broader societal challenges,” he argued.

He also discussed the difficulties in securing investment for capital expenditures in semiconductor manufacturing.

“Most other developed countries provide incentive support for semiconductors, and the UK needs to have similar discussions,” he said.

Overall, Sturman stressed the importance of the new Labour government recognising and acting upon the opportunities in the technology sector. He reiterated the need for long-term thinking, strategic funding, and a cohesive industrial strategy to ensure that the UK remains at the forefront of technological innovation. By addressing these areas, the UK can position itself as a leader in the global technology landscape and reap significant economic benefits.

To hear more about the UK’s tech industry and much more, you can listen to Electronic Specifier’s interview with Charles Sturman on Spotify or Apple podcasts. 

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