Pragmatic chief on being ‘brave’ as he builds up British chipmaker 

“It is good to be a little brave,” says Richard Price, co-founder and chief technology officer of Pragmatic, one of the UK’s leading semiconductor chip companies.

He needs to be. Pragmatic is this month stepping up high-volume production of its ultra-thin, low-cost chips at its Durham factory. In doing so, it is making products from the technology that Price and his team developed, rather than licensing the manufacturing to others, as fellow Cambridge-based chip pioneers Arm did so successfully.

The decision means Pragmatic is capital intensive and will become increasingly so as it expands. Fortunately, Price says he has seen a “shift in mindset” among some UK investors.

“Four or five years ago the prospect of setting up a hardware business investing what will be many hundreds of millions and hopefully billions of pounds into capital equipment would have been quite frightening for investors,” he says. Now, City investors and the government are recognising the merit of supporting production of semiconductor technologies developed in the UK.

“Without that investment in infrastructure and manufacturing you are at a disadvantage both in terms of the broader supply chain and that you are relying on imports and the value you bring through on intellectual property alone,” Price, 50, says.

Pragmatic, founded in 2010, secured £182 million in a funding round in December 2023, the largest venture financing for a European chip company. The investment round was led by the government’s National Wealth Fund, which stumped up £60 million, and M&G Investments, which put in £40 million.

“Long-term capital put to work in this way not only supports economic growth but can capture value for people’s pensions and savings as we transition to a more sustainable economy,” said Niranjan Sirdeshpande, global head of investments at M&G’s catalyst strategy.

Price says that Pragmatic is continually engaged with investors given its funding needs and believes there is substance to initiatives such as the chancellor’s Mansion House reforms, which aim to direct more pension fund investment into UK-based private growth companies.

“My sense is that it is real, but it will take a little time to ripple through. There is a willingness and a desire to make it work,” he said.

Accounts filed last month showed Pragmatic’s operating losses widened to £55.1 million in 2024, compared with £36.7 million the year before. Revenues fell marginally to £1.7 million. It spent about £23.7 million on research and development during the year.

The semiconductor industry has been buffeted by geopolitical tensions over Taiwan, home to TSMC, the world’s largest chip foundry, as well as the trade war between the US and China.

Price said Pragmatic was pressing on with its plans, building its second high-volume fabrication line, which “should start producing material during quarter-four”.

“There are not a lot of businesses like ourselves in Britain. That is something we are quite proud of. We are trying to do something that is unusual and a little bit difficult to do,” he said.

“Over the last 30 years or so there has been a movement of semiconductor and related supply chain manufacturing into Asia and increasingly concentrated into Taiwan, China and South Korea.

“We came up with a different way of manufacturing semiconductors and through that development we came to the conclusion that actually it doesn’t need to be done in Asia. It is partly because we have a very modular and compact manufacturing footprint and the manufacturing itself isn’t labour intensive.”

Pragmatic’s integrated business model means it can help customers develop bespoke products in months, rather than years. It also minimises the amount of cash Pragmatic needs to tie up in stock. Other fabs might have several hundred million pounds’ worth of inventory part-way through processing, Price said. “Because we are holding days, and at the most weeks, of inventory the financial value is much smaller and we can be more agile and respond to demand.”

The technology itself is evolving. “We are currently on generation three,” Price said. “On that platform we have developed products, primarily targeting internet of things applications … whether for industrial use cases or consumer use cases.” One use case is smart labels, for product descriptions, tracking and authentication; another is in small, flexible consumer devices, such as smart watches and health patches.

They are developing generation four and five of the chips, which will have more capabilities. “If you think of something like a continuous glucose monitor, it has gone through quite a rapid growth, but is still a relatively bulky item. We can see over time the ability to reduce elements of that through our technology that will allow you to miniaturise it and make something that is more like a Band-Aid,” he said.

The UK’s semiconductor expertise mainly lies in research and design, with more than 600 companies generating £9.6 billion in revenues in 2022 and employing 15,000 people.

Whitehall officials warned them last month to keep an eye on the impact of tariffs proposed by President Trump. He has indicated tariffs at 100 per cent will be imposed. “We do sell into the States and it is very much an important market for us,” Price said. “At this point … we need to monitor the detail. In the longer term we are not concerned about it on our business.”

He added: “The UK is our home and it is where it will remain. But we have always had a model where we intend to deploy manufacturing regionally, including quite likely North America at the appropriate point. Being able to locate manufacturing close to our customers and their supply chains makes sense.”