19 May 2023
If you are covering the UK’s semiconductor strategy, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“The UK’s semiconductor strategy is a realisation of quite how late to the game the government has been in this sector. The fact it has committed £1bn over the next decade is cementing itself as a laggard in the semiconductor world.
“To put that figure into context, a brand-new semiconductor fabrication plant costs in excess of £10bn, and that doesn’t account for the cost fo building the appropriate ecosystem, such as suppliers or infrastructure, much of which takes a lot of time to be put into place, not to mention a highly skilled labour pool.
“From a global context too, the UK will continue to be left behind. The US Chips Act directs $280bn of subsidies over the next decade, while Europe has committed around $50bn over the same time frame. Over just next five years, China will spend in excess of $143bn and India has committed $30bn. Put simply the UK’s effort is a drop in the ocean and is a case of too little too late.
“It is ultimately a shame the country did not wake up to this industry sooner. The UK has great access to transport (ports/airport), and while it was never likely to challenge established players such as China, Taiwan or Korea, as part of the EU it could have at least had a seat at the table. However now the UK is subscale.
“While it is better than doing nothing and will give an element of supply chain security, the strategy should instead be looking at investing in the equipment makers, rather than the production industry itself. The UK has the R&D capabilities to play a major role in part of the process of manufacturing, but they will never be an industry leader themselves.”
