Supplementary written evidence from Compound Semiconductor Applications Catapult (SEM0072)

 

Semiconductor analysis

Compound Semiconductor Applications Catapult, 14 June 2022

Background

Without access to semiconductors, the UK’s freedom to develop products, exploit new markets and deploy the latest technologies is severely limited. Semiconductors are critical to defence, telecoms, national security, prosperity and to meet our societal and environmental obligations, such as Net Zero.

Semiconductors have been central to most recent megatrends, from the PC in the 1990s to the Smart Phone in 2000s, and are critical to the next megatrend of Artificial Intelligence, with revenues forecasted below[1]:

The recent Innovation Strategy published by the government department for Business Energy and Industrial Strategy (BEIS) stated “Semiconductors have become an area of intense geopolitical interest. We will evaluate the nature of the support the government already gives the sector to support UK capabilities.”

This paper assesses the UK’s capability in semiconductors in relation to resilience, security and strategic advantage.

For the purpose of this paper, Strategic Advantage is defined as freedom to operate in the following key markets: Defence, Net Zero and Energy Security, Space, Quantum, Telecoms, Cyber and AI.

Please note: in the wake of recent developments, this paper broadens the definition of Net Zero to encompass Energy Security.


Smart products

Modern products are becoming increasingly ‘smart’ due to functionality provided by electronics and software. This trend is affecting everything from cars to household objects such as fridges and more complex products such as smart phones. In each case, a smart product requires different types of semiconductor devices, otherwise known as chips, with each type of semiconductor chosen because of its function.

Graphical user interface, application

Description automatically generated

In general, a smart product requires a highly complex silicon chip, denoted by Si in the diagram, which runs the software to provide the intelligence. The silicon chip is surrounded by other chips that provide specialist functions. For example, a compound semiconductor chip, denoted by CS in the diagram, might provide facial recognition or 5G. The OLED in the diagram is a type of semiconductor that provides display functions.

In general, it is impossible to build a smart product with just one type of semiconductor, and typically 3 types of semiconductor are required: silicon, compound and a third ‘other’ category. A family tree of semiconductor chips/devices is shown below, the ringed items indicate UK fabrication capability:

 

Some of these devices are described in the glossary at the end of the paper. Each type of semiconductor possesses a unique function as described below.

 

Segmenting semiconductors by material

Semiconductors can be segmented into three categories according to the material they use:

These categories are described below.

Silicon semiconductors

Silicon is the most established and ubiquitous of the semiconductor materials. It is also the world’s most researched material. As silicon is a single element, it is possible to create very large, pure crystals of silicon – making it ideally suited for large scale production of very complex chips.

Silicon fabrication can be segmented into 3 broad categories: legacy, mainstream and leading edge. These categories relate to lithography process, or node, which determines the size of transistor that can be fabricated. As the lithography process gets smaller, it is possible to fabricate more transistors on the same chip, providing higher functionality.

Transistor - definition

Transistors are the basic building blocks of electronics. A single transistor can be used as a switch, to operate a light for example. Advanced processing is required to fabricate millions of transistors on the same chip to create a computer chip that can run software.

The three categories of silicon semiconductors are described below.

Category

Lithography or node

(smallest transistor)

Typical chips

Cost to build a fab

Legacy

Introduced before 2000

> 90nm

Up to 10m transistors per chip

From single discrete transistors that switch power to complex chips with millions of transistors capable of running basic software

< £100m

Mainstream

Introduced between 2000 and 2010

28nm – 90nm

Up to 1bn transistors per chip

Highly functional chips capable of processing complex signals and running complex software

£200m £1bn

Leading edge

Introduced after 2010

< 28nm

Up to 100bn transistors per chip

 

Extremely complex chips that may combine multiple mainstream chips in one device, capable of running complex software

$5bn $20bn

 


Compound semiconductors

Chart

Description automatically generatedCompound semiconductors combine 2 or more elements from the Periodic Table to create a compound. The most important compound semiconductors combine elements from group III and group V of the Periodic Table to create III-V semiconductors, for example gallium and nitrogen form gallium nitride, chemical symbol GaN. It is also possible to combine elements from group II and group VI to form II-VI semiconductors. The table below lists some common compound semiconductors.

Type

First element

Second element

Binary III-V

(most important)

Group III (aluminium, boron, gallium and indium)

Group V (antimony, arsenic, nitrogen, phosphorous)

Binary II-VI

Group II (cadmium and zinc)

Group VI (oxygen, sulphur, selenium and tellurium)

Binary IV-VI

Group IV (lead and tin)

Group VI (sulphur, selenium and tellurium)

Binary V-VI

Group V (bismuth)

Group VI (tellurium)

Binary II-V

Group II (cadmium, zinc)

Group V (antimony, arsenic and phosphorous)

 

 

Although compound semiconductors are more complex than silicon, and correspondingly more expensive to manufacture, they exhibit properties that cannot be achieved with silicon. These properties fall into 3 categories: power, speed and light, which are described below.

Category

Typical chips

Typical applications

Power

(eg GaN or SiC)

Single power transistors or arrays of power transistors

Used for power electronics in electric vehicles and smart grids

Speed

(eg GaN or GaAs)

High frequency amplifier chips

Used to generate radio frequency (RF) signals for 5G, satellite communications and defence applications such as RADAR

Light

(eg InP or GaAs)

Lasers and sensors

Optical communications, missile guidance and quantum applications

 


Other semiconductors

The ‘other’ category of semiconductors encompasses a wide variety of materials and applications, some of which are described below.

Material / technology

Typical chips

Typical applications

OLED and AMOLED

Large area displays

Displays for laptops, smart phones and smart TVs

Perovskite

Large area solar panels

Solar panels

Thin film

Flexible computer chips (eg PragmatIC) – much lower cost than silicon but very limited functionality compared with silicon

Low-cost labelling of consumer products

2D (eg graphene)

Sensors (eg Paragraf)

High precision monitoring in harsh environments such as nuclear reactors or CERN

 

 

The table below estimates the proportion of each type of semiconductor by value in some typical products:

Product

Manufacturing cost

Semiconductor value

Si (%)

Mainstream and leading edge

CS (%)

Other (%)

 

iPhone[2]

$570

$350

80%

10%

10%

Tesla powertrain[3]

$3,900

$1,950

20%

65%

5%

Data centre server[4]

?

$5,600

90%

>5%

<5%

Please note: the semiconductor values were obtained from the referenced sources, whereas the proportions were estimated.

This paper considers each type of semiconductor on its merits, based on UK capability, strengths and strategic advantage.


Semiconductor supply chains

Semiconductor supply chains are complex, involving multiple processes and technologies delivered by specialist companies located around the world. A simplified representation of the supply chain is shown below:

Silicon semiconductors and compound semiconductors have similar supply chains, although they use different materials and processes to produce semiconductor chips. Typically, the value of the product increases by 5x or 10x from one stage of the supply chain to the next. The first 2 stages involve fabrication plants (fabs), which produce a circular wafer containing hundreds or thousands of die – these are individual semiconductor chips before any electrical connections have been added. The third stage, known as microelectronic packaging, involves separating the die from the wafer and adding electrical connections to enable the chip to be used in a system, and ultimately an application. The final 2 stages involve system design and integration to create products for end-user applications.

These stages are described below, referring to UK capability at each stage.

Semiconductor fabrication

The UK has around 25 semiconductor fabs, as shown in the map. Some of these fabs specialise in silicon chips, some specialise in compound semiconductor chips, while others do both. One fab (PragmatIC) specialises in flexible ‘thin film’ semiconductors.

 

 

 

 

 

 


UK capability in silicon semiconductors

The table below describes UK capability in silicon semiconductors, from R&D to design and fabrication, along with strategic advantage.

Silicon category

Device / application

UK R&D capability

UK design capability

UK fabrication capability

Strategic advantage

Legacy

> 90nm

 

Logic, MCU, MOSFET, diode, IGBT

 

High

 

Medium: design houses include Dialog and Ensilica

High: some fabs capable of 1bn devices / year

Medium: alternatives available

Mainstream

28 to 90nm

MCU, DSP, FPGA, RAM, FLASH, etc

Medium research at a handful of universities

High: good MCU and ASIC design (eg XMOS)

None

High: critical to all electronic products

Leading edge

< 28nm

GPU, AI, IPU, FPGA

Medium research at a handful of universities

High: world leading MCU design (eg ARM)

None

High: critical to advanced electronic products

 

UK capability in compound semiconductors

The table below describes UK capability in compound semiconductors, from R&D to design and fabrication, along with strategic advantage.

Compound semiconductor category

Device / application

UK R&D capability

UK design capability

UK fabrication capability

Strategic advantage

Power electronics

 

MOSFET for electric propulsion

High: over £300m invested by EPSRC since 2006

High: start-ups, SMEs and larger companies

Medium: mix of low-scale and medium-scale production

High: critical to Net Zero

RF/ microwave

 

RF amplifier for 5G / RADAR

High: over £300m invested by EPSRC since 2006

High: many SMEs and a few larger companies

Medium: low-scale production

High: critical to telecoms and defence

Photonics / quantum

 

Laser + detector for optical comms

High: over £400m invested by EPSRC since 2006

High: many SMEs and a few large companies

Medium: some large-scale wafer production but off-shored packaging

High: critical to telecoms, quantum and defence

 


UK capability in ‘other’ semiconductors

The table below describes UK capability in ‘other’ semiconductors, from R&D to design and fabrication, along with strategic advantage.

Other category

Device / application

UK R&D capability

UK design capability

UK fabrication capability

Strategic advantage

OLED

 

Displays

Low

Medium

None

Low: alternatives available

Perovskites

Solar cells

High: good research at a few universities

Medium

None

Low: alternatives available

Thin film

Flexible MCU

High: leading university research

High: supported by ARM

High: world leading thin film fabrication (eg PragmatIC)

Medium: potentially disruptive technology

2D

Sensors

High: graphene and other 2D materials

High: mostly start-ups as it’s an emerging technology

High: early-stage companies (eg Paragraf)

Medium: potentially disruptive technology

 

Microelectronic packaging

Microelectronic packaging - definition

Microelectronic packaging is the process of converting a semiconductor die into an electronic module that is suitable for integrating into a system:

The UK has around 20 packaging companies. Some of these companies offer independent contract services, while others form part of vertically integrated organisations and do not offer their services to the open market. This paper identifies some of the main packaging companies and assesses their capability.


Packaging processes

The main packaging processes include:

UK packaging companies

A packaging company is one that is capable of handling bare semiconductor die. The table below lists some UK packaging companies along with their capabilities, with data that was obtained from public sources.

Company

Location

Technology

No. Employees

Turnover

Alter Technology

Packaging & Assembly | Alter Technology (formerly Optocap) (wpo-altertechnology.com)

EH54 7DQ

Contract packaging and assembly

43 (2020)

Small

Bay Photonics

Bay Photonics Ltd - Advanced Photonics Assembly and Packaging - EPIC

TQ4 7RZ

Contract assembly of photonic integrated circuits (PICs)

12 (2020)

Small

Custom Interconnect Ltd

Custom Interconnect Limited (cil-uk.co.uk)

SP10 3JL

Contract packaging and assembly with significant capability in automotive and defence

131 (2021)

£15m (2021)

Dynex Semiconductor

Dynex High Power Semiconductors and Power Assemblies (dynexsemi.com)

LN6 3LF

In-house packaging of power electronic devices as part of a vertically integrated company

288 (2020)

£25m (2020)

Helia Photonics

Helia Photonics Ltd – The ultimate innovators in thin film optical coatings (helia-photonics.com)

EH54 7EJ

 

Contract specialist optical coatings and alignment to create photonic modules

18 (2020)

Small

Lumentum

Homepage | Lumentum Operations LLC

NN12 8EQ

In house photonics packaging and alignment to create high-speed optical communication modules as part of a vertically integrated company

326 (2020)

£395.5m (2020)

Microsemi

Locations | Company (microsemi.com)

NP26 5YW

Contract microelectronic packaging and assembly with significant capability in miniaturized RF and healthcare modules

99 (2020)

$102.2m (2020)

RAM Innovations

RAM Innovations | Your Gateway to Embedded Die Packaging (ram-innovations.com)

CH5 2DQ

Contract embedded die packaging

5 (2020

Small

Semelab TT Electronics

Semelab | High Performance Semiconductors | TT Electronics

LE17 4JB

Contract high reliability packaging with significant capability in hybrid RF and power modules

103 (2020)

£12.3m (2020)

TT Electronics

Engineered Electronics | Sensors, Power, Connectivity & Manufacturing | TT Electronics

Multiple sites including:

CF45 4SF

EX31 3AR

NE22 7AA

NP10 9YA

SO50 4ET

GL7 4DS

TS25 2BQ

OL4 3JA

S4 8BT

Contract high reliability packaging with significant capability in hybrid sensor modules

Note: TT Electronics is a highly diversified electronics manufacturing company, not just packaging

4,578 (2020)

£431.8m (2020)

 

UK packaging capability

Assessing the capability of UK packaging companies yields the following analysis:

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

UK capability covers a wide range of technologies (power electronics, RF and photonics) and diverse markets (aerospace, automotive, healthcare and defence).

Many of the companies are niche and very small, creating challenges for scale-up.

Historically, agencies such as Innovate UK have supported process development rather than investment in capital equipment, which is necessary for scale up. There’s an opportunity to provide incentives to invest in capital equipment through loans.

Some packaging processes are labour intensive, especially photonic alignment, and have been offshored; there’s an opportunity to develop automation techniques, making it economically viable to scale-up and grow UK capability.

Microelectronic packaging tends to be capital intensive and R&D intensive, resulting in protracted investment decisions.

International investments could lead to acquisition of UK companies and offshoring capability.

System integration

The final stages of the supply chain involve system design and integration to create products for end-user applications:

According to ESCO[5], the UK has around 5,000 companies that design and manufacture electronic systems, with approximately 90% being start-ups and SMEs and the remaining 10% being large and/or multi-national companies. In 2012, the electronics systems community employed more than 850,000 people in the UK, contributing over £78bn to GDP. In 2019, the community employed around 1 million people across 45,000 companies (not all manufacturing), generating over £100bn in revenue[6].

The employment distribution of electronic and electrical engineers provides a proxy for the relative strength of sectors involved in electronic systems design and manufacturing:


Many of the sectors in the ESCO report map directly to the key markets considered in this paper:

Key Market

Sectors in ESCO Report

Defence

Defence

Net Zero and Energy Security

Transport and Utilities

Space

Nearest match is likely to be Manufacturing

Quantum

Unlikely to be considered by ESCO in 2012

Telecoms

Utilities and Manufacturing

Cyber

IT

AI

IT

 

These companies are highly competitive, using just-in-time stock control to minimise the value of components, including semiconductors, in their inventory. Components are purchased on the open market; the main purchasing criteria are cost and lead-time. This means that any UK supply chain intervention needs to be cost competitive at a global level – UK companies will not pay more for a semiconductor manufactured in the UK if it is available at lower cost elsewhere.

Case Study: automotive supply chain crash

According to the Society of Motor Manufacturers and Traders (SMMT), the UK automotive industry reported a 41% downturn in production in 2021. This was partly caused by the availability of mainstream silicon semiconductors, with one UK manufacturer citing a lead time of over 24 months for a silicon chip known as a CAN Bus Controller. Although this chip is valued at a few £s, it is not possible to complete production of a vehicle valued at £30k without it.

What was the primary cause of the supply chain crash?

In this instance, there were several causes that conspired to create a ‘perfect storm’. Firstly, the automotive industry operates ‘just in time’ procurement to minimise the value of stock in warehouses, with little buffer stock to absorb supply chain shocks. Secondly, the COVID pandemic created a surge in demand for consumer electronics as society was urged to work from home; this drove the demand for high-margin silicon chips used in tablets and laptops at the expense of low-margin silicon chips such as CAN Bus Controllers. Thirdly, an automotive chip plant in Japan suffered a fire damage, halting production of automotive chips.

The combination of these 3 events caused massive disruptions to automotive supply chains.

 

Paper prepared by:

Martin McHugh, CEO, Compound Semiconductor Applications (CSA) Catapult

Dr Alastair McGibbon, Head of Business Development, Compound Semiconductor Applications (CSA) Catapult

Dr Andy G Sellars FIET, Strategic Development Director, Compound Semiconductor Applications (CSA) Catapult


Glossary of semiconductor chip/devices

Module/chip

Material

UK capability

Notes

Standard integrated circuits (ICs)

Si

System design using standard ICs

Limited fabrication

Standard ICs tend to provide basic functions, such as amplification, and tend to be commoditised.

The UK has expertise in system design using standards ICs.

Microcontroller /

Microprocessor

Unit (MCU)

Central Processing

Unit (CPU)

Si

Chip design

System design using MCUs

No fabrication

Microprocessors are generic ‘machines’ designed to run software. This means they are very flexible, fit for multiple applications, but they are not optimised to solve a particular function.

Traditionally MCUs were optimized for speed (eg Intel) or power efficiency (eg ARM) for battery powered products, but low power MCUs have recently achieved higher speeds without sacrificing power efficiency.

The UK has expertise in microprocessor design (eg ARM), system design using MCUs and software, but no fabrication capability.

MCUs typically cost in the region $10m-$100m to design, and MCU devices typically sell for $1-$50.

Memory

(RAM, ROM,

EEPROM)

Si

System design using memory

No chip design or chip fabrication

Memory chips can be categorized as ‘volatile’ (they forget their contents when switched off) or ‘non-volatile’ (they remember their contents when switched off).

RAM is volatile, but designed for very fast computation. DRAM and SRAM are variants of RAM.

ROM is non-volatile, slower, and some variants can only be programmed once.

EEPROM (flash memory) is a reprogrammable version of ROM, and typically used in USB sticks.

Memory chips tend to be commoditised and dominated by a few vendors (eg Samsung).

Digital Signal

Processor

(DSP)

Si

Chip design

System design using DSPs

No fabrication

A DSP is a specialised version of a microprocessor optimised to process digital signals such as voice or video.

One form of optimisation is to queue the instructions in a pipeline. Another form of optimisation is very fast multiplication followed by addition, as these operations are repeated many millions of times.

Some DSPs will include memory (RAM) on the chip.

Graphics

Processor

Unit

(GPU)

Si

Chip design

System design using GPUs

No fabrication

A GPU is an optimised DSP designed to process high resolution video signals.

Some GPUs will include memory (RAM) on the chip.

Artificial

Intelligence

Processor,

Intelligence

Processor

Unit (IPU)

Si

Chip design

System design using IPUs

No fabrication

An IPU is a specialised version of a microprocessor optimised to mimic the neural function of a brain.

One form of optimisation is to perform weighted multiplications and additions, as these operations are repeated many millions of times in a neural network.

Some IPUs will include memory (RAM) on the chip.

IPU design is likely to exceed $100m.

Application Specific

Integrated Circuit

(ASIC)

Si

Chip design

System design using ASICs

No fabrication

An ASIC performs a single function very quickly and very efficiently. The design cost for an ASIC is typically $10m-$100m, but the fabrication costs can be as low as $10 per chip. However, an ASIC is designed to provide a single function (eg a modem is an example of an ASIC).

System on chip

(SoC)

Si

Chip design

System design using SoCs

No fabrication

A SoC combines many chips together in one chip and represents an ‘electronic sub-system’. Typically, a SoC will combine an MCU, RAM, ROM and an ASIC.

Field

Programmable

Gate Array

(FPGA)

Si

System design using FPGAs

No fabrication

An FPGA is a generic chip that can be programmed to provide the combined functionality of several other chips, such as standard ICs, microprocessors, DSPs etc. It’s possible to combine these separate chips on the same FPGA.

However, FPGAs have limited capacity (limited number of gates), restricting how many functions can fit on the same chip. Also, they tend to be more expensive than ASICs, larger and less power efficient.

The main advantage is that FPGAs can be reconfigured, providing a high degree of flexibility. They are often used to create a prototype chip, that is then fabricated as an ASIC to reduce cost and improve power efficiency.

Power devices

Si and CS (GaN, and SiC)

Chip design and fabrication

System design using power devices

Power devices are used in electric vehicle traction systems, rail traction systems and smart energy grids. The UK has major strengths in this area.

RF transmitter

RF receiver

Si CS (GaN)

Chip design and fabrication

System design using RF devices

3G and 4G systems used Si chips, but 5G and beyond will increasingly use GaN.

Optical fibre comms

CS

Chip design and fabrication

High speed laser chips transmit pulses of light down optical fibres. Similar chips are used to convert the optical pulses into electronic signals at the receiving end.

Sat comms

CS

Chip design and fabrication

System design and manufacture

Satellites increasingly use CS to communicate to other satellites and to earth.

Head-up

display

CS

Chip design and fabrication

Head up displays use miniaturised LED arrays. The UK has leading companies developing this technology.

Facial recognition

CS

Chip design and fabrication

Facial recognition uses invisible lasers that operate in the infra-red, coupled with corresponding infra-red sensors.

Quantum encryption

CS

Chip design and fabrication

The UK is leading research into new CS chips that exploit quantum properties, such as encryption.

Solar panels

Si and CS

Chip design and fabrication

Earth based solar panels tend to be fabricated in Si, whereas space based solar panels (for satellites) are fabricated in CS. CS solar cells are twice as efficient as Si solar cells, but are correspondingly more expensive to fabricate.

 

 


[1] PowerPoint Presentation (appliedmaterials.com)

[2] Apple iPhone 13 Pro Teardown | TechInsights

[3] PowerPoint Presentation (cargroup.org)

[4] PowerPoint Presentation (appliedmaterials.com)

[5] Electronics Systems Community (ESCO): analysis of companies involved - GOV.UK (www.gov.uk)

[6] Electech sector: a roadmap for the UK – UKRI