TechWorks, the UK tech trade body, has come up with a plan to boost the UK’s semiconductor presence in world markets.

TechWorks notes that the UK has 160 chip design companies and 21 manufacturers and employs 15,000  people but accounts for only 2% of the global market, contributing £10 billion annually in a $600 billion market. “The UK’s share could grow exponentially with the right investments, infrastructure, and policies,” says TechWorks

The plan to do that, over ten years, is based on five action points:

1. Grow Globally Competitive Chip Companies:

Build and sustain a new generation of fabless chip companies to create $100 billion in value within ten years, with a longer-term goal of $1 trillion. Grow new or existing compound semiconductor companies to be top 10 players in this emerging international market.

Strengthen partnerships with global foundries and foster domestic production capabilities in silicon photonics and compound semiconductors. Achieving global leadership requires significant increase in targeted fund of funds equity investment for R&D and operations scale-up.

2. Scale-up for Manufacturing:

Enhance the production capabilities of UK manufacturers, particularly in photonics, power electronics, and quantum,
Action: Introduce strategic funding mechanisms, such as government-backed loans or tax incentives, to enable capital expenditure on advanced production equipment. Aim to scale up promising companies in the UK instead of relocating overseas due to constraints.

3. Invest in Talent Development:

Create a robust talent pipeline by attracting international expertise while cultivating domestic skills.

Action: Address the significant shortfall of engineers through enhanced apprenticeships, stronger university-industry collaboration, and policies to reframe engineering as a prestigious, rewarding career.

4. Create a National Semiconductor Institute with impact:

Establish an entity inspired by institutions such as Belgium’s IMEC, serving as a hub for R&D, innovation, design and prototyping supporting emerging technologies like quantum, AI and clean energy.

Action: The institute should oversee a UK pilot line for innovation and advanced packaging, innovation in design, coordinate funding allocation, and develop alliances with international research bodies.

5. Enhance Domestic Demand:
Strengthen UK supply chains and incentivise domestic use of UK-designed chips.
Action: Target government procurement and investment initiatives toward sectors such as defence, clean energy, and telecommunications, ensuring resilience in critical national infrastructure.

Challenges and the Road Ahead

Global Competition

The UK faces stiff competition from nations implementing robust semiconductor strategies, including the US CHIPS Act and similar EU and Asian initiatives. These programs provide substantial subsidies for semiconductor companies, which could further marginalise the UK.

Financial Gaps

The report highlights a significant funding gap in venture capital, particularly for later-stage investments. While the UK has a vibrant startup ecosystem, many promising companies are acquired by US firms before they achieve scale. Incentivising ambitious and patient capital investment through mechanisms like the British Business Bank could address this gap and ensure long-term growth.

Policy Realignment

Reforming existing policies to favour targeted investments over generic grants, such as revising the R&D tax credit framework, could drive resources toward high-growth potential sectors like semiconductors. Additionally, policies enabling secondary equity sales could alleviate financial pressures on founders and early-stage employees, encouraging long-term commitment.

Conclusion: A Call to Action

The semiconductor sector offers the UK a pathway to technological leadership and economic resilience. With decisive action, the UK could be transformed into a semiconductor powerhouse, leveraging its innovation, R&D, and design strengths to build a globally competitive ecosystem.

By prioritising the five pillars outlined in the TechWorks Semiconductor Leadership Group strategy, the government can ensure the UK captures its fair share of the $1.9 trillion semiconductor market. This ambitious yet achievable plan aligns with the nation’s broader goals of fostering high-value jobs, bolstering national security, and cementing its position as a leader in the global technology landscape.