The UK’s technology industry trade body, techUK, has released its latest review of the UK Government’s semiconductor strategy, warning that more needs to be done to promote innovation and support scale-ups if the country is to secure a position in this critical sector.

Two years after its initial study into the UK’s semiconductor industry, techUK’s updated Plan for Chips report outlines the progress made since the UK Government introduced the National Semiconductor Strategy in 2023.

However, despite lauding the government’s ambitious vision, which committed to building on the UK’s strengths in the sector around R&D, design and intellectual property with more funding, the report has found that progress, so far, has been slight.

Research highlighted in the report shows that the UK has so far spent less than its nearest European neighbours on financial support within the semiconductor industry, at just $1.3 billion (£1bn) compared to France’s $3.1 billion (£2.4bn), and Germany’s $21.5 billion (£17bn).

That’s despite government figures showing that semiconductor companies generated £9.6 billion in revenues in 2022, employ an estimated 15,000 people in the UK, have secured a total of £1.7 billion in grants and fundraisings, not to mention that 72% of internationally headquartered semiconductor firms undertake research, development, design and IP activity in the UK.

With that in mind, techUK’s study argues that more financial support and targeted policies are necessary for the UK to pursue the kind of competitive position that the trade body argues the country is capable of.

A major barrier is the access of UK startups in the sector to private investment and capital, with techUK finding that many UK-backed funds do not take the role as a private lead investor. 

To tackle this, the report recommends a National Semiconductor Centre to establish support and for scale-ups, as well as the use of public institutions like the British Business Bank or National Wealth Fund to provide ongoing financial support. 

Along with helping to secure large-scale investment for semiconductor startups – which until now have struggled to access both private capital and public funding – the report claims the UK could fast become a leader in next-gen semiconductor innovations by building on work already underway.

The country already has large, well established AI, quantum and photonics sectors, each of which counts on semiconductors as a critical part of their supply-chains. Although these sectors  have benefited from tailored support from the government, techUK said that more investment is needed to support the adoption and development of advanced designs.  

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techUK’s report argues that this work could be driven further by extending the current R&D tax relief schemes, providing specialised support from within HMRC, and by classifying semiconductor capabilities as Critical National Infrastructure, much as the government has already done to promote the construction of data-centres.  

“The UK has a unique opportunity to lead in the global semiconductor landscape, but success will require bold action and sustained commitment,” said Laura Foster, associate director for technology and innovation at techUK.

“By accelerating the implementation of the National Semiconductor Strategy, we can unlock investment, foster innovation, and strengthen our position in this critical industry.  

“We must act at pace to secure the UK’s semiconductor future and as such our technological and economic resilience.”