Sat, May 20, 2023 page12

• UK touts ￡1bn chip investment plan

  TARGET: The government will focus on areas where the UK has a comparative edge rather than compete with other nations that are investing much more in the sector

  • Bloomberg
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  The UK is committing ￡1 billion (US$1.24 billion) to bolstering its domestic semiconductor industry over the next decade, funding a long-anticipated strategy to engage in the battle for dominance in the global chips market.

  The investment is a fraction of what other governments have pledged to the sector after COVID-19 pandemic-era shortages upended global supply chains and underscored the world’s reliance on Asia for chips used in everything from mobile phones to laptops and other home electronics.

  The US and the EU have in recent months pledged about US$50 billion and 43 billion euros (US$46.5 billion) respectively to spur manufacturing in their regions.

  The UK’s plan is to home in on areas of the sector where the government believes the kingdom already has a comparative advantage rather than go head-to-head with governments throwing far more money at the industry as a whole.

  “Our new strategy focuses our efforts on where our strengths lie, in areas like research and design,” British Prime Minister Rishi Sunak said.

  Global chip supply disruptions brought on by COVID-19 restrictions touched off a race among major economies to secure inventories, protect their proprietary technologies and make more semiconductors at home.

  The US, in particular, has aggressively targeted China’s efforts to advance its semiconductor technologies, blocking US companies from providing certain equipment and services to the country.

  The UK Department for Science, Innovation and Technology said the government’s investments would focus on areas including research and semiconductor design. Britain is already home to Arm Ltd, Softbank Group Corp’s prized chip designer.

  The UK is also targeting compound semiconductors, made of combinations of elements with properties deemed promising in emerging technologies such as 5G, electric vehicles and facial recognition.

  The government said the investment would expand the domestic sector, protect national security and mitigate the risk of supply chain disruptions.

  However, the chips most critical to day-to-day applications would still come from overseas — particularly from Taiwan, home to the world’s leading supplier of chips.

  The UK will “increase its cooperation with close partners” to develop supply chain resilience, it said.

  The UK’s total, 10-year funding commitment is less than what the world’s leading chip foundry company, Taiwan Semiconductor Manufacturing Co (台積電), spends every two weeks.

  The UK government has been facing increasing pressure to lay out a strategy as other nations take aggressive measures to secure their own supplies.

  Meanwhile, signs have emerged that Britain’s own industry is moving into foreign ownership.

  Arm, for example, decided to list in the US instead of London.

  In 2021, US chip giant Intel Corp told the BBC it had ruled out the UK as a location for a new plant because of Brexit.

  The opposition Labour Party’s Lucy Powell blasted the strategy, saying that it would be “met with disappointment by the scale of its ambition.”

  Following Arm’s decision to list in the US, she said: “This strategy offers little assurance we can maintain and grow an industry vital for growth and national security.”
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