UK’s chip strategy is absolutely fab-less

• The UK government has finally unveiled its National Semiconductor Strategy
• The plan has been long-awaited
• Its focus is on product design and collaboration
• The “up to” £1bn funding over 10 years looks set to be spread thin
• Anyone hoping for chip fab (factory) construction plans will be disappointed

After almost three years in gestation, the UK government has at last unveiled its National Semiconductor Strategy, which aims to set out how the UK “will build on industry strengths, safeguard supply chains from disruption and protect tech against national security risks” with the help of “up to” £1bn in funding to access “infrastructure, power more research and development and facilitate greater international cooperation.” 

Was it worth the wait? There has certainly been frustration at the lack of any kind of guidance from a national strategy, as was clear from a House of Commons Committee statement issued last November that lambasted the government for the lengthy delays in formulating a plan – see UK semiconductor strategy? What UK semiconductor strategy?

Well, the strategy revealed today doesn’t look like anything that’s going to shake the foundations of the global chip sector, or indeed lead to the laying of any chip fabrication plant foundations in the UK – the funding, which begins with “up to” £200m in the 2023 to 2025 timeframe, simply won’t support any such aspirations. 

And following the supply chain issues of recent years and the desire for major markets to ensure they are not reliant on just a few sources of semiconductor manufacturing – an issue that could, of course, blow up again if China takes its plans for Taiwan to the next level – there’s a global push to ensure that chip production and the location of fabs (fabrication plants/foundries) are more geographically spread than is currently the case, as about 80% of semiconductor production takes place in Asia. That led to the US$52bn Chips for America Act in the US, which has started the process of funding new fabs, and the €43bn European Chips Act, which carries the financial heft to have an impact on the chip production sector’s international balance.

That kind of activity will clearly be left to the US and the European Union, while the UK focuses more on R&D, design and brokering relationships that, the UK government hopes, will not leave the country in a supply chain lurch in the future. It’s notable that the UK’s National Semiconductor Strategy has been unveiled just as UK prime minister Rishi Sunak attends the current G7 leaders’ summit in Japan, one of the nations with which the UK has been brokering much closer industrial and business ties over the past few years. According to the strategy announcement, Sunak will spend some of his summit time in “discussions on strengthening our tech collaboration with like-minded economies and strengthening supply chains for critical technology like semiconductors,” according to the UK government’s announcement.

Indeed, the UK and Japan have committed to establishing what they call “an ambitious semiconductor partnership”, led by the UK’s Department for Science, Innovation and Technology (DSIT) and Japan’s Ministry of Economy, Trade and Industry (METI). The partners will seek to “deliver new R&D cooperation, skills exchanges, and [improve] the resilience of the semiconductor supply chain for both countries.”

So in what ways can the UK make its mark on the semiconductor sector? It seems the focus will be on Britain’s “strengths and skills in design, R&D and compound semiconductors,” as well as a vague offer to help “grow domestic chip firms across the UK.”

And there is at least some evidence that the UK has the skills to design chips the rest of the world wants to use – Cambridge, UK-based Arm is one of the world’s leading chip design firms (though it is currently owned by Japan’s SoftBank and is about to have its shares listed in New York rather than London, which tells us a lot about the current status of the UK in many regards). 

Here’s a snapshot of the strategic reasoning from the UK government’s announcement:

“Over a trillion semiconductors are manufactured each year, with the global semiconductor market forecast to reach a total market size of $1tn by 2030. Semiconductors also underpin future technologies, such as artificial intelligence, quantum and 6G.

“The strategy focuses on the UK’s particular areas of strategic advantage in the semiconductors sector – semiconductor design, cutting-edge compound semiconductors, and our world-leading R&D ecosystem – supported by UK universities from Cambridge to Cardiff and Manchester to Edinburgh demonstrating global leadership in this space.

“Compound semiconductors do things silicon chips can’t, with use cases in evolving technologies, such as autonomous driving and future telecoms. Their creation requires expertise in advanced materials, an area of UK science leadership.”

But even in this niche compound chip sector, the aspirations don’t go beyond the development of designs and products: The manufacturing will be left to others it seems, as it will be in an area of great potential and growing importance – graphene. The CEO of UK firm Paragraf, which claims it is capable of manufacturing graphene for the mass production of low-cost, sustainable and highly efficient  semiconductors, told The Guardian newspaper that the funding commitment would not cover the cost of building a basic fab and that the strategy was “frankly flaccid”.

Still, the UK government says the strategy has been “developed in close consultation with the semiconductor industry and academia, and the government will build on this partnership by creating a new UK Semiconductor Advisory Panel. The panel will bring together key figures from industry, government, and academia to work closely on shared solutions and implementation.”

So it seems the cornerstone of the long-awaited plan is to now form a panel that can figure out what best to do next. 

Even the supporting statements that accompany the UK government announcement are variable in their enthusiasm. Here’s the comment from Julian David, CEO of digital technology trade association techUK: 

“The Semiconductor Strategy sets out a long-term roadmap to boosting our chips industry. By doubling down on the UK’s strengths, such as in intellectual property and design, while seeking to tackle barriers to growth such as access to talent, infrastructure, power and supply chains, this strategy has the opportunity to fire the starting gun on a bright future for the UK semiconductor industry. However, delivery will be key, and it is vital the government moves quickly with the industry and our international partners to turn the strategy into action.”

There’s that message again – get a ****** move on!

There’s little doubt that the UK has technology talent, particularly in its highly regarded universities, such as Cambridge, Bristol, Southampton, Manchester, Surrey and others, as was highlighted recently at the launch of the UK Telecom Innovation Network (UKTIN) – see Can the UK find its telecom R&D niche?

Where doubt remains is whether the UK’s National Semiconductor Strategy will have any meaningful impact on the UK’s sector, let alone the global chip industry. As techUK’s David noted, moving quickly and delivering something tangible that will have an impact on the strategies of universities, startups, developers and investors is vital, because a government press release highlighting the UK’s great potential and the important role that chips play in modern society makes promises but doesn’t deliver –  maybe getting the advisory panel populated and a funding plan published this summer, while people remember that the strategy exists, would be a start. 

- Ray Le Maistre, Editorial Director, TelecomTV