UK could lose wafer maker IQE over delayed chip strategy

Business news | February 6, 2023

By Peter Clarke

IQE plc (Cardiff, Wales), a leading supplier of compound semiconductor wafers, could relocate abroad unless the UK government sets out its strategy for semiconductors quickly.

That is according to The Times which quotes CEO Americo Lemos saying the government must get things moving in the next six months or “risks” losing IQE abroad to places that are more supportive of semiconductors.

With United States pledging US$50 billion to supporting chipmakers through its Chips Act and the European Union’s equivalent legislation offering €43 billion, the implications are clear.

Elsewhere Labour MP Darren Jones, blasted the UK government saying: “Two-years in the making but still no strategy. Further delay would be an act of national self-harm.” Jones was speaking as chair of the House of Commons committee on Business, Energy and Industrial Strategy. “With 40 days until the budget, the strategy must be published urgently so that sufficient funds can be put behind it and used effectively.”

The semiconductor strategy is the responsibility of the Department for Digital, Culture Media and Sport for now. It was supposed to produce a plan last autumn. It is thought that the Treasury was unhappy with the first draft and sent it back to the department for review.

It has been said that semiconductor strategy should be the responsibility of the Business department.

Carrot and stick

IQE’s Lemos has tried deploying both carrot and stick to move the UK government. In 2022 he proposed an ambitious plan to create a compound semiconductor foundry in Newport, South Wales.

“We would love to stay in the UK and have committed to grow in the UK. That’s why we are working with the government on the strategy,” the Times quoted Lemos saying. “But we also have to do what shareholders want and go where the money is.”

Lemos was pictured on LinkedIn last week visiting Number 10, Downing Street. He commented: “It was great to meet with the team at 10 Downing Street, this afternoon, to discuss the UK’s role in the shifting global semiconductor industry. With the UK’s competitive advantage in some areas of the global supply chain and the potential to be a true global leader, it was a really productive conversation and we look forward to further engagement with No. 10 and other relevant departments soon.”

IQE forms part of a cluster of semiconductor business in south Wales. One of these, Newport Wafer Fab became controversial when it was acquired by Nexperia NV, a Dutch company owned by China (see China’s Nexperia buys Newport Wafer Fab amid concerns).

UK government dithering over whether it should or should not oppose the sale emphasized the UK’s lack of a semiconductor strategy at a time when other countries and regions were committing large sums to support domestic semiconductor business.