'A sticking plaster': The National Semiconductor Strategy has left the UK exposed

The UK's unique strengths are being squandered

The government's £1 billion plan to support the UK's chip industry is well targeted, but risks missing the mark on timing.

With everything from smartphones to satellites relying on chips, the semiconductor industry is one of the modern world's most important sectors.

The pandemic, when a combination of factors strained global chip supply, threw that fact into stark relief. Several countries have been seeking to move chip production in-house ever since.

The USA has committed more than $50 billion to support the domestic semiconductor industry, and that's just from the government; private sector investment could bring the final figure to more than $230 billion.

Closer to home, the EU has promised to invest €43 billion in its own chip production, hoping to lessen its dependence on the USA and Asia.

As for the UK? The National Semiconductor Strategy commits £1 billion to investment: small potatoes in the global order, but it's not an unreasonable figure – if we're smart with it.

Building the future

The £1 billion figure, to be spent over 10 years, is "pretty light" compared to other regions' investments, says Adrian Toutoungi, an IP lawyer and partner at law firm Taylor Wessing, who works closely with semiconductor clients. The post-Brexit UK simply can't match the money the EU or USA can throw at semiconductors. Trying to do so would be "complete pie in the sky."

But that's okay. We're not trying to onshore an entire semiconductor supply chain of logic (CPUs and GPUs), memory and analogue components.

Adrian points out that the UK has had "particular strengths" in semiconductors since the early '80s. Thanks to our strong R&D and academic sectors, those strengths have been in analogue chips, normally produced in smaller batches for specific needs like power management and communications.

Several firms show off those "particular strengths" - like Cambridge-based Pragmatic Semiconductor, which works with flexible integrated circuits, or the Newport Wafer Fab in Wales, which specialises in compound semiconductors.

"For years everything [in chips] has been silicon, but it's been found if you move away from single-element semiconductors to compounds like gallium nitride, chips will have different properties. That's very advantageous in the analogue segment."

The staff at Newport have "real skills" in manufacturing techniques and power electronics, which are expected to become increasingly important as the electric vehicle segment takes off.

Adrian says compound semiconductors will be essential in creating "the next generation" of power electronics. A compound semiconductor open foundry, where chip designers can have their work manufactured, has been identified as an area where the government's money could make a real impact – but references to this have been removed from later versions of a report recently delivered to the Department for Science, Innovation and Technology.

Government "can't find" the money

So, there might (key word) be a plan in place. The issue now is timing.

Earlier this month the government said it would delay spending hundreds of millions of pounds on a flagship microchip facility, widely expected to refer to the Newport Fab, until after the general election in November.

"Other governments are not putting off their own investment," says Adrian. "Delay can be critical in these fast-moving sectors. The government found £50 billion for Brexit at the drop of a hat, and now says it can't find £1 billion for semiconductors."

That's important because the EU's CHIPS Act funding may target the analogue market, too. Building a competent analogue sector here in the UK will mean nothing if there's a larger market with the same specialisation and a free flow of trade on our doorstep.

"The UK wants tradeable strength: the ability to barter the supply of logic and memory for our own strengths in semiconductor IP, compound materials and specialist analogue production."

That would work well in normal situations, but geo-political tensions and a pandemic have made most of this decade feel like the world is on thin ice.

"There's a big question mark over whether this aspect of the [National] Semiconductor Strategy would be successful. The Covid-19 pandemic showed that the goodwill of allies can wear thin quickly. Whilst the UK has undoubted strengths, it's unclear to many commentators whether the bargaining position they would provide in the event of another pandemic or dislocation of supply would be adequate for the UK's memory and logic chip requirements.

"In this regard, the UK has been left exposed by Brexit. For obvious reasons, the National Semiconductor Strategy says nothing about this, but for many that is the harsh reality and is nothing more than a sticking plaster on the position the UK will find itself in, come the next pandemic."