MPs: Government putting UK at risk by underinvesting in semiconductors

BEIS says Government should look at international cooperation

MPs have expressed concern that the Government is putting the UK at risk by neglecting the rapidly expanding semiconductor sector, amid a global shortage of essential components.

A report published Monday by the Business, Energy and Industrial Strategy (BEIS) Committee says the Government is highly dependent on other nations for its chip supply, putting UK businesses at serious risk.

MPs are now pressing the Government to publish its long-delayed semiconductor strategy, and to form alliances with allies in an effort to keep the UK in the semiconductor supply chain.

The committee members pointed at cooperation with the USA and Taiwan as two potential growth areas that could provide opportunities for the industry.

Semiconductors are an essential component of all modern electronic systems. They are the fundamental elements of computer chips and serve as switches and transistors in electronic devices.

Facilities that produced semiconductors were forced to shut for many months during COVID lockdowns. This resulted in a shortage of chips worldwide, causing problems for device and vehicle manufacturers.

Because of the chip shortage governments all over the globe, especially in the US and Europe, have been investing billions on semiconductor production and research.

The semiconductor industry is currently valued at more than $500 billion globally and is projected to grow to over $1 trillion by 2030.

However, the UK semiconductor sector is heavily dependent on firms in other countries, and the BEIS MPs warn that there is little chance of a recovery unless the Government increases its level of assistance.

One suggestion is the creation of new semiconductor fabs in UK.

The Government had initially promised to publish a semiconductor strategy in autumn this year, but has yet to provide an exact date.

"Other countries are investing in the resilience of their semiconductor supply chains, yet Ministers in the UK can't even publish their semiconductor strategy on time," Darren Jones, BEIS Committee chair, said.

"The industry is expecting high growth in the coming decades, which is an opportunity for us to leverage our strategic lead in design and in energy-saving compound semiconductors."

The BEIS Committee report also recommends that a single government department should be in charge of fostering the UK semiconductor sector and ensuring supply security.

It also proposes establishing an 'open fab' in South Wales, which would let any company manufacture at the facilities, promoting the industry's expansion.

"We are committed to supporting the UK's vitally important semiconductor industry," a government spokesperson said.

"We are reviewing our domestic capabilities and working closely with industry and international partners to develop a new semiconductor strategy which will grow the sector further and make sure our supply chains remain resilient. Our strategy will be published as soon as possible."

Earlier this month, the Government ordered Chinese-owned technology firm Nexperia, owner of the Newport Wafer Fab (NWF), to sell at least 86% of its stake in NWF on national security grounds.

Nexperia previously held a 14% stake in NWF, but increased its stake to 100% in July 2021 - a move that industry watchers criticised the Government for allowing.