A new £10 million fund has been unveiled by the UK Government, designed to support British businesses to deliver the next generation of semiconductors.

Announced by tech minister Kanishka Narayan, the fund is expected to support up to forty UK firms in accelerating development of their chips, with the aim to help them compete in a rapidly growing global market worth hundreds of billions.

With Government figures showing that the UK semiconductor sector is on track to grow by 75% by 2030, the fresh investment targets an area where Labour believes the country is strongest, and can best support its tech ambitions.

Companies set to benefit from the new fund, delivered by Innovate UK, include Paragraf Limited, which develops highly energy-efficient semiconductor devices using graphene technology, alongside Silicon Microgravity Limited, the creator of matchbox-sized navigation devices that can work without relying on satellite signals

The fund will provide these companies and others with access to specialist, ultra-clean semiconductor manufacturing facilities, technical expertise, and business mentoring to help translate their innovations into commercial products.

“There is immense potential in the UK semiconductors sector,” said Narayan.

“By investing in its growth, we will build on our country’s strengths, setting ourselves apart in a highly competitive market to unlock new skilled jobs at home and boost our economy.”

Semiconductor technology underpins not only critical national infrastructure, like secure communications, defence systems and cyber security, but is at the heart of everything from smartphones and cars to medical devices and renewable energy systems.

The tech is also fundamental to AI, being essential to its processing power and part of the infrastructure needed to train and run complex algorithms, making semiconductors key to the success of the Government’s much heralded plan to see the UK become an ‘AI Superpower’.

This is why, along with AI, quantum, and advanced connectivity technologies, the Government is betting heavily on the success of UK semiconductors as one of the frontier technologies underpinning its Modern Industrial Strategy. 

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Via programmes like ChipStart, Labour plans to capitalise on the research base and startups already working within the semiconductor industry, with the Strategy outlining how hundreds of millions in new funding, like that announced today, will bolster the sector in the UK.

However, despite the Government’s plans, there is a lot of ground to make up. Research from techUK earlier this year shows that the UK has so far spent less than its nearest European neighbours on its semiconductor industry, at just $1.3 billion (£1bn) compared to France’s $3.1 billion (£2.4bn), and Germany’s $21.5 billion (£17bn).

Figures from the Digital Futures at Work initiative expose an even wider gulf in chip investment compared to the US, which has pumped over $114 billion (£84.8bn) into semiconductor support. Not to mention the fact that American investors hold an average 27.5% stake in more than sixty major UK chip firms, outstripping UK investors at just 22%.