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Semiconductor strategy aims to electrify UK’s tech ambitions

Semiconductor concept
Technology, Media & Telecomms

The UK Government has been thinking hard about chips (or semiconductors). Last week, it announced its long-awaited national semiconductor strategy after two years, following another announcement on a new semiconductor partnership with Japan. Announcements are coming in thick and fast from the newly created Department for Science, Technology, and Innovation (DSTI), all focused on making the UK a “tech superpower” by 2030.

Semiconductors are effectively the brains that are used in modern electronics, and are used in countless products across our computers, smartphones, appliances and gaming hardware, powering several trillion dollars of goods and processes. The growth of areas such as artificial intelligence (AI) and autonomous vehicles will largely depend on the availability of semiconductors, so they are a critical piece in the puzzle in tech and the wider economy.

The UK is an understated player in the semiconductor industry but offers notably shining examples to help it punch above its weight. Britain is home to the leading chip-maker Arm, for example, based in Cambridge, which is responsible for producing chips that are used in around 95% of all the world’s smartphones.

So, what’s in the semiconductor strategy? The government plans to invest £1 billion over the next decade to improve access to infrastructure, drive research and development, and to help support greater international cooperation. Crucially, £200 million will be invested over the years 2023-2025, with the remaining £800 million to be allocated by the end of 2033.

The plan has been blasted by some as a disappointing pledge that will have little impact on the UK’s ability to compete on the world stage or in supercharging the UK’s tech ambitions. One critic noted that the £1bn pledged won’t even buy one basic semiconductor plant. However, others have said that it is the “right level” for a country smaller than the US and Germany.

The UK Government also announced its semiconductor partnership with Japan last week, which would include “ambitious R&D co-operation and skills exchange”, helping to strengthen each country’s domestic sector and bolstering supply chain resilience.

The need for a cohesive strategy is underlined by planning from other players, showing that this will be a key battleground in tech and global politics in the coming decade. The UK’s pledge is eclipsed by Washington’s Chips Act, which involves $52bn of subsidies and incentives to encourage semiconductor companies to build fabrication plants in the USA. The EU has also launched its “European Chips Act” with €43bn of state aid, and China is also reportedly amping up its strategy to ready a significant support package of 1 trillion yuan (£117bn) for its semiconductor industry, although later reports state that this plan is on pause.

As the fight to be a leading provider of semiconductors heats up, the finer details of the UK’s strategy will be under scrutiny in the context of the DSIT ambitions.