FST JOURNAL

When designing a strategy for the semiconductor industry, the key task is to determine what is important for the UK, what is specific to the UK that we can affect in a meaningful way, and how best to rally the industry around those aims. It is right that the policy focusses on UK strengths. We should not be pursuing areas where we have not been particularly strong or chasing technologies which are very capital-intensive to develop and take many years to build up a competitive position.

So the UK’s key strengths, as set out in the policy, are in areas like R&D, design (of both products and systems), IP creation and IP business, as well as specialist manufacturing which includes compound semiconductors, photonics and thin film manufacturing. These are areas that have grown in the UK without help from the Government to date but we can now accelerate them.

Funding

Whether startups or publicly-listed companies, all businesses need funding: to start it, grow it and then later on, as it expands, to expand the operation or acquire other technologies. So funding is always a pinch point. Most startups have access to seed funding, but that is only a first step. Given the number of semiconductor startups in the UK, it does show that there is at least some funding available, but it is more difficult to take a company all the way through to commercial success through patient scale-up funding.

The funding environment in the UK is not tuned to long term investment. If some of the latest support initiatives that Government talks about can be unlocked, that will help UK deep-tech generally and semiconductors more specifically.

We also need to see the £1 billion funding semiconductor announcement as being supplemented by a number of other available funding streams in areas such as: netzero, electrification, green economy, digital economy, AI, supercomputing and space satellites, among others. There is what has been described as an ‘alphabet soup’ of various organisations that provide support to various technology sectors. A lot more collaboration would help to leverage more value out of these initiatives. Now, many of these areas are customers and users of semiconductor technology – indeed, without semiconductors, none can really succeed.

The UK has seen many key breakthroughs, including ARM and its licensing model, yet the industry is fragmented. 

Accessing the home market

So, opening the door for British semiconductor companies to access those sectors, as a way to leverage the technology created in the UK, will provide a very good platform for our product companies to succeed. After all, that is what is wanted at the end: for UK semiconductor companies to succeed and grow their business worldwide. The UK market for chips by itself is just too small to sustain successful businesses. This is a global industry. So if you limit yourself to one small geographic area in terms of marketing and sales, that is not going to sustain long term growth. Growing beyond our domestic market will require additional funding support.

In the UK, historically, we have lacked a focal point for semiconductors. We have seen many key breakthroughs: ARM and its licensing model was invented here, Bluetooth single chip product was invented here, many other products that went on to achieve world success and become standard were created in the UK. Yet the industry is fragmented and giving it some point of focus is really important. Having a specific Government policy covering semiconductors is a welcome first step and so is creating some form of a national semiconductor institute that works on a consistent basis on our semiconductor strategy.

The City of London is particularly strong in areas like law and finance. In the semiconductor business, we do require better IP protection laws, scale-up finance, tax advice and business management training, all aspects of economic infrastructure that can help the semiconductor business.

I would also like to see some UK-led conferences. I remember that, years ago, there would be major semiconductor conferences in the UK, but not anymore. Restarting these international events with support from Government could help the focus of the business and opportunities for building networks back in the UK.

Then, to thrive long term, we must remain globally connected, to markets, people and technologies, but also in remaining competitive on a broad scale. That is critical. Whatever the level of Government support, be it £1 billion or £10 billion, we as an industry cannot remain dependent on Government support forever. While this pump-priming initiative may provide an initial boost, success ultimately is down to industry leaders who create successful and competitive companies that can attract private sector institutional investments.