UK plans investment of $1.26 bn in semiconductor sector

The UK government has unveiled a significant investment of 1 billion pounds ($1.26 billion) to strengthen the country’s semiconductor sector and enhance chip supply chains.
The focus of this strategy, as stated by the newly formed Department for Science, Innovation, and Technology (DSIT), is on Britain’s role in semiconductor design, which is utilized in various applications ranging from cars to smartphones and washing machines.

Prime Minister Rishi Sunak emphasized the strategy’s concentration on leveraging Britain’s strengths in research and design to establish a competitive edge on the global stage. The investment will begin with 200 million pounds allocated between 2023 and 2025, with a potential increase to 1 billion pounds over the next decade.

During a meeting of the Group of Seven (G7) leaders in Japan, Rishi Sunak agreed with his Japanese PM, Fumio Kishida, to launch a semiconductor partnership aimed at enhancing research cooperation and bolstering supply chain resilience. A similar agreement has already been established between Britain and South Korea.

While the primary focus of Britain’s strategy is on design and research rather than semiconductor manufacturing, plans to support investments in the chip manufacturing sector will be announced by autumn.

The UK’s semiconductor strategy is a response to chip shortages caused by the COVID-19 pandemic, which disrupted various industries and particularly impacted car production.

The shortages prompted the United States to announce $52.7 billion in chip subsidies last year. The European Union proposed a chips law that could attract about 43 billion euros ($47 billion) in investments.

Other countries, including Japan, India, and South Korea, have also introduced their own semiconductor strategies in recent years to address chip shortages and enhance their competitiveness against Chinese technological advancements.

These developments, driven in part by the need to respond to chip shortages and to better compete with China, have spurred calls in Britain for the government to expedite its efforts. A parliamentary panel’s report from last year highlighted the vulnerability of the UK’s semiconductor supply chain, as it lacks an end-to-end system. Any disruption to chip supplies, such as a potential invasion of Taiwan by China, the world’s largest semiconductor supplier, could have a significant impact on Britain.