The UK’s semiconductor industry is facing a critical moment, with industry experts calling for immediate action to maintain its global standing. techUK, a leading technology trade association, is urging the UK government to implement strategic policies that will strengthen the sector and ensure long-term competitiveness.
Laura Foster, Associate Director of Technology and Innovation at techUK, highlighted the importance of decisive action:
“The UK has a unique opportunity to lead in the global semiconductor landscape, but success will require bold action and sustained commitment. By accelerating the implementation of the National Semiconductor Strategy, we can unlock investment, foster innovation, and strengthen our position in this critical industry.”
With semiconductors serving as the foundation of modern technology—from AI-powered data centers to consumer electronics—securing the UK’s role in the industry is a matter of national economic and technological resilience.
The UK’s Strengths and Challenges in Semiconductors
The UK has historically been a leader in semiconductor design and intellectual property (IP), with Cambridge standing out as a key innovation hub. Companies like Arm, which designs chips used in 99% of the world’s smartphones, exemplify the country’s strengths in the field.
However, a recent techUK report warns that these advantages are at risk due to several factors, including insufficient investment, skills shortages, and a lack of tailored support for the sector. The report states:
“The UK is not starting from zero. We have globally competitive capabilities in design and IP, but we must double down on these strengths to compete internationally.”
Despite contributing £12 billion in turnover in 2021 and 90% of semiconductor companies expecting growth, the sector faces major obstacles:
- High costs and limited access to private capital
- A lack of domestic investment (only 5% of semiconductor startup funding originates in the UK)
- Reliance on international talent due to local skills shortages
Without targeted investment and government support, the UK risks losing its foothold in this rapidly expanding market, projected to reach $1 trillion globally by 2030.
Key Recommendations for Securing the UK’s Semiconductor Future
The techUK report outlines 27 key recommendations across six major focus areas: semiconductor design, research & development (R&D), manufacturing, skills development, and global partnerships.
1. Strengthen the UK’s Existing Semiconductor Strengths
- Leverage expertise in chip design and IP.
- Support regional semiconductor hubs like Cambridge and South Wales.
- Expand the UK’s leadership in compound semiconductors.
2. Establish a National Semiconductor Centre
- Create a central hub for innovation, R&D, and industry collaboration.
- Provide support to semiconductor startups and businesses.
- Coordinate efforts between academia, industry, and policymakers.
3. Expand R&D Tax Incentives
- Include capital expenditure in R&D tax credits to attract investment.
- Encourage companies to build new facilities and develop cutting-edge technology.
4. Develop a Semiconductor Design Competence Centre
- Establish shared facilities for chip designers to reduce financial risk.
- Support the development of next-generation semiconductor technologies.
5. Address the Semiconductor Skills Shortage
- Expand STEM education and training programs.
- Attract and retain global semiconductor talent.
- Create a workforce pipeline to support long-term industry growth.
6. Strengthen Global Partnerships
- Secure strategic agreements with allied countries for supply chain stability.
- Collaborate on semiconductor R&D and critical materials sourcing.
- Navigate international trade restrictions and export controls effectively.
The Urgency for Action: Competing in a Global Race
The report warns that the UK is at risk of falling behind other nations that have already made substantial semiconductor investments.
For example:
- The European Chips Act has committed €43 billion to semiconductor R&D and infrastructure.
- The US CHIPS and Science Act has allocated $52 billion to boost domestic semiconductor production.
- China has ramped up its semiconductor investment, prioritizing self-sufficiency in chip manufacturing.
Without a clear and well-funded strategy, the UK may struggle to compete in a sector that is increasingly dominated by government-backed initiatives across the globe.
“Governments worldwide are rapidly attracting semiconductor companies while also building domestic capabilities. The UK must act quickly and leverage its existing strengths to secure a long-term role in the global semiconductor value chain,” the report states.
Conclusion: A Defining Moment for the UK’s Semiconductor Industry
The UK stands at a critical crossroads in the semiconductor industry. While the country has strong capabilities in chip design and intellectual property, it risks losing its competitive edge due to a lack of investment and strategic support.
By implementing bold policies, investing in R&D, and fostering international partnerships, the UK has the potential to become a leader in the future of semiconductors—but only if action is taken now.
As the global demand for semiconductors continues to rise, the UK government must treat semiconductor leadership as a cornerstone of its industrial strategy, ensuring both economic growth and technological security in the years ahead.
Sources: https://www.artificialintelligence-news.com/news/uk-must-act-secure-its-semiconductor-industry-leadership/, https://britainsbestguides.org/blogs/the-uk-explained/
