The TechWorks Semiconductor Leadership Group (SLG), comprising executives from prominent UK semiconductor companies, in anticipation of the Chancellor’s forthcoming Autumn Statement, is advocating for HM Treasury to implement strategies that bolster the UK semiconductor manufacturing industry.
This is crucial for maintaining global competitiveness, especially in the face of subsidised international rivals. The group’s recently published paper emphasises the need for UK chip manufacturers to operate on an equal footing globally, necessitating at the very least, support for capital expenditure and access to finance for critical step-up expenses to stay competitive.
The UK, while not competing with high-volume chip manufacturers in the Far East, boasts leading companies in burgeoning markets such as power electronics for EVs and renewable energy, 5G radio communications, photonics for augmented reality, high-performance computing, and Micro-Electro-Mechanical Systems (MEMS) for sensors in life science, automotive, and robotics. These sectors export millions of chips globally.
To sustain and expand their market dominance, these companies need to periodically modernise and enhance their facilities. However, the long-term, capital-heavy nature of chip manufacturing and a general misunderstanding of the market in financial sectors make acquiring investments from conventional sources challenging, even though such companies often flourish in the long run if they can retain their competitive edge through strategic investments.
The Government’s semiconductor strategy, released in May, stated, “We will announce plans by the autumn to further support the competitiveness of the semiconductor manufacturing sector that is critical to the UK.” The Semiconductor Leadership Group aims to contribute industry insights to this planning process and assist HM Treasury in securing the sector’s future.
Prior to the Chancellor’s Autumn Statement, the group suggests several measures to HM Treasury, including:
Modifying capital expenditure rules for Innovation and R&D schemes (UKRI and R&D Tax Credits) to permit significant capex recovery for strategic semiconductor manufacturing upgrades.
Raising the maximum funding from UKRI/InnovateUK for specific semiconductor manufacturing improvements, ensuring UK businesses remain globally competitive.
Establishing a matched funding or lead investor scheme to support strategic upgrades in UK facilities, where applicable companies can show their potential to lead globally.
Reforming the apprenticeship system to address the shortage of process engineers, technicians, and operators, granting employers more flexibility with their Apprenticeship Levy contributions.
Charles Sturman, Chair of the Techworks Semiconductor Leadership Group, commented: ” The Chancellor’s Autumn Statement, due on Wednesday 22nd November is an opportunity for the government to show that it recognises the challenges faced by the UK’s semiconductor manufacturing sector and to propose meaningful interventions in support of this strategic industry, as indicated in the strategy.
Graeme Shaw, CEO of Semefab, a manufacturer of MEMS on silicon wafers said: “We export chips globally, and are looking forward to the Chancellor’s Statement this Autumn as an opportunity for the UK to indicate its understanding and support for the Semiconductor manufacturing sector as other nations have demonstrated recently.”