UK PM Sunak plans to allocate just £1bn to semiconductor industry

A source close to the government has said that Prime Minister Rishi Sunak is preparing a £1 billion ($1.24 billion) investment into the country’s semiconductor industry, as chip companies threaten to take business elsewhere if they don’t receive support from the government.

The announcement is expected to be made during next month’s G7 summit in Japan where the Prime Minister will also present the much anticipated UK semiconductor strategy. It’s been over a year since Lord Callanan told the House of Commons that the Department for Digital, Culture, Media and Sport was working on a semiconductor strategy “to be published shortly”.

Although this is a welcome move, it’s not exactly what stakeholders in the industry would have been hoping for and the source revealed that the newly formed Department for Science, Innovation and Technology (DSIT) was pushing for a larger investment.

This will help the UK better compete with other nations that are heavily investing in their semiconductor industry. The USA, for instance, developed the CHIPS Act pledging $52 billion in subsidies and other incentives to encourage semiconductor companies to build their fabrication plants in the country and to facilitate research into chip technologies and workforce education.

The European Union has also completed the development of the European Chips Act which has a €43 billion ($47 billion) provision to help nations in the EU grow their semiconductor industry. The UE has set out plans to double the current global market share held by European countries.

Japan has also announced plans to invest 330 billion yen ($2.47 billion) into just one new semiconductor company named Rapidus, to facilitate the development and production of advanced 2nm semiconductors.

However, Richard Gordon, vice president for Semiconductors & Electronics at Gartner believes the investment makes sense since the semiconductor industry in the UK is not as big as some of the other nations.

“The UK does not have a semiconductor industry of any consequence from a size point of view (and never will have) so there is absolutely no point in announcing tens of billions in support,” the VP said. “What would we do with it? We’re not going to build high volume fabs to compete with Taiwan, South Korea, or the USA, or even China.”

Gordon also believes he has an idea of what the anticipated semiconductor strategy will be. “We already know what the 'UK chip strategy' will be; it will cherry pick a few areas where we think we might have some expertise (and can claim to be 'leading'), but which does not require multi-billion investment, such as compound semiconductors,” he said.

Whether or not the investment is enough to appease the country’s semiconductor industry remains to be seen.