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To catch up in the fierce global competition over semiconductor supplies, the United Kingdom has unveiled a £1 billion investment strategy to bolster its chip design sector, as Prime Minister Rishi Sunak announced in the early hours of Friday morning.

Rather than directly competing with the sizable manufacturing subsidies offered by the United States and the European Union, the strategy will leverage the UK’s existing strengths in design and compound semiconductors. Notable clusters include Cambridgeshire and South Wales.

The COVID-19 pandemic has laid bare the world economy’s heavy reliance on Chinese and Taiwanese manufacturers for semiconductors, which are integral to everything from iPhones to missile systems.

The potential for conflict in Taiwan has sparked a chips race

The government has pledged approximately £200 million in funding between now and 2025. A significant portion is earmarked for establishing a National Semiconductor Infrastructure Initiative. This initiative aims to unlock the potential of British chip firms. Additionally, it includes plans for constructing an open foundry dedicated to compound semiconductors, a critical demand from the industry.

While the strategy emphasizes developing electrical engineering and computer science skills, it notably lacks details regarding immigration policies or visas for highly skilled workers, despite industry warnings of talent shortages.

Scott White, executive director of semiconductor firm Pragmatic, expressed his anticipation of collaborating with the government in implementing the strategy. However, he pointed out the absence of information concerning commercial manufacturing, leaving companies like his awaiting incentives to establish facilities in the country until later this year.

A confederacy of manufacturing powerhouses in need of chips

The government plans to foster international partnerships as part of its investment, with Japan being the first collaborator, as elaborated by Sunak during the G7 summit. British officials believe that Japan’s manufacturing strengths complement the UK’s expertise in design.

Sunak asserted, “By increasing the capabilities and resilience of our world-leading semiconductor industry, we will grow our economy, create new jobs, and stay at the forefront of new technological breakthroughs.”

The UK is also engaging in discussions with South Korea, the United States, and the European Union, all of which are making significant investments in manufacturing.

Also read: British lawmakers urge government to increase chip industry support