UK to invest $1.3bn to build chip supply chains

Reuters/Androniki Christodoulou

Britain announced £1 billion ($1.26 billion) of investment for its semiconductor sector on Friday in a long-awaited strategy that aims to strengthen the domestic industry and chip supply chains.

The strategy focuses on Britain’s role in designing semiconductors, used in everything from cars to smartphones and washing machines, the government’s newly formed department for science, innovation and technology (DSIT) said.

“Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage,” Prime Minister Rishi Sunak said in a statement.

Britain will invest £200 million in 2023-25, growing to up to £1 billion in the next decade.

Sunak is in Japan for a meeting of leaders of G7 nations, where he has agreed with Japan’s Prime Minister Fumio Kishida to launch a “semiconductors partnership” to cooperate on research and bolster supply chain resilience. The UK has a similar agreement with South Korea.

The emphasis of UK strategy was on design and research, rather than making the semiconductors, although it said it would announce plans to support investment in the chip manufacturing sector by the autumn.

The UK strategy comes after chip shortages worldwide during the Covid-19 pandemic disrupted a range of industries and hit car production, though they have now started to ease.

The United States announced $52.7 billion in chip subsidies last year, while a European Union chips law proposes to bring about €43 billion ($47 billion) in investments. Others including Japan, India and South Korea have unveiled their own semiconductor strategies in recent years.

Those moves, partly in response to chip shortages and partly to compete better with Chinese technology efforts, have spurred calls in Britain for the government to move faster.

A report by a panel of lawmakers said last year that the UK’s lack of an end-to-end supply chain for semiconductors made it particularly exposed to any future disruption to chip supplies, such as if China were to invade Taiwan, the world’s biggest semiconductor supplier.