A strategic approach to semiconductors is needed to ensure the future of British chips

The House of Commons Business Energy and Industrial Strategy Committees’ report into UK semiconductors emphasises the need for a more strategic approach to the UK chips industry to promote growth and secure the UK’s place in global value chains

Following its June 2022 inquiry into the UK semiconductor industry, the House of Commons Business Energy and Industrial Strategy (BEIS) Select Committee released a report where it assessed challenges and opportunities for the UK's semiconductor industry. The report explored the role of semiconductors in the tech sector, their positioning in the UK’s and the global economy, and the best path forward for the Government to work with the industry.  

The Committee's inquiry was timely as access to semiconductors has become a major concern for a number of industries and the UK Government is set to publish a new Semiconductor Strategy. This follows legislative action being taken in the US and EU. 

techUK submitted evidence to the inquiry and was pleased to see that the Committee adopted many of our suggestions. You can read our submission here and a summary of the BEIS Committee's report below. 


A UK semiconductor strategy is needed now 

The Committee's report correctly identifies the complexity and highly specialised nature of the semiconductor industry as well as the need for cross border collaboration to address risk areas in global supply chains. Further the report also highlighted the opportunities that exist to grow the UK’s position in the global semiconductor value chain through a focus on entrenching the UK’s position as a design and intellectual property (IP) hub, supporting the development of new fabrication techniques and ensuring we take a more strategic approach to financial support, access to talent and supply chain risk. 

The BEIS Select Committee noted the lack of strategy from Government on semiconductors and highlighted the need to alleviate the issue through a preliminary mapping of the industry, to include supply chain analysis, heatmapping, industry needs, and the urgent development of a risk and resilience strategy to accompany the Semiconductor Strategy. This high-level engagement aligns with the more cross-cutting thinking requested by techUK and the industry.

In addition, the Select Committee’s report advocated for an increased strategic scope to include IP and design, support for leading edge node chips, matching manufacturing and design capabilities, prioritising existing strengths to better engage emerging markets, and supporting the growth of new fabrication plants across the UK. 

Though the report focused on forward-looking opportunities, there was also an acknowledgment of challenges that the industry has faced in the past, particularly noting issues related to how the Government is exercising its powers under the National Security and Investment Act where there are risks to inward investment. 


Key recommendations and industry needs 

The Select Committee's report offered a range of suggestions on the opportunities to support the growth of the UK semiconductor indusrty. For example through better working with international partners, domestic funding mechanisms, and investment schemes, as well as developing and providing access to skilled workers who can meet the industry’s needs. 

In June 2022, techUK submitted a list of recommendations in our response to the Select Committee’s inquiry on behalf of techUK's members. We were pleased to see a number of these recomendations suppported in the Committee's report. These included: 

Undertaking a strategic analysis of the UK’s position in the international supply chain as part of a UK Semiconductor Strategy 

The Select Committee’s report acknowledged the need for a full understanding of the industry, and specifically cited techUK’s request to prioritise and complete the mapping of the industry to thoroughly understand the industry and key growth opportunities, to include subsectors and strengths and weaknesses. 

Ensure the UK has the right skills and R&D support to foster a growing industry 

The report recommended that the forthcoming Semiconductor Strategy not ignore this issue and offer clear guidance for how the Government can meet the specific skillset needs of the industry. In addition, the Select Committee’s report acknowledged techUK’s work on R&D tax credits and our members ask to see R&D tax credit expanded to cover capital expenditure on physical assets such as labs, plants and machinery. A vital step for incentivising new UK semiconductor fabrication plants. 

Seek to support and build on key UK strengths such as chip design 

Prioritising UK semiconductor advantages is another theme that was found throughout the report, with the Select Committee acknowledging chip design as a key strength for the UK that the Semiconductor Strategy must support. 

Strengthen protections for UK intellectual property in global value chains 

The Select Committee’s report recommends that the Government’s Semiconductro Strategy include IP and design in its scope. 

Support nascent industries such as compound semiconductors and other alternate semiconductor materials through our innovation and industrial policy 

The Select Committee highlighted the importance of compound semiconductors and other alternate materials in its report, signalling a strong need to support these nascent industries. Proposed actions from the report include supporting nascent-industry specific investment mechanisms, acknowledging the strengths of key clusters, and the dangers of strong global competition. 

Support investment in the UK and take on potential blockers such as the National Security and Investment NSI Act. 

Though the report did not view the National Security and Investment Act as a blocker, the Select Committee acknowledged industry challenges and the need to develop increased transparency and communication around the Act. Namely, the report asks that the Government outlines elements of the semiconductor supply chain that constitute critical national infrastructure. 

Build international partnerships to secure markets for UK IP and supplies from a diverse range of markets 

The Select Committee report acknowledged the necessity of international collaboration in the semiconductor industry, with specific recommendations to deepen collaboration with the EU and the US while seeking to entrench and expand the UK's posituon in the global supply chains both in IP, design and new materials and manufacturing techniques. 


Next steps 

The Select Committee’s findings provide useful feedback in the discussion around a UK Semiconductor Strategy. techUK understands the UK Government is due to publish a semiconductor strategy shortly and we will continue to engage on behalf of our members with DCMS and other key Government departments as the policy is finalised. 

techUK’s position on and response to the House of Commons BEIS Select Committee's inquiry can be found here.

If members have further questions about techUK’s work on semiconductor strategy, please reach out to [email protected]


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Neil Ross

Neil Ross

Associate Director, Policy, techUK

As Associate Director for Policy Neil leads on techUK's public policy work in the UK. In this role he regularly engages with UK and Devolved Government Ministers, senior civil servants and members of the UK’s Parliaments aiming to make the UK the best place to start, scale and develop a tech business.

Neil joined techUK in 2019 to lead on techUK’s input into the UK-EU Brexit trade deal negotiations and economic policy. Alongside his role leading techUK's public policy work Neil also acts as a spokesperson for techUK often appearing in the media and providing evidence to a range of Parliamentary committees.

In 2023 Neil was listed by the Politico newspaper as one of the '20 people who matter in UK tech' and has regularly been cited as a key industry figure shaping UK tech policy. 

[email protected]

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