Comment: Underwhelming semiconductor strategy is set up to fail
The world has woken up to the importance of semiconductors and the semiconductor supply chain. Unfortunately the long awaited UK National Semiconductor Strategy is too late, under funded and shows a complete misunderstanding of the issues that means it is set up to fail.
The strategy, published in detail late on Friday, shows the challenge ahead. Most of the responses welcomed the publication but pointed out that the challenges are in the implementation. The advisory panel, which should have been the key voice of industry at the launch, will not be established until June, which hints at some issues being resolved in the background.
Reading through the strategy in detail is even more disappointing. While there are shout outs to the tech clusters in Cambridge and Bristol for their world class skills, the report is confused as to the different parts of the semiconductor supply chain, from equipment makers such as SPTS to Microchip’s packaging capabilities in South Wales as part of the design cluster.
While publication is welcome, it does not come with any extra money. The £200m over three years (2023 to 2025) is distinctly underwhelming. At the same level of annual funding as the previous ten years this looks very much like citing the existing funding streams rather than new funding. Against the backdrop of $50bn for the US CHIPS Act and €40bn for the EU CHIPS Act, this is even more disappointing.
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The strategy also has a strong focus on re-building the indigenous supply chain. In some areas, such as compound semiconductors, this is distinctly possible. In others, government policy is an actively discouragement. The battle with Nexperia over the Newport Wafer Fab will have implications for the company’s power fab in Hazel Grove, which is probably the longest established such plant in the country still running.
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We have 25 fabs in the UK, although most are in universities. While there have been many years of trying to get these capable of running prototypes, the government has not supported the development of commercial pilot lines that we have seen running in Europe for several years. The strategy does not explicitly recommend supporting other wafer plants and fabs such as IQE and Pragmatic Semiconductor.
The report acknowledges that semiconductors have not been able to tap into research funds, and promises to create a dedicated funding stream as part of the strategy. It only detailed the regional breakdown of R&D spending in April this year.
All of this comes against the background of a cost of living crisis and inflationary pressures, which industry figures have highlighted as a restraining factor. But the UK government can offer more than twice the semiconductor funding, £500m, in subsidies to Jaguar Land Rover to persuade its cash-rich Indian parent Tata to build a battery gigafactory here. It is also supporting the quantum industry with more than twice the funding proposed for semiconductors.
With the continuing tensions between Taiwan and China, and the risk of significant disruption to the semiconductor supply chain over the next few years, the strategy is more than too little, too late. It is set up to fail.
The full strategy is at www.gov.uk/government/publications/national-semiconductor-strategy
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