Tech industry stakeholders have described the £1bn funding behind the UK’s long-awaited semiconductor strategy as “disappointing” when compared to other nations.
This morning the government revealed a plan to boost the country’s semiconductor industry by focusing on research and design, and protecting chip supply chains by forging strategic partnerships.
However, the £1bn funding – split over 10 years – is significantly less than the $50bn allocated by the US and €43bn from the EU, drawing criticism from some semiconductor companies and investors.
“The level of investment announced for the next two-year period is disappointing, especially considering the UK needs to try to keep pace with the investment levels announced as part of the EU and US Chip Acts,” said Amelia Armour, partner at Amadeus Capital Partners.
The government said it will spend £200m between now and 2025. Armour warned that this “won’t achieve much” because it is “spread over many initiatives” and “will need to be allocated in a very targeted way to have an impact”.
She added that the £1bn “comes across as lacking” compared to the £2.5bn allocated in the Spring Statement to the UK’s quantum computing sector.
This was echoed by Ben White, founder of Sheffield-based infrared sensor startup Phlux Technology. He told UKTN that the £1bn announced today “is not significantly higher than the amount spent over the previous 10 years”.
White added that he is sceptical that it is enough to make the UK a “compound semiconductor superpower”.
“What’s certain is that in order to be effective, this investment will need to be carefully deployed and well aligned to the compound semiconductor industry needs in terms of access to research facilities, talent and trade links,” White said.
For Scott White, the founder and executive director of Pragmatic, the semiconductor strategy needs “further clarity” on how the investment will be spent and when.
Pragmatic’s founder questioned whether £1bn spread across the next decade would be “too much of a dilution”.
“Ultimately, you could invest £100m annually into something that really moves the needle for the industry. You could equally waste £1bn in a year by focusing it on areas that won’t have an impact.”
Mark Dickinson, CEO of University College London spinout Intrinsic, said the semiconductor strategy was a chance to make amends for the effects of Brexit and take advantage of the UK’s microchip strengths.
“However at a level of investment significantly lower per GPD than our peers, we will drop further behind in R&D and become even more vulnerable to issues of supply in a technology so fundamental to society,” Dickinson said.
‘UK can’t afford to compete in subsidy war’
However, the semiconductor strategy has garnered support from some corners.
“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,” said Julian David, CEO of trade association techUK.
“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.”
Dr Jalal Bagherli, co-chair of the UK Semiconductor Advisory Panel, said: “I welcome the government’s policy to support the growth of the semiconductor industry in the UK. To compete on a global stage, it’s critical that we invest in UK’s leading research and development, an expanded talent pipeline, and provide a differentiated manufacturing infrastructure.
“By doing so, we enable a thriving environment for innovative semiconductor startups whilst ensuring that our domestic supply chains are robust and resilient.”
Gerard Lyons, business researcher at the Centre for Policy Studies think tank, said the government is “right to acknowledge that the UK simply cannot afford to compete in the global subsidy war”.
Lyons added: “Instead it is focusing on areas where the UK already has established strengths – which is why it is wrong to make false comparisons between this strategy and the US or EU’s plans.”
