Jonty Bloom and Will Smale Mar 9, 2023
The boss of one of the UK’s leading microchip firms is calling for the government to invest “hundreds of millions” in the sector.
Millions of products from cars to washing machines and mobiles rely on microchips also called semiconductors.
Scott White, of Pragmatic Semiconductor, said without a huge funding boost UK firms will go abroad.
The government said it would soon publish its strategy to improve access to skills, facilities and tools.
It comes as a new report says the UK government “must act now to secure the future of the vital UK semiconductor industry”.
Mr White, Pragmatic’s chief executive, said the government “can’t just spend a few tens of millions of pounds” on the semiconductor sector, as “that isn’t enough to move the needle”.
“It has to be hundreds of millions, or even more than £1bn, to make a substantive difference,” he said. “It is not about unfair subsidies, it is about having a level playing field with other countries around the world.”
Mr White said that other governments were “investing substantially” in their microchip industries, and that the UK had to follow suit.
Pragmatic Semiconductor employs 200 people across its headquarters in Cambridge and at two production sites in Country Durham.
Mr White added that while the company wanted to keep manufacturing in the UK, “that only makes sense if the economies are justified compared to elsewhere”.
A joint report published on Thursday by the Institute of Physics (IOP) and the Royal Academy of Engineering (RAE) found “skills shortages, high costs and low public awareness threaten the UK’s position in the vital semiconductor race”.
The study follows a global shortages of microchips in recent years temporarily halted production of everything from games consoles to cars.
The IOP and RAE are calling for financial support for the sector in the UK.
They also want to see more children encouraged to study sciences at school, to help increase the number of qualified potential employees, and highlighting the importance of the sector.
The report – entitled UK Semiconductor Challenges and Solutions – also calls for the government to release its long-awaited national semiconductor strategy. This has now been two-years in the making.
The IOP’s director of science, innovation and skills, Louis Barson, said the UK cannot simply rely on importing the microchips it needs.
He said: “We need a strong homegrown semiconductor industry, and that is critical to our economic security and physical security.”
The UK’s semiconductor sector is valued at $13bn (£11bn), according to one recent estimate. That might sound like a lot, but the global industry is said to be worth $580bn (£490bn).
Meanwhile, a parliamentary report last autumn said that the UK only produced 0.5% of the world’s semiconductors.
The IOP says that there are currently 40 or so semiconductor firms in the UK, with 25 doing manufacturing work. And it estimates that the total workforce is around 11,400 people.
There have recently been some worrying signs for the industry in the UK.
Last week, the UK’s top chip-designer Arm announced that it would be listing its shares on the New York Stock Exchange instead of London’s. The news came despite UK Prime Minister Rishi Sunak meeting with bosses from Arm’s parent company, Japan’s SoftBank.
In addition, another UK chip firm, IQE, has already warned that it might have to relocate abroad without more government support for the sector.
All this comes against a backdrop of big overseas government investment in the semiconductor sectors. Last summer, the White House announced that it would invest $50bn in the industry in the US over five years, $29bn in boosting production, and $11bn in research and development.
It is a similar picture in the European Union, with Brussels planning to invest €43bn ($46bn; £38bn).
“Other countries are continuing to invest significantly in their own semiconductor industries, and the UK will fall behind without timely government action and a coherent strategy,” said Prof Nick Jennings, chairman of the RAE’s engineering policy centre committee.
In addition to the matter of funding, the IOP and RAE want the government to confirm that it will proceed with its proposed plan to set up a national body for the sector, a so-called “semiconductor institute”.
“Crucially it could speak for the sector, provide a coordinated voice that would allow the industry to present a united front,” said Mr Barson.
A government spokesman said: “Our forthcoming semiconductor strategy will set out how the government will improve the sector’s access to the skills, facilities and tools it needs to grow. The strategy will be published in due course.”