The UK government recently announced a plan to revive its semiconductor industry, with a particular focus on designing and manufacturing non-silicon chips and leveraging intellectual property rights.
On May 19, the British government pledged £1 billion ($1.2 billion) to support the UK semiconductor sector in an effort to bolster domestic chip-making capabilities and reduce dependence on foreign companies. The move joins similar efforts by the US and EU to bolster their chip industries after vulnerabilities were exposed during the COVID-19 pandemic that highlighted the risks of dependence on Taiwan and China.
While the UK’s plan has been in development for approximately two years, its financial commitment falls quite short of the massive subsidies provided by the US ($52.7 billion) and the proposed EU investment (43 billion euros or $47 billion).
Nonetheless, the UK government aims to capitalize on its strengths, particularly in semiconductor design, which is utilized in various applications ranging from smartphones to household appliances. Prime Minister Rishi Sunak emphasized that this investment would help establish a competitive advantage for Britain on the global stage.
Although the publication of the strategy was welcomed by companies in the sector, many criticized the scale of support. Graphcore, an AI chip designer, considered the funding to be “modest” compared to countries like Germany, while the CEO of Paragraf, a graphene manufacturer, described it as “flaccid.” Simon Thomas, CEO and founder of Paragraf, highlighted that the UK’s financial commitment is insignificant compared to the industry’s overall scale.
The plan initially focuses on research and design, with an investment of £200 million available from 2023 to 2025, which could rise to as much as 1 billion pounds over the next decade. However, Citi experts noted that while the focus on research and design makes sense, the funding is too small to be of much value to major industry partners. The UK government also announced a semiconductor partnership with Japan during Prime Minister Sunak’s visit to the G7 summit, similar to an existing agreement with South Korea.
The UK is home to Arm, a prominent processor technology designer utilized in almost every smartphone. The company’s intellectual property is sold to companies like Apple and Qualcomm. In 2016, Arm was acquired by Japan’s SoftBank, prompting criticism that the UK allowed its leading tech success to be purchased by foreign investors. SoftBank now plans to list Arm in the United States.
Business leaders have recently expressed growing concerns about Britain’s strategy, stating the need for comprehensive support in areas such as infrastructure, skills training, and investment as the country transitions to a post-carbon future.
A parliamentary report released last year highlighted the UK’s vulnerability to disruptions in chip supplies due to the absence of an end-to-end semiconductor supply chain. This vulnerability is particularly pronounced if there were to be a future disruption caused by events such as a potential Chinese invasion of Taiwan, the world’s largest semiconductor supplier.