DCMS UK Semiconductor Industry Assessment

The Department for Digital, Culture, Media and Sport (DCMS) is looking to commission a £900,000 study to understand the technical and economic feasibility and need for a UK Semiconductor Infrastructure Initiative. In the tender notice to commission the report, DCMS said it aims to catalyze the growth of the UK semiconductor sector and contribute to supply chain resilience.

The global chip crisis has sharply focused the UK’s reliance on a few major chip manufacturers (fabs), such as Taiwan Semiconductor Manufacturing Company (TSMC), based in Taiwan. As Computer Weekly previously reported, although high-end microprocessors and memory chips used for computer hardware fared quite well during the semiconductor shortage, the same was not true for the automotive sectors, which are using more and more embedded computers. An integral part of their vehicle platform.

They are based on cheap, older-generation semiconductor technology, where supply is in short supply. Governments around the world are responding to the crisis. As part of European Chip LawFor example, the European Commission (EC) aims to mobilize over €43bn of public and private investment and set up measures to prevent, prepare for, anticipate and rapidly respond to future supply chain disruptions.

The US is increasing economic pressure on China and has banned exports of some US chipmaking equipment and semiconductor technology. In October, the US Bureau of Industry and Security (BIS) The US Department of Commerce announced new restrictions to limit China’s ability to buy and manufacture certain high-end chips used in military applications.

In the UK, a big area of ​​concern is how China is restricting domestic technology. The government ruled that Nexeria, an Amsterdam-based company whose parent company is Chinese-owned, must now sell its 86% stake in the Newport fab. Nexeria to acquire UK’s largest semiconductor manufacturing plant in 2021

Over the past few months, the National Security and Investment Act 2021 (NSIA) Used to prevent the acquisition and licensing of other UK-based semiconductor technologies by Chinese manufacturers. The NSIA blocks the transfer of algorithms, source code, databases, designs and other categories of intellectual property if there is a risk to national security.

In July, Kwasi Kwarteng, then UK Secretary of State for Business, Energy and Industrial Strategy, issued a final order under the NSIA. Manchester University siege From moving forward with an intellectual property license and manufacturing agreement with Chinese firm Beijing Infinite Vision Technology Company regarding SCAMP-5 and SCAMP-7 vision sensing processors in Manchester. And in August, Kwarteng used the NSIA to block the acquisition of semiconductor design firm Pulsic by Chinese firm Super Orange HK Holding.

A recent reportA look at the UK semiconductor industry by the Department for Business, Energy and Industrial Strategy (BEIS), reports that the industry has seen a significant lack of investment over the past 20-30 years in fab manufacturing, which “leads” into a distinct UK semiconductor ecosystem, specialized ‘clusters’. Jobs, spin-offs, and links to academia built around fabs”.

The report said the UK’s “well-developed clusters put the country in a good position to capitalize on growth”, but added that it was not clear to the committee that “the support or attention currently being given by the government is anything like at scale. Our semiconductor supply is secure.” needed to do and provide the future prosperity of the semiconductor industry”.

Trade association TechUK also produced a report for BEIS in June, The UK Semiconductor Industry, which warned of the prohibitive costs of attempting to build fabrication plants to enable the onshore UK chip manufacturing process. TechUK reports that due to the high level of specialization in semiconductor manufacturing, barriers to market entry are extremely high.

“The US and EU will need billions of dollars and euros in subsidies to onshore semiconductor manufacturing efforts through their respective CHIPS Acts,” TechUK said in the report. “Overall, this effort to further diversify the global semiconductor supply chain should be welcomed. However, investment in these new manufacturing or fabrication plants will only be part of a long-term push to diversify the global supply of chips.

“While investments in new fabrication plants around the world will be essential to diversify supply, the global semiconductor industry is highly diversified, as well as highly specialized. Therefore, complete onshoring of the supply and value chain of semiconductors cannot be practically achieved, even within large trading blocs such as the EU and the US.”

TechUK urges policymakers to look at similar efforts based on an assessment of whether such heavy investment supports the UK’s existing strengths and compares this to the opportunity cost of directing public investment to advance the UK’s existing areas of excellence.

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