Semiconductors are chips that are now used in a huge number of different products, from smartphones to cars and hospital equipment. With these items now in huge demand globally and many looking to enter the lucrative market, the battle is on for the UK to save its semiconductor industry.
What’s Happened Recently?
The recent announcement of a £1 billion support package from the UK government for the semiconductor industry has received a mixed reception. Prime Minister Rishi Sunak announced this move as part of a ten-year plan that’s designed to make the country a technology superpower. However, some analysts have claimed that it’s not enough and that the UK runs the risk of being left behind other countries, with the US and the EU confirming support packages substantially larger than the British equivalent while Ireland has received huge investment from private companies.
Part of the reason that industry experts are looking for more help can be seen with the fact that Cambridge chip designer Arm was sold to a new Japanese owner and is now listed on the New York stock exchange, removing what was once one of the country’s top assets in the semiconductor field. They fear that others will follow the same route due to a lack of investment. Earlier this year, Pragmatic Semiconductor was one of the British companies warning that they might need to move their operations abroad unless help is made available so that staying in the UK makes economic sense. So why does this matter?
The Economic Impact
The idea of the support package is to allow this industry to grow and boost the national economy, which would stay at the front of the cutting-edge technology industry. At the moment, it’s believed that the UK produces 0.5% of the global supply of semiconductors. This gives the country an £11 billion share of an industry that’s worth £490 million overall, meaning that there is a large amount of scope for future growth.
A look at the economic calendar for the UK reveals the major upcoming dates for areas such as the unemployment figures and the balance of trade. These are key indicators of the country’s economic well-being that are used by investors to gauge the current situation. A healthy and growing semiconductor could make a big difference to these numbers and encourage investors to take a closer look at Britain.
This new investment plan has been created to help companies focus on research and design, which are areas where British firms have excelled. In this way, the government investment is lower than it would have been for a large manufacturing plant, as the machines used for the manufacturing process would require a far greater investment.
With only a couple of dozen chip manufacturing plants across Britain, this isn’t the labour-intensive industry it is in some other parts of the world, but the industry is said to employ more than 11,000 people in the UK. If we look at the example of Arm, they currently employ just under 3,000 British workers, who make up about half of their total workforce.
The potential benefits to have a bigger semiconductor industry in the UK can’t be ignored, but we’ll need to wait to see if the current support package is going to be enough to provide the stimulation this sector needs.