The UK needs to “identify commercial opportunities for UK semiconductor companies as part of partnerships with allied countries” to compete globally in the sector, a new report has argued.
The paper from TechUK has said that the UK needs to focus on its strengths to draw further investment into its semiconductor sector, which is the third largest in the world behind the US and China.
“Many semiconductor startups state access to large scale private investment as one of the most fundamental challenges,” it notes. Providing a “diverse range of funding options”, including both public and private funding, is crucial for UK AI firms to compete with those in other countries and to “capitalise on the UK’s strengths in the global supply chain”, it adds.
Export controls
TechUK also advises the government to prevent export control measures from stifling the growth of the sector by aligning the UK regime with that of allied countries. While export controls are an “essential part” of UK security, the report suggests, ensuring alignment with other nations prevents UK semiconductor firms from being put at a competitive disadvantage.
Consultation with those in industry is also crucial, it advises, “to gain a clear understanding of UK entities’ ongoing activities in affected regions”. Understanding how firms might struggle with sanctions and compliance is necessary to ensure continued competitiveness, the report’s authors add.
‘Provide adequate support’
“In cases where businesses are expected to face significant disruptions,” the report states, the government “should provide adequate support and clear guidance to mitigate these effects.”
“Additionally, the government should ensure that countries with which the UK has signed Free Trade Agreements (FTAs) are granted Open General Export Licenses [OGELs]. This would help ensure that the advantages of trade agreements extend to technologies affected by export controls.”
Dual-use categorisation of semiconductors has also made trading globally more challenging for some UK firms, “limiting the flexibility and market potential for these technologies”. The report acknowledges, however, that “escalating geopolitical tensions” and, in particular, Russia’s invasion of Ukraine has hit supplies of critical materials, including neon gas and krypton.
SME export support
TechUK’s report echoes the recommendation of the Institute for Manufacturing’s Semiconductor Infrastructure Initiative Feasibility Study to establish a National Semiconductor Centre.
This, it says, would help to achieve the range of other recommendations in the paper, including making connections to help UK SMEs to export. Less than 10% of them currently do, it notes.
“Offering new capabilities for international connections, R&D, mentorship or investment would equip UK semiconductor scale-ups with the tools needed to scale both within, and then outside of the UK.
“Here, the National Semiconductor Centre could play an important role alongside existing initiatives from UKRI and DBT to forge connections for UK businesses.”
Dedicated trade expertise is also “critical to the success” of the UK semiconductor industry, the authors argue. “Expertise in importing materials and exporting products” is required in a sector that demands the import of a range of physical materials, as is securing access to imports of the critical minerals that are essential in tech supply chains
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