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UK ‘missing out’ on semiconductor inward investment as international competition heats up

28 November 2022

The Government should secure partnerships with strategic allies to secure lucrative inward investment in the UK semiconductor industry, according to a new report from the Business, Energy and Industrial Strategy Committee.

MPs on the Committee singled out cooperation with the US under the CHIPS Act and engagement with Taiwan as possible areas that could yield opportunities for the industry.

Making international partnerships was something to be explored in an overdue semiconductor strategy, the Committee said, adding that the Government should publish without any further delay.

Chair's comment

Committee Chair Darren Jones said,

“The Government is putting UK plc at significant risk by failing to take action in support of the semiconductor industry.

Other countries are investing in the resilience of their semiconductor supply chains yet Ministers in the UK can’t even publish their semiconductor strategy on time.

Semiconductors are essential components of modern technology and in the infrastructure required to reach net zero. The industry is expecting high growth in the coming decades, which is an opportunity for us to leverage our strategic lead in design and in energy-saving compound semiconductors.

Following the decision to require Nexperia to divest from its Newport site, Ministers must proactively engage with potential buyers to secure the future of our vital semiconductor cluster in South Wales.”

The Committee’s report says that ‘it is not clear that the support currently offered by the Government is at anything like the scale which is needed to make a difference’. It said, the semiconductor strategy should include ‘facilitating the design and construction of new fabs’ – referring to semiconductor production plants. Supporting a ‘open fab’ in South Wales, that would allow any firm to produce at the facilities, should also be considered, the report said.

Concerned by a worldwide shortage of semiconductors following Covid-19 lockdowns, governments across the world, particularly in the US and Europe, have been ploughing tens of billions of dollars into semiconductor investment, including establishing new fabs.

Globally, the semiconductor industry is worth more than $500bn and, despite a recent dip in demand, is expected to expand to over $1tn by 2030. Compound semiconductors could make up an increasing share of this. They are critical for core components in many items ranging from cars to washing machines and military use to green technologies.

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