The British government plans to provide direct taxpayer funding to support the semiconductor industry as part of a strategy for a sector that has become a lightning rod in global geopolitics, officials familiar with the plans said on condition of anonymity.
This includes seed money for start-ups, help for existing firms to scale up and new incentives for private venture capital, the officials said.
Ministers are to establish a semiconductor task force to coordinate public and private support to ramp up manufacturing of compound semiconductors in the next three years, they added.
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An overall figure has not been agreed with the Treasury, but it is expected to be single figure billions of British pounds, one person familiar with the plans said.
Chips are vital components in everything from mobile phones to vehicles, and shortages have the potential to cause significant disruption to supply chains. Companies already affected by the COVID-19 pandemic are reconsidering their investments in the UK due to frustrations over delays in formulating a strategy.
Compound semiconductors are based on materials different from conventional silicon chips, and are used in newer technologies such as 5G wireless devices and electric vehicles.
A push in the UK to develop local semiconductor manufacturing would echo US efforts to restrict exports of the technology to China meant to hobble its push into the chips industry. The Netherlands and Japan, key chipmaking countries, are close to joining the US to curb links with Beijing.
Under the new British strategy, public funding would be provided through existing programs such as the British Business Bank, Innovate UK and the National Security Strategic Investment Fund, the people said.
A draft semiconductor strategy last year suggested that British Prime Minister Rishi Sunak should take steps to cut the UK’s reliance on semiconductors from Taiwan because of the threat posed by China.
British Secretary of State for Digital, Culture, Media and Sport Michelle Donelan reviewed the strategy and is close to approving a new version for publication in the weeks ahead, a person familiar with the situation said.
The strategy reportedly says that the supply of chips is an issue of major geopolitical and economic importance, and that the UK should diversify with other sources of microchips from friendly and secure nations, while investing more in research and development.
That would align with Sunak’s stated desire to invest in industries of the future and help start-ups.
In a lecture last year, he praised the “entrepreneurial culture” of California’s Silicon Valley, and pledged to use the UK’s Brexit freedoms to reduce regulatory barriers to innovation.
Shadow Secretary of State for Foreign, Commonwealth and Development Affairs David Lammy said that the UK must partner with the EU to secure its supply of semiconductors.
“It’s not the case that the UK can do this on its own,” he told Bloomberg Radio.
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