Microchip firm asks UK gov’t for hundreds of millions in investment

10th March 2023
Kristian McCann

The boss of one of the UK's major microchip firms is calling on the government to invest "hundreds of millions" in the sector. This comes following a joint report published Thursday (9th March) that found "skills shortages, high costs and low public awareness threaten the UK's position in the vital semiconductor race". 

The conclusion of the report made by the Institute of Physics and the Royal Academy of Engineering has been echoed by the boss in question, Scott White of Pragmatic Semiconductor, as he warns that without a huge funding boost UK firms will go abroad. 

“The government can't just spend a few tens of millions of pounds," White said. “It has to be hundreds of millions, or even more than £1bn, to make a substantive difference." 

Mr White added that while the company wanted to keep its manufacturing in its UK plant in County Durham, "that only makes sense if the economies are justified compared to elsewhere". 

The UK government has already come under pressure from UK lawmakers who slammed it last month for again delaying its strategy for semiconductors, stating it "must act now to secure the future of the vital UK semiconductor industry". 

Other Western countries have already begun to ramp up spending on domestic production of these chips over supply side shortage concerns as relations with major chip manufacturer China begin to cool. 

The US had already in August 2022 announced roughly $280bn in funding to encourage investment in domestic semiconductor manufacturing and research; Japan has plans for its state-backed semiconductor venture Rapidus to partner with IBM on the development of cutting edge chips, and the EU in November announced plans to allocate €43bn to boost R&D for semiconductors, with a goal of producing 20% of the world's semiconductors by 2030. 

The UK's semiconductor sector is valued at £11bn in a global industry said to be worth £490bn; a Parliamentary report last autumn said that the UK produced 0.5% of the world's semiconductors. 

This relatively week positioning has already seen chip manufacturers turning away from the UK as they look for better returns. Last week, the UK's top chip-designer Arm announced that it would be listing its shares on the New York Stock Exchange instead of London's and despite UK Prime Minister Rishi Sunak meeting with bosses from Arm's parent company personally. 

UK chip firm IQE has already previously warned that it might have to relocate abroad without more government support for the sector. 

The government have said the "forthcoming semiconductor strategy will set out how to improve the sector's access to the skills, facilities and tools it needs to grow” and that it will “be published in due course, yet no deadline has been given. 

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