The UK’s semiconductor industry is at risk without a strategy to ensure the security of the supply chains for chips, MPs on the Business, Energy and Industrial Strategy (BEIS) committee have warned.
The committee called on the government to “urgently” publish its semiconductor strategy, which was first announced two years ago, or otherwise risk the development of the UK’s burgeoning industry.
The committee published a response to the government’s stocktake of the industry in November 2022, but it expressed disappointment that its recommendations had not been fully addressed yet.
The key recommendations included better co-operation with allies to safeguard supply and to secure inward investment. The committee also cast doubt on whether government support for the industry was sufficient to have any meaningful effect.
China is the largest producer of semiconductors globally, followed by South Korea. The US also has a manufacturing base that largely specialises in producing complex, high-value chips.
In recent years, the sector has faced significant challenges, with market distortions and geopolitical pressures around technology growing alongside the world’s demand for chips. These factors have led to a renewed spate of investments around the world, as countries compete for influence and control over critical semiconductor technologies.
The Covid-19 pandemic unleashed a global chip shortage due to supply chain disruptions and soaring demand that is only just starting to subside. The increase in demand that followed the move to remote working, along with the ongoing trade war between the US and China, has also caused significant disruption to the industry.
The committee admitted that semiconductor supply chains are “inherently global” and the that the UK “cannot and should not” aim to meet its semiconductor needs domestically. Instead, the sector should focus on the UK’s strengths in R&D, design and compound semiconductors.
One of the UK’s most successful firms in this area is Arm, a semiconductor and software design company based in Cambridge, that created the architecture that underpins the vast majority of chips found in smartphones.
Committee chair Darren Jones said, “It’s a poor excuse for the government to hide behind its failure to publish a semiconductor strategy for not responding to our practical recommendations fully.
“Countries across the globe have grasped the importance of securing semiconductor supply chains for their futures, why haven’t we? While others race ahead, ploughing billions into setting up fabs or industry support, we’re not even at the starting line.
“Two years in the making, but still no strategy. Further delay would be an act of national self-harm. With 40 days until the budget, the strategy must be published urgently so that sufficient funds can be put behind it and used effectively.”
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