Thursday, December 22, 2022

The government is putting UK firms at “significant risk” by failing to invest in semiconductors

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According to a report, the government should partner with strategic allies to secure lucrative investment in the UK chip industry

Britain needs to increase investment in semiconductor chips as international competition mounts, a new report has found.

Semiconductor shortages have plagued automakers around the world after factories that made the electronic components had to close for months during the pandemic.

The gap continues as modern cars rely on these chips to control a variety of systems including anti-lock braking and satellite navigation.

But the government is over-relying on other countries to produce semiconductors, putting UK companies at “significant risk”, according to a report by the Business, Energy and Industrial Strategy Committee.

It said the government should partner with strategic allies to secure lucrative investment in the UK chip industry.

MEPs on the committee highlighted cooperation with the US under the CHIPS law and cooperation with Taiwan as possible areas that could offer opportunities for the industry.

The CHIPS and Science Act is a US federal law.

Building international partnerships is something that needs to be explored in an overdue semiconductor strategy, the committee said, adding that the government should publish without delay.

The report also suggested that a single government agency should take responsibility for promoting the UK’s semiconductor industry and for security of supply.

Darren Jones, Corporate, Energy and Industrial Strategy Committee. Chairman, said: “The Government is putting UK companies at significant risk by failing to take action to support the semiconductor industry.

“Other countries are investing in the resilience of their semiconductor supply chains, but ministers in the UK are not even able to publish their semiconductor strategy in time.

“Semiconductors are essential components of modern technology and in the infrastructure required to achieve net zero. The industry expects high growth in the coming decades, which is an opportunity for us to leverage our strategic lead in design and low-power compound semiconductors.”

The committee’s report says it’s not clear that the support currently on offer from the government is anywhere near the scale needed to get things moving, adding that the semiconductor strategy is “to facilitate design and build of new factories” – related to semiconductor production facilities.

Support for an “open factory” in South Wales, which would allow any company to produce at the facilities, should also be considered, the report said.

Concerned about a global shortage of semiconductors following the Covid-19 lockdowns, governments around the world, particularly in the US and Europe, have poured tens of billions of dollars into semiconductor investments, including the construction of new fabs.

Globally, the semiconductor industry is worth more than $500 billion and is expected to grow to more than $1 trillion by 2030, despite a recent fall in demand.

Compound semiconductors could play an increasing role in this. Not only are they critical for core components in cars, but also for washing machines and military applications for green technologies.

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