Save UK chip industry says Semiconductor Leadership Group
The UK’s Semiconductor Leadership Group (SLG) is calling for immediate support from the government to ‘save the UK chip industry’.
Ahead of the Chancellor’s Autumn Statement, the SLG is urging the Treasury to find effective mechanisms to support the UK semiconductor manufacturing sector, ensuring the chip industry continues to compete globally, even whilst many international competitors are subsidised.
In a position paper published today, they argue that UK chip manufacturers need a level playing field to compete globally and this means, as a minimum, a support mechanism for capital expenditure and access to finance for the necessary step-up expenditure to remain competitive.
The group consists of executives from across the UK semiconductor industry and is supported by TechWorks, the UK’s Deep Tech Trade Association. The group provides a unified and balanced industry voice to support the UK Government by identifying strengths, challenges and opportunities which define the semiconductor sector. The group is chaired by TechWorks’ CEO Charles Sturman and includes executives from leading chip technology firms including Bourns, Clas-sic, Imagination, Paragraf, Plessey, Pragmatic and XMOS.
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However this is different from the Semiconductor Advisory Panel co-chaired by former Dialog CEO Jalil Bagherli and UK technology minister Paul Scully, who stays in post after the recent government reshuffle, to advise the government
This is also different form the Semiconductor strategy being developed by the University of Cambridge for the UK government. This is set to propose a Semiconductor Institute and small scale compound semiconductor foundry to be supported for the next ten to 20 years, and will send its report to ministers next month. However this will take a substantial time to achieve the required funding, if at all, in the next spending review.
In the meantime the SLG, which sits alongside the existing National Microelectronics Institute in TechWorks to represent chip fab operators, is calling for support for the existing manufacturing and skills in the UK as proposed in the recent Semiconductor Strategy.
Although the UK does not try to compete with ultra-high volume chip manufacturers in the Far East such as TSMC and Samsung, it does have world-leading companies exporting millions of chips in areas such as such as power electronics for EVs & renewable energy, 5G radio communications, photonics for augmented reality and high-performance computing and MEMS (nanoscale structures) for sensors in life science, automotive & robotics.
The long-term, capital-intensive nature of chip manufacturing coupled with the lack of market understanding in finance markets make these investments difficult to obtain from traditional investors even though in the long term, such companies often grow to be highly successful if they can maintain their lead through appropriate investments.
The Government semiconductor strategy published in May said, “We will announce plans by the autumn to further support the competitiveness of the semiconductor manufacturing sector that is critical to the UK”. In their paper, the Semiconductor Leadership Group aims to provide industry input into this planning and support HM Treasury in securing the future of this important industry sector.
Ahead of the Chancellor’s Autumn Statement, the group proposes to HM Treasury to:
- Change capex rules for Innovation and R&D schemes (UKRI and R&D Tax Credits) to allow significant capex recovery when investing in strategic enhancements to semiconductor manufacturing.
- Increase the maximum funding available from UKRI / InnovateUK for specific semiconductor manufacturing enhancements to ensure the UK business can remain globally competitive.
- Create a matched funding or lead investor scheme in support of strategic upgrades to UK facilities where applicable companies can demonstrate the ability to lead globally through such enhancements.
- Address the shortage of process engineers, technicians and operators through apprenticeship system reform, offering employers more flexibility in how they use their Apprenticeship Levy contributions.
“The Chancellor’s Autumn Statement, due on Wednesday 22nd November is an opportunity for the government to show that it recognizes the challenges faced by the UK’s semiconductor manufacturing sector and to propose meaningful interventions in support of this strategic industry, as indicated in the strategy,” said Charles Sturman, Chair of the Techworks Semiconductor Leadership Group.
“We hope our proposal helps the government to understand what is required for the industry to remain competitive on a global scale.”
Graeme Shaw, CEO of Semefab, a manufacturer of micro-electromechanical systems (MEMS) on silicon wafers backed this up.
“We export chips globally, and are looking forward to the Chancellor’s Statement this Autumn as an opportunity for the UK to indicate its understanding and support for the Semiconductor manufacturing sector as other nations have demonstrated recently,” he said.
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