techUK responds to Parliamentary inquiry on the UK semiconductor industry
techUK welcomes the confirmation in the recent Digital Strategy that the Government will bring forward a Semiconductor Strategy. Semiconductors are a key component of the UK’s technology sector as such, the government should work with industry stakeholders to help the industry flourish.
Through the new Semiconductor Strategy the UK must undertake a strategic approach to how we support the sector with a view to the long term rather as a knee jerk reaction to the supply constraints heightened by the COVID-19 pandemic. This approach should seek to map our domestic sector, double down on where we lead in the global value chain and seek to ensure access to semiconductor components for UK manufacturers by working with our international allies and partners.
You can read techUK’s full response to the House of Commons BEIS Select Committee here and you can find a summary of the key points we have made below:
The UK is a world leader in design and IP and should seek to maintain this position: the UK’s great strength is in semiconductor design and IP where we are world leading. The UK is host to 110 design firms including among them several world leaders making the UK a significant player in the global value chain.
These companies are often centred around leading universities and supported by strong innovation and financial institutions as well as good governance and regulation. For example, in Silicon Fen, or the Cambridge Cluster. There are over 1500 companies in the technology and life science generating revenue of £14bn per annum.
It is vital the UK seeks to protect and support these clusters by ensure continued access to the best tech talent for UK based companies, ensure the UK’s IP regime is supporting exports as well as monitoring how the regime is protecting against the various forms of IP theft that could damage the industry.
The UK should double down on support new manufacturing techniques: UK based semiconductor companies have enabled revolutionary increases in computing power and power management allowing consumers to get access to more powerful and more energy efficient technology. The UK has a growing market of compound semiconductors. While 80% of semiconductors use silicon, 20% use non-silicon-based compounds of two or more elements.
The UK has a strong materials science R&D, design and manufacturing base in these technologies which have a variety of potential applications including in 5G and electric vehicles, but also in clean energy, defence and space technologies.
Ensuring these emerging technologies are supported by the UK’s R&D and innovation system as well as ensuring they gave access to finance will be vital to enabling them to grow and scale, helping the UK develop specialisms and market share in emerging manufacturing techniques.
We should look to secure and maintain the UK’s access to semiconductor supplies: through the G7 the UK should work with its partners to develop strategy to secure access to key categories of semiconductors and components. If supply chains tighten again the Government should consider the reintroduction of green lanes for technology products and business IT to ensure the fast tracking of key equipment into the UK . The Government could also identify a minister with a horizontal view of supply chains tasked with monitoring and responding to supply issues.
The Government should focus on the future of the semiconductor industry via access to talent, funding and incentives for investment: The semiconductor industry is hugely diverse and highly specialised. When designing a strategy to support the sector, while access to components must be considered, it is not possible to onshore such a diverse and specialised sector, even within large trading blocs such as the EU and US.
The UK should therefore focus on supporting its own specialisms and building on our position on the global value chain. This can be achieved by ensuring access to talent, financial support via the R&D system, expanding the coverage of the R&D tax credit to cover capital expenditure and the further modernisation of R&D incentives through the expansion of the Patent Box (PB).
Neil Ross
As Associate Director for Policy Neil leads on techUK's public policy work in the UK. In this role he regularly engages with UK and Devolved Government Ministers, senior civil servants and members of the UK’s Parliaments aiming to make the UK the best place to start, scale and develop a tech business.
