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December 5, 2022

New chip hub could be formed as part of UK government semiconductor strategy

After being criticised for a lack of support for chipmakers, ministers are looking at setting up a national hub for the semiconductor industry.

By Matthew Gooding

A new national hub for chipmakers could be formed as part of the UK government’s semiconductor strategy, it has been revealed.

The UK government is making moves to boost its semiconductor sector (Photo by Kirill Burtasovsky/Shutterstock)

The Department for Digital, Culture, Media and Sport (DCMS) has launched a feasibility study into the formation of a national institution which could boost the infrastructure underpinning the UK’s industry through the government’s upcoming semiconductor strategy. 

News of the study comes less than a week after a highly critical report into the UK government’s approach to the semiconductor industry was released by MPs on the Business Energy and Industrial Strategy (BEIS) committee, which said the government has “overlooked” the industry.

It called for the semiconductor strategy, which has been more than two years in the making, to be published immediately by DCMS.

What is the new UK government semiconductor strategy?

A DCMS spokesperson told Tech Monitor last week that the strategy would be published “as soon as possible”, and today’s announcement says it will aim to “unlock the full potential of British microchip businesses, support jobs and skills to grow the UK’s domestic industry and ensure a reliable supply of semiconductors”.

The research project announced today will look into the feasibility of new national initiatives to bring the nation’s industry together to tackle shared challenges and help businesses scale up. 

It will look at whether better access to prototyping and manufacturing facilities for chip firms is needed to tackle barriers to innovation and grow the industry. It will also cover opportunities to make specialist software tools more available for start-ups and ways to develop cutting-edge packaging processes, the point in the supply chain where chips are prepared for use.

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Digital secretary Michelle Donelan said: “We rely on semiconductors – they are in everything from our smartphones, kitchen appliances, and cars ahrough to the supercomputers that support our weather reporting, energy sector and countless other areas of our economy.

“In the UK we are leading the world in areas including design and research. We want to build on these successes and keep our semiconductor sector on the cutting edge.

“This study will help us meet our ambition and could lead to a new national institution and greater research facilities.”

A DCMS spokesperson said the study will consider how to improve infrastructure in five key areas: industry coordination, silicon prototyping, open-access manufacturing for compound semiconductors, advanced packaging and intellectual property. 

The proposed initiative is one of many options under consideration and does not represent the full breadth of the strategy, the spokesperson said, adding that the strategy’s publication was not contingent on the research project being completed.

It is hoped the study will set out the delivery model a national initiative could take to have the most positive impact on the industry, including whether or not the different infrastructure capabilities are centralised in one organisation. 

Bidding on the contract for the feasibility study is now open through the Crown Commercial Service procurement agency. The contract has a budget of £700,000-£900,000.

Can the UK salvage its semiconductor industry?

The government is seemingly taking action in the wake of Bthe EIS committee report published last week, which criticised the support currently on offer to the sector. Other countries, as well as the European Union, have been investing billions in domestic chip-building capacity in the wake of the global chip shortage which has crippled many industries in recent years, but in the UK manufacturing activity remains minimal.

“It is not clear to us that the support or attention currently offered by Government is at anything like the scale which is needed to secure our supply of semiconductors and to deliver the future prosperity of the semiconductor industry,” the report says.

“The government must not overlook the semiconductor industry any longer. Whilst we recognise the difficult fiscal picture in the UK, we call on ministers to set up a new sector deal as the vehicle to work with industry to agree UK priorities and the best use of any public funds or support.”

Potential locations for a new hub could include Cambridge, home of the country’s most important chip company, design behemoth Arm, as well as several smaller players in the market. If the focus is to be on manufacturing, it may make sense to locate it in South Wales near the Newport Wafer Fab, Britain’s largest chip manufacturing plant, and the semiconductor research cluster which centres on Cardiff University.

The government recently decided to unwind the takeover of Newport Wafer Fab by Chinese-owned Nexperia on national security grounds, leaving the ownership of the site uncertain. Placing a national semiconductor hub there may be one way to help secure its future.

Read more: The European Chips Act has already failed

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