While the UK is be labelled as “closed for business” and Rishi Sunak is Play Unicorn Kingdom in Silicon Valley, the British chip industry is in danger of losing some of its strongest players due to a lack of supportive policies.
Pragmatic Semiconductor, based in Cambridge, UK, funded in part by In-Q-Tel, the CIA’s investment arm, has created an ultra-thin, ultra-low cost, flexible integrated circuit (FlexIC). Instead of relying on silicon, it is made from indium gallium zinc oxide at a fraction of the cost.
The application of the technology spans a wide range of industries, including healthcare, pharmaceuticals, packaging and games. In the words of Pragmatics, it offers “digital traceability and interactivity to everyday objects.”
Scott White is the Founder and Executive Director, Strategic Initiatives, of Pragmatic. According to White, the company could end leaving British shores if the UK government’s semiconductor strategy falls short of expectations.
So what would British politicians need to provide enough support to match the appeal of the $52.7 billion CHIPS bill? White tells TNW that Pragmatic wants the government to support innovative new companies through public tenders.
“By creating homegrown revenue opportunities and becoming a key customer for emerging semiconductor technologies targeting key national priorities such as net zero and affordable health care, the government can provide the reassurance and certainty investors need to help start-ups and scale-ups thrive. support,” said White. .
In the footsteps of Arm?
The current lack of ability to effectively raise funding for the UK business means that Pragmatic could move its operations overseas. Plus, it could potentially appear outside the UK in the future, following in the footsteps of Cambridge compatriot Arm. Earlier this year, in a major blow to London, the chip architecture giant and crown jewel in the UK tech industry chose to list the company only in New York.
What would an adequate strategy look like in more detail? White believes that annual public procurement targets, commitments to public institutions to ‘buy British’ and encouraging government bodies, such as NHS Trusts, to explore the use of the technology would provide the required opportunities.
In addition, such a strategy would address both supply and demand, ultimately making “the UK a more attractive place from which innovative semiconductor companies can build and maintain a global base”.
Funding from the government, the CIA and… China
Following a $125 million Series C round (more than 50% oversubscription) in late 2022, the CIA’s In-Q-Tel investment arm, also known as IQT, owns a portion of Pragmatic. British Patient Capital, a subsidiary of the British Economic Development Bank, also participated in the financing.
The company has raised more than $190 million to date and employs more than 200 people. Puhua Capital, a Hangzhou-based VC focused on health and technology, has also invested an undisclosed amount. Although Pragmatics has deliberately kept Chinese investment low due to the sensitive geopolitical situation.
The geopolitics of chip making capabilities
According to Chris Miller, the author of Chip War: The Fight for the World’s Most Critical Technology, the process of designing and manufacturing chips is the most complex technological process humans have ever undertaken. In the words of Millerthe supply chain required to produce an advanced chip “stretches across multiple continents, includes some of the most purified materials and the most precise machine tools ever created.”
By 2022, the global semiconductor market size will exceed $573 billion, and it is predicted to grow to $1,380.79 billion by 2029. Meanwhile, Miller further believes that it is not just a matter of business, economics or technology, but also a matter of political importance as to which countries have these capabilities and which do not.
As such, successful startups like Pragmatic can become entangled in strategic tug-of-war that extends far beyond applied technology excellence.