The UK's National Semiconductor Strategy is a comprehensive plan to support and strengthen the country's semiconductor industry. It aims to foster domestic growth, enhance supply chain resilience, and safeguard national security, positioning the UK as a semiconductor technology leader while addressing potential vulnerabilities and disruptions in the sector.
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What is the UK's National Semiconductor Strategy?
The UK Government unveiled its £1 billion National Semiconductor Strategy in May 2023 to enhance the country's semiconductor production capabilities. This comprehensive strategy focuses on enhancing the UK's expertise in semiconductor design, research and development, and compound semiconductors, crucial components in everyday technologies.
The funding allocated will support the growth of domestic semiconductor companies across the UK, fostering collaboration with industry partners to accelerate research, innovation, and the commercialization of semiconductor technologies, facilitating quicker transitions from lab to market.
Prime Minister Rishi Sunak emphasized the importance of the national semiconductor strategy, stating, "Semiconductors underpin the devices we use every day and will be crucial to advancing the technologies of tomorrow." He added, "Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage."
The UK Strategy sets itself apart by prioritizing the nation's best interests over large-scale silicon manufacturing, opting for alternative opportunities that leverage its history of innovation and strong foundations in the semiconductor sector.
The strategy aims to secure the UK's position in future semiconductor technologies, such as AI and quantum computing, economic growth, job creation, innovation, international influence, and supply chain resilience through collaboration with partners.
Why Was the UK's National Semiconductor Strategy Created?
The semiconductor sector is witnessing global growth, which is projected to surpass $1 trillion by 2030. However, the UK lacks domestic semiconductor capabilities, relying heavily on imports. This became a major vulnerability during the COVID-19 pandemic when supply chain disruptions threatened numerous industries.
Moreover, semiconductors pose cybersecurity risks if compromised, a growing concern as more devices become internet-connected. The UK Government acknowledges that compromising cybersecurity for modern technology is unacceptable, and, therefore, the National Semiconductor Strategy outlines measures to address and mitigate these vulnerabilities.
What Are the Primary Objectives of The UK's National Semiconductor Strategy, And How Does It Plan to Achieve Them?
Objective 1: Grow the Domestic Sector
The strategy emphasizes R&D support for university spinouts and startups in the semiconductor sector. It identifies key areas for funding, including innovative manufacturing and emerging technologies.
Notably, there are plans for a UK semiconductor infrastructure initiative to enhance research infrastructure and a semiconductor incubator to assist startups. This could involve an "open foundry" for compound semiconductors and access to chip design software and prototyping facilities, addressing cost and location challenges.
On the skills side, the strategy aims to work with academia and industry to train semiconductor specialists and make the UK more attractive for international talent. This includes new centers for doctoral training and industry-led learning programs.
A new UK Semiconductor Advisory Panel will be created with industry, government, and academic leaders to oversee the strategy. This panel will provide guidance, feedback, and accountability on delivering the vision to grow the domestic industry through strategic investments in R&D, infrastructure, and talent development.
Objective 2: Mitigate the Risk of Supply Chain Disruptions
Like other nations, the UK government recognizes the risks posed by semiconductor supply chain disruptions to industry and national security. The strategy outlines measures to address this issue, including guiding companies to prepare for future supply chain shocks.
It also suggests conducting information-gathering exercises to assess the impact of shortages on critical sectors and ensure resilience in the defense sector.
The government will work with industry to map manufacturing requirements for critical sectors and establish baseline domestic production needed for resilience. Furthermore, international collaborations with trusted partners are proposed to enhance supply chain resilience, mirroring initiatives in the EU Chips Act.
Objective 3: Protect Our National Security
The strategy recognizes two national security concerns: the risk of sensitive technology falling into the wrong hands and the threat of cybersecurity vulnerabilities within semiconductor hardware.
The government has already used the National Security and Investment Act to address these issues to block certain acquisitions, albeit with some criticism. In addition, the national semiconductor strategy proposes a more transparent approach, offering guidance on sensitive areas and considering the expansion of export controls.
It also emphasizes the importance of cybersecurity, leveraging the UK's hardware design and IP expertise to enhance hardware-based security and engaging in international partnerships for cybersecurity discussions.
The government commits to supporting initiatives like Digital Security by Design, which aims to bolster the resilience and security of semiconductors in the face of growing cyber threats.
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How Does the UK's National Semiconductor Strategy Measure Up Against Other Initiatives?
The UK's National Semiconductor Strategy represents a significant commitment to developing the local semiconductor industry but falls behind the substantial investments made by the US and EU.
Compared to the UK's £1 billion commitment, the EU's Chips Act allocated £37 billion to support struggling incumbent chipmakers and onshore fabrication plants. Meanwhile, the US Chips and Science Act approved £42.5 billion to boost domestic semiconductor research, development, and manufacturing, leading to an estimated £160 billion in private semiconductor investment.
The UK strategy takes a more targeted approach within limited taxpayer funds. It focuses on developing domestic strengths in semiconductor design, compound semiconductors, skills, and research. However, the UK will still rely heavily on Taiwan for advanced chip fabrication.
Overall, the UK's national strategy represents an improvement over the EU's approach by avoiding subsidies for uncompetitive incumbent firms but lacks the scale and manufacturing focus of the US initiative.
What Does This Mean for UK Semiconductor Market?
The UK's national semiconductor strategy has garnered mixed reactions within the semiconductor market.
It presents opportunities for universities, spinouts, startups, and clusters like the South Wales compound semiconductor hub, offering government funding for emerging technologies and academic training. However, established larger companies may feel overlooked, expecting more support in areas like R&D tax relief and export assistance.
Additionally, delays and uncertainties in the strategy's implementation have raised concerns, given the fast-paced global semiconductor policy changes in other regions.
The strategy's success hinges on efficient fund deployment and effective collaboration between government, industry, and academia. While promising, its impact on the UK's semiconductor market remains uncertain, and timely execution is crucial to maintain competitiveness in a rapidly changing industry.
References and Further Reading
UK's Secretary of State for Science, Innovation and Technology. (2023). Policy paper - National semiconductor strategy. [Online]. Available at: https://www.gov.uk/government/publications/national-semiconductor-strategy/national-semiconductor-strategy
Cytera, C. (2023). The Good, The Bad, and the Missing in the UK's Semiconductor Strategy. Center for European Policy Analysis. [Online]. Available at: https://cepa.org/article/the-good-the-bad-and-the-ugly-in-the-uks-semiconductor-strategy/
Dr Patrick Schröder & Olivia O’Sullivan. (2023). The balancing act for the UK's semiconductor strategy. [Online]. Chatham House. Available at: https://www.chathamhouse.org/2023/06/balancing-act-uks-semiconductor-strategy
Edwards, C. (2023). UK's National Semiconductor Strategy - a plan begins to form. [Online]. The Institution of Engineering and Technology. Available at: https://eandt.theiet.org/content/articles/2023/06/uk-s-national-semiconductor-strategy-a-plan-begins-to-form/
Innovation News Network. (2023). How the UK's £1bn National Semiconductor Strategy will elevate the sector. [Online]. Available at: https://www.innovationnewsnetwork.com/how-the-uks-1bn-national-semiconductor-strategy-will-elevate-the-sector/33106/
Milmo, D & Mason, D. (2023). UK's £1bn strategy for semiconductor industry lacks ambition, say critics. The Guardian. [Online]. Available at: https://www.theguardian.com/business/2023/may/19/uk-1bn-strategy-semiconductor-industry-lacks-ambition
Ross, N, & Brooks, B. (2023). The National Semiconductor Strategy: A good start, but what comes next will be critical to its success or failure. techUK. [Online]. Available at: https://www.techuk.org/resource/the-national-semiconductor-strategy-a-good-start-but-what-comes-next-will-be-critical-to-its-success-or-failure.html
Swayne, M. (2023). UK Government Unveils £1 Billion Strategy For UK's Semiconductor Sector. [Online]. Available at: https://thequantuminsider.com/2023/05/19/uk-government-unveils-1-billion-strategy-for-uks-semiconductor-sector/
Thompson, A. (2023). Assessing the UK National Semiconductor Strategy. EE Times. [Online]. Available at: https://www.eetimes.eu/assessing-the-u-k-national-semiconductor-strategy/
Tyler, N. (2023). A £1 billion strategy for the UK's semiconductor sector. [Online]. Available at: https://www.newelectronics.co.uk/content/features/a-1-billion-strategy-for-the-uk-s-semiconductor-sector/