Back British microchip factories before it's too late, Rishi Sunak told

The Telegraph article | By Gareth Corfield

Britain must start reshoring computer chip production before it’s too late, Rishi Sunak has been told.

Two of Britain’s pre-eminent microprocessor design companies have urged the Prime Minister to start lobbying big manufacturers to set up shop here, warning that Britain risks losing out without action.

“It's not a case of ‘if the UK Government doesn't support this, these things won't go ahead’,” said Scott White of Cambridge-based Pragmatic Semiconductor. “They'll just go ahead somewhere else and the UK won't get the value creation from it.”

Mark Lippett of semiconductor design company XMOS said establishing a British manufacturing base was “the only way to future proof yourself”.

The comments add to growing calls for action, as both the US and EU court businesses to set up chip factories.

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s biggest chip manufacturer, is due to open an advanced silicon chip fabrication plant, known as a “fab”, in Arizona next year. The venture is partially backed by the US government and President Joe Biden has taken a personal interest in the development.

Americo Lemos, chief executive of Cardiff-based chip manufacturer IQE, earlier this month urged the British Government to start engaging with global chip manufacturers in a similar manner to the US.

Mr Biden’s government has passed a law mandating more than $52bn of public spending on chip manufacture over the next five years. The measure is explicitly aimed at drawing chip manufacture out of China, which makes around three quarters of the world’s computer processors.

China's dominance of the industry leaves British companies at the whims of foreign producers, with many car manufacturers warning last year of chronic shortages of chips.

Concerns about dependence on China are also growing amid increasingly strained relations between Westminster and Beijing. Last year Business Secretary Grant Shapps intervened in the acquisition of Newport Fab Wafer in Wales by a Chinese-backed company, blocking the deal on National Security grounds.

That intervention has created uncertainty about the chip factory’s future as Newport Fab Wafer seeks out a new buyer.

Not all believe Britain should be trying to compete in advanced manufacturing. Trade association TechUK, which acts as an umbrella body for tech companies operating in Britain, has said it does not support reshoring of advanced chip manufacturing.

Mr Lippett, whose company XMOS designs but does not manufacture computer chips, said: “I appreciate there’s a finite amount of funding available. So I think it needs to be thoughtfully distributed in the value chain, as opposed to just pointed at manufacturers”.

Britain’s chip industry is largely focused on design, rather than manufacture, with expertise in the field of compound semiconductors. Unlike traditional silicon chips, compound semiconductors use advanced materials such as gallium nitride for their processors.

The advanced materials give these chips an edge over plain silicon, making them well suited for so-called “power electronics” where processors must handle high voltages. Examples include chips used in high-voltage motors or in the automotive industry.

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