UK’s £1bn semiconductor scheme labeled ‘disappointing’ by chip industry

After two years of waiting, the UK finally has announced its semiconductor support plan, aimed at growing the domestic sector, increasing its competitiveness and reducing the risk of supply chain disruptions. But while industry players welcomed the strategy, they also criticized the level of support.

Under the new scheme, the government will invest up to £1 (€1.15) billion over the next ten years, with the first £200 million to be deployed 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 offers €43 billion to attract chipmakers to build facilities within the bloc and ensure a European chip supply.

For Amelia Armor, partner at Amadeus Capital Partnersa British venture capital firm investing in semiconductor start-ups, government funding is insufficient.

“The level of investment announced for the next two years is disappointing, especially given that the UK must try to keep pace with the investment levels announced as part of the EU and US Chip Acts,” Armor told TNW. “£200m split across many initiatives will not achieve much and will have to be allocated in a very targeted way to have an impact.”

Spreading the £1 billion investment over a decade is also problematic, said Amanda Brock, CEO of Open UKa non-profit representing the country’s open technology sector, including a leading chip design company Arm.

“It simply won’t build a world-leading semiconductor industry, even with the existing world-class R&D experience we have in the UK today. We need to see faster action behind larger numbers to reach the goal,” explains Brock.

Unlike the US and the EU, the UK’s plan is not specifically aimed at strengthening production capacity. Instead, it focuses on international collaboration and the growth of focus areas where the country already has leadership positions: R&D, design, compound semiconductors and intellectual property.

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

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

“The UK won’t be able to develop a full supply chain to meet its semiconductor needs — it’s beyond the reach of the US or Europe even,” Lippett told TNW. “The question is, how does the UK ensure ‘a seat at the table’ when the global allocation is determined? By having technology that the others want.”

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

“Until the UK has all those building blocks in place, either in-country or as part of established semiconductor supply chains involving the UK as a major supplier, it won’t come close to being the global science and technology superpower. technology. [Sunak] looking for,” she said.