DSIT publishes an overview of the UK’s semiconductor activity
Background
The Department for Science, Innovation and Technology (DSIT) has recently published a report presenting findings from research undertaken to produce a baseline of semiconductor-related economic activity in the UK.
Commissioned in 2023, the study aims to expand the existing evidence base and enable a better understanding of future progress towards the objectives and commitments set out in the National Semiconductor Strategy (NSS).
Key findings
- The UK is an attractive global location for semiconductor research and design activity, evidenced by the fact that 72% of the dedicated, internationally headquartered semiconductor companies identified through this study undertake research, development, design and IP activity in the UK.
- The UK has a niche and highly specialised semiconductor sector that is highly relevant to numerous strategically significant UK companies.
- Currently, dedicated UK headquartered semiconductor companies are more likely to be involved in the telecommunications and compute sectors, whereas more internationally headquartered companies are involved in the UK’s automotive, aerospace and defence sectors.
- Support for deeper engagement between UK headquartered semiconductor companies and strategically significant OEMs in the UK’s automotive, aerospace and defence sectors could further support UK-led development of new and emerging semiconductor technologies.
- Among the subset of dedicated, UK headquartered SMEs identified through the study, both semiconductor design / IP activity and manufacturing have been important sources of employment growth over the past 5 years, as has activity focussed on compound and emerging materials.
- 90% of survey respondents expect to see either rapid or moderate growth in their semiconductor activity over the next 2 years.
- Increasing access to fundraising for companies at earlier stages of development (seed and venture stages) may go some way to addressing perceived scale-up challenges identified in survey findings.
- Future revenue scenarios suggest that dedicated UK semiconductor revenues could be between £13 billion and £17 billion by 2030. The difference in semiconductor revenues over the 6 years to 2030 under the low and constant (high) growth scenarios is estimated to be £13.5 billion.
- Qualitative research with both strategic stakeholders and industry representatives returned very strong sentiment that tangible and decisive policy action is now urgently required to support sustainability and future growth of semiconductor activity in the UK.
Potential policy implications
The view from the UK stakeholders consulted is that the UK should continue to build strategic international relationships that can help further lever UK strengths in R&D, Design and IP. This will require continued and globally commensurate investment in leading-edge technology and talent.
There is broad consensus among strategic stakeholders that the UK should focus on leveraging its strengths in R&D, Design and IP, and that the UK’s manufacturing efforts should be directed towards establishing and scaling earlier stage emerging technologies and materials development.
Medium-sized semiconductor companies are a significant segment of the UK sector. Supporting these companies to scale will help to mitigate market concentration risks and address a perceived gap in scale up support.
Next steps
techUK will continue to work with the UK’s semiconductor sector, including through the Chips Coalition and the Government’s Semiconductor Institute, to put the National Semiconductor Strategy into action. Click here to find out more about techUK’s activity in this area.
Click here to read the full economic perspective report.
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