UK financiers don't understand the semiconductor sector, says industry group

While welcoming the government's focus on the industry, the Semiconductor Leadership Group says more needs to be done to build a viable ecosystem

The Semiconductor Leadership Group (SLG), a group of manufacturers and chip designers brought together by industry association TechWorks, has suggested a number of ways the government and investors could build on domestic skills, capabilities and know-how to make the UK a semiconductor powerhouse.

The group welcomed the government's £1 billion semiconductor strategy, announced in May, as a crucial initiative to enhance the strategically important sector; it also commended the government's feasibility study for promoting R&D and specialist manufacturing within the country.

However, it suggested more needed to be done.

In a briefing released on Tuesday [pdf], the group offered further insight on how the UK could build on its existing strengths and drive commercial success in the industry. This will require an ecosystem approach supporting research, innovation, design, product engineering, manufacturing through to end-market consumption.

The needs of newer specialisms such as AI, the drive for Net Zero, IoT and quantum computing are different from existing markets, the SLG says. Together with recent geopolitical developments, this presents a unique opportunity for the UK to establish a globally competitive semiconductor industry. But achieving this will require stronger collaboration between industry, government and finance over the long term.

Among the measures suggested by the SLG are targeted support or tax breaks for semiconductor manufacturers and chip designers to upgrade existing facilities or build new ones, and incentivising the UK market to create local supply chains.

"The UK has a strong history in IP licencing ... with several businesses which supply the global semiconductor industry," the briefing said.

Developing more UK-based chip companies that can capitalise on that IP will allow more of the economic value of finished products to remain in the UK, it added.

The SLG urged more support for the UK industry at all levels, from R&D to startups to scale-up businesses, to create a "critical mass" of capabilities within the country.

"We urge government to work with industry in defining a set of policies which work in concert to build a long-term sustainable and successful microelectronic ecosystem," it said in the briefing.

"Each element of the value chain should be supported to build a critical mass of UK know-how, talent and cross-industry collaboration. A complete ecosystem will also ensure more business value is captured within the UK economy."

UK capital markets don't understand semiconductor sector

The group said it also looking for ways to increase long-term investment from "investors with real-world semiconductor experience and understanding."

It voiced concern that semiconductor companies are being snapped up by overseas companies, and said it's important that sufficient capabilities remain in the UK. It was critical of the financial sector's lack of understanding of the long term investment needs of the industry.

"UK has strong capital markets, however unlike other global markets, they do not understand the semiconductor sector," the SLG said.

"There is an opportunity for education and promotion here and for government interventions which will incentive potential investors."

Members of the SLG include multinational chip and IT firms such as Huawei and Nexperia, as well as UK-based companies including XMOS, Plessey and Cambridge Gan Devices.