UK’s £1bn semiconductor plan is hailed as ‘disappointing’ by the chip sector

After a two-year wait, the UK has finally announced its semiconductor support plan, which aims to grow the domestic sector, increase its competitiveness and reduce the risk of supply chain disruptions. But while industry players welcomed the strategy, they also criticized its support.

Under the new scheme, the government will invest up to £1.15 billion over the next decade, with an initial £200 million to be made available over the next few years.

However, this amount is dwarfed by similar initiatives in the West. The US has pledged $52 billion in subsidies to boost its domestic semiconductor industry, while the EU’s chip law provides €43 billion to encourage chipmakers to build facilities within the Union and ensure European chip supply.

Government funding is not enough for Amelia Armour, a partner at Amadeus Capital Partners, a UK VC firm that invests in semiconductor startups.

“Investment levels announced for the next biennium are disappointing, especially considering the UK must try to keep up with investment levels announced under the EU and US Chip Acts,” Armor told TNW. “£200m spread across many initiatives is not going to do much and needs to be very well targeted to have an impact.”

Spreading the £1billion investment over a decade is also problematic, according to Amanda Brock, CEO of OpenUK, a non-profit organization that represents the country’s open technology sector, including leading chip design firm Arm.

“Even with the world-class R&D experience that we have in the UK today, it’s simply not going to build a world-leading semiconductor sector. We need to see faster action behind bigger numbers to get there,” Brock explained.

Unlike the US and EU, the UK plan does not particularly focus on boosting production capacity. Instead, it targets international collaboration and growth in priority areas in which the country is already a leader: research and development, design, compound semiconductors, and intellectual property.

The funds will also be used to improve the talent pipeline and give UK companies easier access to the necessary infrastructure, with a particular focus on start-ups and SMEs.

According to Mark Lippett, CEO of Bristol-based semiconductor company XMOS, manufacturing is not the only way to ensure competitiveness and a secure supply chain.

“The UK will not be able to build a full supply chain to meet its semiconductor needs – that’s beyond the capabilities of even the US or Europe,” Lippett told TNW. “The question is: how will the UK secure a seat at the table when the global allocation is decided? By having technology that the others want.”

But for OpenUk’s Brock, combining investment with skills, deep industry knowledge and a semiconductor manufacturing sector are key elements to the UK’s success.

“Until the UK has all of these building blocks, either in-country or as part of established semiconductor supply chains in which the UK is a key supplier, it will be nowhere near the global superpower in science and technology.” [Sunak] looking for,” she said.

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