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Creating a UK semiconductor ‘super cluster’ to drive growth and exports for the long term

Date: 27.11.2024

Topics: Clusters, Supply Chains

RF supply chains
A man wearing a blue blazer and light blue shirt stands in an office environment. He is holding a pair of glasses in his left hand, looking to the side as if engaging with someone off-camera. The background features elegant geometric patterns. - CSA Catapult

Martin McHugh, CEO at CSA Catapult explains the steps needed to transform the UK's semiconductor industry and drive economic growth for the long term.

The UK semiconductor industry is at a critical stage in its evolution.  

As Europe, the USA, China, Japan and South Korea invest, there is a significant risk of the UK being left behind.  

Earlier this month, the EU invested €170m in 27 Chips Competence Centres to improve technical expertise and boost skills. In the US, the government is fast-tracking $39 billion-worth of subsidies to support its semiconductor industry.   

The UK cannot compete financially with these countries.  

The UK industrial strategy provides an opportunity to capitalise on our strengths and chart a new course for the industry. These strengths include chip design, R&D, IP and compound semiconductors. 

Semiconductors are essential to delivering the industrial strategy. They are everywhere in modern life and underpin several key industries, including automotive, defence, aerospace, health, telecoms and manufacturing. 

CSA Catapult, as the UK’s authority on compound semiconductors and their commercialisation, has published eight recommendations to support our existing areas of strength and deliver growth. 

A close-up view of a microchip on a circuit board. The microchip is centrally positioned and connected to a network of glowing blue lines representing electronic pathways on the dark blue-toned circuit board. - CSA Catapult

Make semiconductors a national priority

Firstly, we recommend that semiconductors are recognised as a subsector of the industrial strategy. 

Semiconductors are a critical technology. They underpin our economy, national security and everyday technology. 

Without them, we would not have smartphones, electric cars, solar panels, satellites, medical scanners and much more. 

Semiconductors are being used to build green technologies and help tackle climate change. The industry must be given the attention and investment it deserves.

Strengthen and co-ordinate activity

There are over 200 dedicated semiconductor companies in the UK, who collectively generate £9.6 billion in revenues and employ 15,000 people. 

Clusters of expertise are in South Wales, the South West, Cambridge, the North East, Northern Ireland, and Scotland. 

However, the industry lacks a single, independent, unified voice to bring these clusters together, promote the sector and attract international investment. 

That is why we’re calling for the creation of a National Semiconductor Institute to strengthen, lead and co-ordinate targeted activity across the UK. 

A key role of the Institute will be to grow existing semiconductor clusters in the UK and unleash the full potential of our cities and regions. 

Investing in infrastructure to build a UK semiconductor super cluster

To grow our clusters, we need investment. We have laid out a £305m Semiconductor Challenge Fund to provide UK clusters with critical infrastructure.  

This would include a £150m investment in regional projects such as a UK Centre of Excellence for quantum photonic integrated circuits (PICs) and a world-first centre for AI-powered electronics, photonics, quantum and design automation (AI.EPQDA). 

Our recommendations also include investment in compound semiconductor manufacturing and infrastructure, specifically open access fabrication plants (fabs). 

Open access fabs specialising in silicon carbide (SiC), gallium nitride (GaN) and gallium arsenide (GaAs) will remove commercialisation and scale-up barriers for start-ups and SMEs and allow them to grow quickly and efficiently.

Creating a talent pipeline

The UK’s semiconductor sector can only grow if we have the right people with the right skills driving it forward. 

There is currently a shortage of skilled engineers with the knowledge and experience to work on the next generation of semiconductor technologies. 

The role of a National Semiconductor Institute will be to coordinate policy development across the UK and close this skills gap. 

We also recommend the UK and devolved governments invest in long-terms skills plans to create programmes and pathways that attract a greater and more diverse talent pool into the industry. 

Removing barriers

To grow the UK semiconductor industry, we must also provide opportunities for the sector to support national interests, such as prioritising UK companies for defence and digital infrastructure contracts.   

We must also remove barriers by increasing access to funding, improving regulation and strengthening IP. 

It is encouraging to see the government make progress on the National Wealth Fund and unlocking UK pension funds to increase access to both public and private funds.  

The UK semiconductor industry has enormous potential. It is growing fast and is estimated to be worth between £13 billion and £17 billion by 2030. 

Our recommendations will build on existing strengths, support regional clusters and drive growth in this critical sector across the UK, positioning us as a global leader in semiconductor technologies. 

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CSA Catapult response to the UK's industrial strategy

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