Building a strong and resilient semiconductor ecosystem in the UK
The key to building a modern, robust and tech-enabled economy for the UK is through semiconductors.
These tiny components are the backbone of modern life, embedded in everything from smartphones to satellites, electric vehicles and medical devices. If their importance wasn’t clear before, the pandemic brought the message home. Global supply chain disruptions halted production lines across industries. Today, growing geopolitical tensions have pushed semiconductor supply chains to the top of national agendas around the world.
The question is no longer whether we need to build resilience in this space, it’s how. For the world’s first compound semiconductor cluster in Wales, the answer doesn’t lie in trying to outspend global superpowers. It lies in playing to our strengths in this industry: R&D, talent development and specialty manufacturing capabilities.
Spotlight on Wales: a world-class compound semiconductor cluster
In South Wales, we are focused on value rather than volume. Wales is home to CSconnected, the organisation supporting growth of the cluster. Our collaborative network brings together industry leaders, academic institutions and innovation hubs to drive advancements in next-generation technologies. Today, the cluster is globally recognised for developing the specialist chips used in 5G infrastructure, aerospace, photonics, healthcare, and electric vehicles.
An array of pioneering organisations form the community, from IQE, KLA, Vishay, Microchip, MicroLink Devices, and CSA Catapult, alongside world-class research institutions like Cardiff University and Swansea University. In 2024 alone, the cluster generated over £507 million in revenue, employed around 3,000 people, and exported 95% of its output. These figures demonstrate Wales’ strategic potential to fuel a resilient and strong semiconductor ecosystem for the UK.
Our cluster is globally connected, hosting international delegations and collaborating with partners across Europe, North America and Asia on advanced R&D, academic exchange, and joint innovation opportunities. In 2027, Wales will host the International Conference on Silicon Carbide and Related Materials (ICSCRM), a major global event in power electronics, after securing the opportunity through a competitive international bid. The event shows the region’s growing reputation for leadership in compound semiconductor technologies.
Resilience through talent: our competitive advantage
If there's one global truth in this industry, it’s that talent makes the difference. There’s a predicted global shortage of around 300,000 semiconductor professionals by 2030. Investors and governments can commit to funding, but without the right people to build, run and innovate, the sector can’t thrive.
This is where Wales has a unique edge. We have two top-tier universities, Cardiff and Swansea, producing over 200 highly skilled graduates a year in relevant disciplines like material science and physics. Through CSconnected, we’re building out vocational and apprenticeship routes to address the wider technical skills gap.
We also offer what many other regions can’t: a lifestyle people want. Affordable living, beautiful surroundings, and a growing, collaborative tech ecosystem, making this a viable long-term home for talent. The stats speak for themselves, productivity in the sector is three times the UK average, and wages are nearly double the national figure.
The jobs created in this sector are deeply rooted. Newport Wafer Fab (now Vishay), for example, has been operating since 1982, making it one of the UK’s longest-standing semiconductor sites. These are sticky jobs- high-investment, high-retention, rewarding careers. That is what resilience looks like.
Policy and investment: what the UK needs to do
The UK Government published its Semiconductor Strategy in 2023, which was a welcome first step in marking the strategic importance of this sector. But we need more than policy documents. We need sustained investment and commitment to the places already delivering meaningful results.
Recent announcements show promising momentum. The UK Government has pledged to grow its annual R&D spend from £20 billion in 2025–26 to over £22.6 billion per year by 2029–30, funding world-leading Welsh innovation in sectors like compound semiconductors, creative industries and agri-tech. The government has also committed to an £86 billion boost to science and technology, aimed at giving regions the power to take cutting-edge research into their own hands.
These moves signal recognition of R&D as a cornerstone of regional growth and resilience. But to truly unlock this potential, investment must flow into proven ecosystems like South Wales, where strong collaboration between academia and industry is already generating results. Let’s be clear: we can’t match the $52.7 billion US CHIPS Act or the €43 billion EU CHIPS initiative on raw spending power.
But pound for pound, this sector delivers in ways few others can:
A pipeline of skilled people to enable sector growth in a knowledge intensive economy.
World-class research infrastructure to support compound semiconductor innovation.
Scale-up and manufacturing facilities which drive local value-capture across the supply chain, creating greater prosperity from British innovation than merely receiving design royalties.
Let’s not forget the long-term returns. Invest in this sector and you’re investing in a future-proof economy, built on world-leading tech, people, places, and purpose.
Wales offers a model that plays to the UK’s strengths. CSconnected is a cluster that is grounded in collaboration between academia and industry.A skilled, motivated workforce and a community-based economy that drives innovation and real-world results. If we’re serious about futureproofing the UK economy then compound semiconductors must be central to that mission, and Wales must be part of the plan. We are not just making chips here in Wales, we are building the skills, jobs and infrastructure that will keep the UK competitive for decades to come.
techUK – Unleashing UK Tech and Innovation
The UK is home to emerging technologies that have the power to revolutionise entire industries. From quantum to semiconductors; from gaming to the New Space Economy, they all have the unique opportunity to help prepare for what comes next.
techUK members lead the development of these technologies. Together we are working with Government and other stakeholders to address tech innovation priorities and build an innovation ecosystem that will benefit people, society, economy and the planet - and unleash the UK as a global leader in tech and innovation.
For more information, or to get in touch, please visit our Innovation Hub and click ‘contact us’.
