05-24 UK National Semiconductor Strategy

[Image above] After a series of delays, the United Kingdom released its national semiconductor strategy on May 19, 2023. Credit: Government of the United Kingdom

With the drive toward electrification and data-centric processes in nearly every industry, demand for semiconductor chips grows louder by the day.

Semiconductor chips are small electronic circuits that provide the foundation for computers and other electronic devices.

During the COVID-19 pandemic, several factors culminated into a global semiconductor chip shortage, causing severe problems for industries that rely on electronics. This shortage and other supply chain issues—combined with the growing demand for chips—led manufacturers and government officials alike to consider more closely the benefits of domestic manufacturing.

In the past year, the United States, the European Union, and India all released multibillion-dollar plans for bolstering domestic chip supply chains. It was expected that the United Kingdom would release a semiconductor strategy soon as well, but political instability led to a series of delays.

Last week, the United Kingdom finally announced its strategy, as well as a new Japanese partnership, for supporting the semiconductor industry. Details of these plans—as well as industry response so far—are given below.

The Hiroshima Accord: An enhanced UK–Japan global strategic partnership

On Thursday, May 18, U.K. prime minister Rishi Sunak met with Japan prime minister Fumio Kishida to sign a new strategic partnership deal ahead of the G7 Summit.

Dubbed the “Hiroshima Accord,” the deal aims to boost cooperation between the nations in a broad range of areas, including defense, clean energy, cybersecurity, and semiconductors.

Regarding semiconductors specifically, the countries will use the partnership “to explore ambitious joint research and development collaboration across semiconductor technologies, capitalizing on our respective strengths including in chip design, advanced packaging, compound semiconductors, and advanced materials,” as stated in the accord.

In a statement, Sunak says the accord “marks an exciting next phase in the U.K. and Japan’s flourishing partnership.”

£1 billion semiconductor strategy ‘too little,’ according to industry

Following the new partnership deal announcement on Thursday, the United Kingdom released its semiconductor strategy on May 19.

The National Semiconductor Strategy states that the U.K. government will invest up to £200 million (US$249 million) into the country’s semiconductor sector over the years 2023–25 and up to £1 billion (US$1.24 billion) in the next decade.

Instead of focusing on the construction of massive fabrication plants like other countries, the U.K. designed its strategy to focus on parts of the semiconductor industry that the country has expertise in, such as intellectual property and design of non-silicon chips.

“Britain is already a world leader when it comes to researching and designing semiconductor technology—our new strategy will double down on these core strengths to create more skilled jobs, grow our economy, boost our national security, and cement the U.K.’s status as a global science and technology superpower,” says U.K. Secretary of State for Science, Innovation, and Technology Chloe Smith in a press release.

So far, the strategy has received a cool reception from the U.K. semiconductor industry, with companies saying it will be too little to make a difference.

“The U.K.’s capital commitment is nothing but a rounding error in this industry,” says Simon Thomas, CEO and founder of graphene electronics company Paragraf, in a Reuters article.

Meanwhile, in an article on The Guardian, U.K. Shadow Secretary of State for Digital, Culture, Media, and Sport Lucy Powell points out that “Rather than the £1bn headline, the reality is £200m over the next three years—significantly less ambition than our competitors.”

However, some companies say the plan is a good start because it “rightly focuses on the areas where the U.K. is a global leader,” as stated by Americo Lemos, chief executive of the compound semiconductor wafer manufacturer IQE, in a Financial Times article.

The interview below with Pragmatic Semiconductor founder and executive director of strategic initiatives Scott White provides a further look at the strategy and industry response.

Credit: Pragmatic, YouTube