IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

UK government set to subsidise chip manufacturing in bid to cut overseas reliance

The move looks to bolster domestic production capabilities and support UK manufacturers

The UK government could be set to subsidise semiconductor manufacturers as part of a move to reduce the country’s reliance on foreign sources.  

A report from Bloomberg, citing sources familiar with the matter, said the move could see billions of pounds invested to bolster domestic production.  

This would include taxpayer-funded support for startups, assistance for existing firms to scale up, and the influx of venture capital in the sector to further support manufacturers.  

As part of this move, reports suggested that the government also plans to create a dedicated taskforce with the aim of coordinating public and private support to increase semiconductor production over the next three years.   

Under the new strategy, sources said that public funding will be provided through “existing programmes”, including the British Business Bank, Innovate UK, and the National Security Strategic Investment Fund.  

The news follows recent reports that a draft semiconductor strategy, drawn up in 2022, recommended that the UK should cut its reliance on semiconductors from Taiwan amidst rising threats from China.  

However, the government is yet to comment on the matter, and told the publication that details of the strategy will be revealed at a later date.  

“We don’t comment on speculation,” a spokesperson said. “Our semiconductor strategy will be published in due course.” 

Realistic expectations

While efforts to cut foreign semiconductor reliance are welcomed by British industry, questions remain over how the UK might achieve its goal of becoming independent in this regard.  

Geoff Blaber, chief executive at CCS Insight, told IT Pro that expectations around the UK’s ability to meet semiconductor demands must be realistic.  

“Whilst a formalised UK semiconductor strategy will be welcome, expectations need to be baked in reality and reflect enormous cost and complexity,” he said.  

“The time and investment inherent in semiconductor manufacturing and the dominance of the US, Taiwan, and South Korea means the UK’s position in the global supply chain is not going to change overnight by the introduction of government subsidies.” 

Blaber added that the goal of homegrown semiconductor manufacturing at scale is neither “realistic or plausible” in the short term. 

“Where government can make a difference is by facilitating investment in the UK from global players and fostering a positive environment for companies in fabless chip design that builds on the legacy created by Arm”. 

Semiconductor concerns 

The issue of foreign reliance on semiconductors has been a long-running theme on both sides of the Atlantic, with the US government taking steps to further accelerate domestic production.  

Last month, Taiwanese manufacturer TSMC announced it planned to triple investment in US operations and build a second production facility in Arizona.  

Related Resource

What 2023 will mean for the industry

What do most IT decision makers really think will be the important trends and challenges in the coming year?

Whitepaper cover with title and image of men walking a raised mazeFree Download

The $40 billion (£32.2 billion) deal marked one of the largest foreign investments in US history and was lauded as a significant milestone in bolstering domestic chip-making capabilities. In the UK, similar calls have been to pursue a strategy akin to the US.  

In an open letter published this week, British tech industry stakeholders urged the government to cut its reliance on foreign-supplied chips and provide greater support for domestic manufacturers.  

Signatories included techUK, Tech London Advocates, and the Raspberry Pi Foundation. 

“The industry needs a coordinated and comprehensive semiconductor strategy,” the letter reads.  

“The technology and manufacturing sectors have been waiting more than two years for the promised strategy, and confidence in the government’s ability to address this industry’s vital importance is steadily declining with each month of inaction.” 

Repeated calls for action from the industry have prompted some movement from the government, however.  

Last month, the Department for Digital, Culture, Media and Sport (DCMS) announced it would conduct a feasibility study aimed at finding new ways to support the UK semiconductor industry.  

The DCMS suggested this could see the creation of a “national microchip institution” that would provide support for UK manufacturing capabilities, bolster supply chain resilience and offer “better access to prototyping and manufacturing facilities”. 

Featured Resources

Defending against malware attacks starts here

The ultimate guide to building your malware defence strategy

Free Download

Datto SMB cyber security for MSPs report

A world of opportunity for MSPs

Free Download

The essential guide to preventing ransomware attacks

Vital tips and guidelines to protect your business using ZTNA and SSE

Free Download

Medium businesses: Fuelling the UK’s economic engine

A Connected Thinking report

Free Download

Most Popular

Getting the best value from your remote support software
Advertisement Feature

Getting the best value from your remote support software

13 Mar 2023
Microsoft set to block emails from unsupported Exchange servers

Microsoft set to block emails from unsupported Exchange servers

28 Mar 2023
What the UK can learn from the rest of the world when it comes to the shift to IP

What the UK can learn from the rest of the world when it comes to the shift to IP

20 Mar 2023