TechUK demands that Britain’s chip strategy is crisped up • The Register

Almost two years after the British government published its National Semiconductor Strategy, calls are growing for bolder action and a faster implementation of its recommendations to deliver on its stated goals.

Those bolder actions include setting up new national bodies to help chipmakers collaborate, secure financing, and access export markets, as well as classifying fabs as critical national infrastructure (CNI), like datacenters.

The UK’s plan to nurture its beleaguered chip industries was published in May 2023 after a protracted delay. It promised what was seen as a disappointing £1 billion ($1.25 billion) in funding over a decade, to be targeted at areas viewed as the country’s key strengths, such as chip design and intellectual property (IP), R&D, and compound semiconductors.

It was perceived as disappointing because of comparisons with the EU and US schemes to disburse €43 billion ($45 billion) and $52 billion in subsidies and other incentives to boost semiconductor production in their respective regions.

However, it also drew praise from some in the industry for its more focused approach on key areas, rather than simply spraying public funding in all directions.

In a newly published report, trade association TechUK warns that progress has only been “incremental” since the national strategy was launched, and that further action is required to turn the government’s ambitions into reality.

“The UK has a unique opportunity to lead in the global semiconductor landscape, but success will require bold action and sustained commitment,” claims Laura Foster, TechUK associate director for technology and innovation.

Foster adds that in order to unlock investment and beef-up the UK’s position in this industry, the government needs to recognize chips as a key strategic tech and accelerate implementation of the National Semiconductor Strategy.

The report, “UK Plan for Chips: a new TechUK blueprint,” sets out three fundamental missions its member organizations see as important, underpinned by a six-point delivery plan.

Those three missions are: to turn Britain’s current strengths into leadership by doubling down on the areas of IP and design, R&D, and compound semiconductors with tailored support; ensuring that companies have sufficient access to both public funds and private capital, including scaling beyond the startup stage; and finally, forming and exploiting strategic partnerships with countries and companies such as TSMC, which dominate manufacturing.

The six-point delivery plan has chapters outlining each strategy. For example, the first is to take steps to retain the UK’s global footing in chip design and IP. The report points out that about two-thirds of UK semiconductor companies operate primarily in this area, most notably Arm.

There are specific challenges facing design operations, such as IP protection and licensing being burdensome for smaller companies. The cost of failure in testing designs adequately also carries high financial risk, while small firms especially struggle to access the technical support needed to develop multi-vendor electronic design automation (EDA) workflows.

A more serious claim from TechUK is that not enough students are developing the skills required for chip design and IP work, especially electronic engineering qualifications, and more needs to be done to upskill workers into high-paying jobs in the semiconductor sector.

It wants to see the establishment of a National Semiconductor Center that could act as a headquarters to address the various recommendations in its report. It envisions this functioning as an umbrella body focused on delivery and coordination across other facilities, such as a Design Competence Center that it also wants to establish.

Another problem area TechUK identifies is that manufacturing requires an extensive R&D phase including the testing and prototyping of chips. But it claims the UK R&D tax credit scheme is less generous than those in the EU and the US, and calls for making tax relief on capital expenditure for R&D more accessible.

The introduction of regional teams to provide specialized R&D support, and even the establishment of an open access foundry to support low volume domestic manufacturing and prototyping, are other suggestions.

TechUK also wants to see semiconductor facilities classed as critical national infrastructure (CNI), in the same way that datacenters have been since last year. This would help to identify and mitigate potential security threats, but it also notes that “reforms to national planning policy need to make it much easier for investors to build fabs and R&D capabilities in the UK,” meaning making it easier to overrule any objections from residents, we assume.

When it comes to engaging with global partners, the report states that this can be difficult for many UK semiconductor businesses, noting that 41 percent of them have fewer than ten employees.

TechUK says the way to tackle this is to allow the National Semiconductor Center to act as a centralized voice for the UK industry on the international stage, working alongside the Department for Science, Innovation and Technology (DSIT) and groups like TechUK and the Chips Coalition, another industry body.

This could take inspiration from the Department of Business and Trade’s Digital Health Playbook, allowing full visibility to international and domestic collaborators and investors, it says.

Other recommendations include working more closely with allied countries and developing a common strategy to reinforce the semiconductor supply chain and ensure access to key strategic materials.

Helping semiconductor companies can get the investment they need, utilizing public institutions like the National Wealth Fund (formerly the UK Infrastructure Bank) or the British Business Bank (BBB) to create more funding support for chip firms to scale up is also vital, says TechUK.

“The UK must use its existing resources tactically, playing to its globally recognized strengths within the semiconductor value chain to bolster its domestic capabilities and meet the competition presented by these global strategies.”

Gartner Research VP George Brocklehurst warned that as far as AI goes, the UK is still dependent on foreign chips.

“We are dependent on AI acceleration chips from the US today, and the US also dominates the AI semi startup landscape, therefore tomorrow’s AI infrastructure,” he said.

“China has several AI semi startups, while the UK and EU have a couple. And it’s not just about supply but local collaboration breeding innovation across the AI ecosystem. System synergies are what’s needed to move the needle.” ®