Deeptech investment firm Haylo Labs has pledged to invest over £100 million in the UK’s chip market following its acquisition of Plymouth-based Plessey Semiconductors.

Focusing specifically on the microLED, optical compute, and interconnect sectors, Haylo Labs said it will spread its eight-figure investment over the next five years and plans to scale up Plessey’s manufacturing capacity, as well as grow the company’s workforce in the local area.

Following nine months of negotiation, the investment firm said that the deal will strengthen the UK’s position as a leader in immersive computing and next-generation tech, allowing the country to take advantage of the international microLED market.

Funding for Haylo’s plans is supported via a $100 million loan from the Chinese tech firm Goertek, a manufacturer of AR and AI products, with the deal signed off under national security grounds by the UK Government.

“This is a defining moment for British tech,” said David Hayes, chief executive of Haylo Labs, and now CEO of Plessey Semiconductors.

“Plessey has built the world’s most advanced microLED platforms, with the highest efficiency to date, and is one of the only facilities in the world that can offer customers an end-to-end design and manufacturing facility with technology and talent that surpasses rivals anywhere globally.

“This acquisition is not just about backing British innovation — it’s about unlocking its global potential in one of the fastest-growing markets over the next decade.”

The microLED market is forecast to grow from £2.7 billion in 2024 to over £592 billion by 2034, driven by demand in augmented reality, optical computing, automotive displays, and premium consumer electronics, such as virtual reality headsets and smart glasses.

With around fifty microLEDs fitting across the width of a single human hair, they can emit light directly at the pixel level for displays that are brighter, sharper, smaller, and more energy-efficient than existing tech.

Big tech firms have recognised the benefits microLEDs might bring, with Plessey already claiming Meta as a client, acting as a supplier for the tech giant’s augmented reality glasses. 

But while the UK Government might be keen to see a British business at the forefront of this emerging market, its decision to sign off on the deal is at odds with its previous moves to block Chinese investment in the UK’s chip sector.

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In 2022, an investigation was opened after the Newport Wafer Fab in South Wales was sold to Nexperia, a Dutch semiconductor firm which itself was already owned by a Chinese firm with strong ties to the country’s ruling party.

That investigation resulted in the UK flexing its regulatory muscles by forcing the company to be resold to a US-based tech firm instead.

Following that, the UK Government last year ordered Beijing-owned FTDI Holding Ltd to sell its 80% controlling stake in a Scottish chip manufacturer, citing risks to national security and critical infrastructure. 

At the time, the Government said the measure was needed to mitigate the risks to the UK’s critical national infrastructure and national security associated with a Chinese firm having this level of access to the country’s chip manufacturing.