UK unveils £1bn chip strategy amid criticism over lack of ambition

Friday, 19 May 2023 Health

The UK has released its National Semiconductor Strategy, setting out the country’s funding plans for the next decade, but critics have slated the announcement as ‘too little, too late’ compared to those of international counterparts.

London has pledged investment of up to £1 billion over the next decade focused on growing the UK’s domestic industry, strengthening skills, research and development, and protecting against security and supply chain risks.

The strategy also focuses on boosting international cooperation, with an announcement of a new strategic chips partnership with Japan this week, where global leaders are gathered for the G7 summit.

While British government officials hailed the strategy as a way to “cement the UK’s status as a global science and technology superpower,” others have criticised it as falling short, particularly in comparison with the semiconductor investment plans of other actors, such as the US, EU and China.

Semiconductor strategy

The strategy, launched on Friday (19 May), sets out plans for investment of up to £1 billion over the next decade, including £200 million between 2023-25. It focuses on what the government says are the areas of strategic advantage for the UK, including research and development, compound semiconductors, and semiconductor design.

The plan also responds to the global focus on strengthening the resilience of chip supply chains, noting that the concentration of chip manufacturing in East Asia, particularly in Taiwan, creates significant vulnerability.

National security is also a focus of the strategy regarding protectionism, the cybersecurity of devices, and the acquisition of chip-making facilities.

London also wants to boost international ties. On Thursday, UK Prime Minister Rishi Sunak signed the “Hiroshima Accord” with Japanese counterparts, an agreement aimed at increasing cooperation to safeguard supply chains and bolster the domestic capacity of each partner.

The deal strengthens research links between the two countries and facilitates skills exchanges.

The UK’s National Strategy contains three main focus areas: growing the domestic sector, mitigating the risk of supply chain disruptions, and protecting national security.

Domestic sector

The first section focuses on boosting the UK’s domestic chip industry, particularly in compound semiconductor production, research and development and specialist skills training.

Plans in this area include investment in a National Semiconductor Infrastructure Initiative, which could involve action to boost startups’ access to specialist software and the availability of business and technical support to British firms.

A new Semiconductor Advisory Panel is also set for creation under the strategy, which will gather figures from industry, government and academia to work on the plan’s delivery.

By this autumn, the government says it will announce further plans for supporting investment in the chip manufacturing sector, especially for those working in critical tech and national security areas.

Supply chain disruption

To improve the UK’s resilience to potential disruptions, London plans to publish guidance for boosting UK SMEs’ understanding of possible risks so that they can take steps to mitigate them.

In addition, the plan is to establish a government-industry forum to identify and act against potential vulnerabilities, especially when they threaten critical sectors such as healthcare or emergency services.

International partnerships are again highlighted as key in this area, with the UK’s tech alliances with the US, Japan, and South Korea singled out as examples of existing agreements.

National security

Regarding national security, the strategy outlines plans to protect UK companies and technologies from potential threats, including via export controls and collaboration between the government and researchers in the field.

Attention is also needed to the possibility that vulnerabilities are built into the hardware, the strategy notes, pledging further support of initiatives such as Digital Security by Design, which aims to develop more resilient and trustworthy hardware and software technologies.

Criticism

The strategy has, however, attracted criticism. Its release was significantly delayed, to such an extent that several key chipmakers warned in recent months that they might be forced to leave the UK unless adequate government support was forthcoming.

Earlier this year, Arm, a major UK-based chip designer, announced that it would not list its shares on the London stock market, instead filing in the US.

Many observers have also noted that the £1 billion figure put forward by London pales compared to the more than €40 billion pledged in the EU’s Chips Act or the $52 billion investment approved in the US last year.

Lucy Powell, opposition Labour party’s shadow secretary of state for digital, said in response to the plan’s launch that “after years of delays, this strategy will be met with disappointment by the scale of its ambition”.

“Behind the £1bn headline, the reality is £200m over the next three years – significantly less ambition than our competitors. Following the listing of ARM in the US, this strategy offers little assurance we can maintain and grow an industry vital for growth and national security.”

Julian David, CEO of trade association techUK, said that while the strategy “has the opportunity to fire the starting gun on a bright future for UK semiconductors” but warned there should be no delays in its implementation.

“Given the delays to this strategy being produced, if we delay the implementation of the Strategy we are at risk of falling further behind in the race to secure a place in this valuable global sector”, he said. “This will make delivery key and it is vital the government moves quickly to turn this strategy into action.”

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