A leading critic of the UK government’s approach to the semiconductor industry here in the UK, the following are key points which Paragraf considers essential to deliver a successful, well aligned, clear, semiconductor strategy, that will enable businesses in the UK to operate efficiently and effectively and hence thrive in the UK, delivering substantial value to the economy.
Each point is highlighted by a single important question, although many more could be posed for each category.
Access to required resource, skills, and talent, today
For success in the semiconductor sphere, access to skilled people is critical. Given the relatively small semiconductor community in the UK, how do we ensure we have the right level of talent injected into the ecosystem to ensure any semiconductor strategy will be successful?
This is not only critical for today’s workforce but for educating the workforce of the future. Introducing high quality talent into companies and businesses, particularly in manufacturing, is key for upskilling the whole workforce. Cross transfer of capabilities, mentoring from internal experts and general natural on-the-job training throughout the workforce is enabled by bringing in the right, highly skilled, people.
Question: Will visas for foreign workers recruited to work in the semiconductor industry be readily available and adjudicated swiftly and will there be a simple process available that we can rely on?
Access to the essential infrastructure requirements
For semiconductor manufacturing to function well in the UK the industry requires high quality, stable, and cost-effective access to facilities and utilities. Given the now lack of suitable sites and buildings around the country for high demand companies, such as those manufacturing electronics and components, we must ensure that critical infrastructure is made accessible for the semiconductor strategy to be successful.
The semiconductor industry is a specialist sphere in its requirements, particularly at the manufacturing end of the spectrum. Whether manufacturing chips, components, assemblies or systems, companies in all parts of the semiconductor supply chain need access to increased levels of, for example, power or specialist gases and chemicals as compared to other sectors. Additionally, as an industry with significantly complex supply chains, timely, efficient, and effective transport network systems are critical whether importing, exporting or internally transporting within the UK for cost effective and desirable product manufacturing.
Question: Will infrastructure upgrades enable semiconductor manufacturing throughout the country, and not only in predetermined, politically selected ‘clusters’, and will companies and investors be able to focus their resources on innovation and accelerating to profitability without being distracted by the need to build up basic infrastructure that is available in other countries around the world?
Educating for future growth of the industry
For the continued growth of a successful semiconductor industry in the UK, providing the future engineers, scientists and leaders will be critical. How do we ensure we have the talent going forward to invent, innovate and develop the semiconductor technologies of the future right here in the UK and deliver the long-term goals of the UK strategy?
The semiconductor world moves at great pace with the global leaders being those that have the ability to deliver solutions and products faster than competitors. The founding pillars of a semiconductor strategy need to be underpinned by continually shifting plans to deliver the next evolution of chips, components, and systems if the UK is to maintain a leading edge, no matter how niche that area is. Providing the future innovators of this sector means delivering highly educated, knowledgeable individuals that understand both the theoretical and practical constraints and opportunities of the semiconductor industry across all stages of design, research, development, product build and engineering.
Question: Will there be an increase in slots on university degrees in relevant courses of study?
Training for today and building for tomorrow
For the near-term success of the UK semiconductor sector having the hands-on capabilities to design and manufacture product is essential. There will also be an increasing requirement for skilled equipment and tool operators to drive the high-tech production lines used to create semiconductor products. How do we fill this skills gap rapidly to ensure we can deliver on the strategy?
Scaling with ambition to give any sector an appreciable foothold requires immediate availability of suitably trained resource. While manufacturing tool operation is skilled work, a focussed approach can result in highly capable personnel in a relatively short period of time. Attracting people into the industry, demonstrating that exciting and highly valuable careers can be attained, and then providing the necessary training tools to enable them to reach their potential is absolutely key. Vocational, career focussed education, such as apprenticeships or practical further education qualification, is key to unlocking this potential workforce.
Question: Will BTEC programmes in relevant skills be created to enable young people to enter the industry?
Trading with the world
For the establishment, operation and commercial success of any major sector in the UK clear, favourable and cost-effective control of the supply and value chains is critical. The size of the UK economy, and government spending and buying power paired with the complex supply chains associated with the semiconductor industry make global relationships a necessity for manufacturing businesses. We must ensure we have close, trusting and mutually beneficial relationships with our supply chain partners, suppliers, and customers to deliver strategy success.
From core materials that feed processes through device build components to the end chips or systems, the majority of the semiconductor product build chain is through necessity traded cross borders. Inefficient trade channels, particularly given the current geo-political state of the world, are a major challenge for growing businesses. Ensuring global import and export with minimal barriers is critical for efficient semiconductor company growth, more proactively trade incentives to invigorate partnerships with preferential regions to ensure supply security and maximise market access will massively invigorate UK based semiconductor business and community growth.
Question: Will UK Government prioritise improved trade agreements with European, Asian and American nations to better enable the commercial development of UK semiconductor businesses?
Crossing the valley of death and delivering real value
For successful delivery of value from the innovative and leading-edge semiconductor developments we have in the UK, support is required to enable companies to reach a point of viable product exploitation, at a level that allows the business to grow beyond simple sustainability. Commitment to helping and supporting small companies realise the value of their products is key to creating a valuable, sustainable semiconductor industry and hence deliver the goals of the strategy.
Growth of manufacturing businesses is complicated and costly, particularly where significant capital equipment and infrastructure investment is required, however the GDP value delivered by these companies, particularly at the leading edge of technology is usually many times greater than other sectors. Crossing the gap from prototype to volume delivery capability takes time and money, however, most can be raised from private capital resources provided there is absolute clarity around inward investment regulations and the scale-up companies have a clear value proposition. Uncertainty amongst overseas investors has recently been created by the length of time it has taken government to reach decisions about some strategic investments and by apparent inconsistencies in different decisions. Fulfilling this proposition requires confidence in product delivery, confidence that is magnified by a show of commitment by an administration to growing a business in that region or country.
Question: Will scaleup funding programmes be available to assist growing companies to become fully-fledged players in the semiconductor industry and will inward investment regulations with European, Asian and American nations be clarified to increase trust and remove uncertainty?
Boosting the chances of success
To enable confident growth of a business, removing barriers to innovation to enable the successful delivery of value-generating products has time proven success. Delivering the UK semiconductor strategy, which has clear focus on beyond-silicon semiconductors and next-generation technologies, requires concerted effort to ensure private companies and businesses have the ability to focus their investment in research and development.
Research and development is a costly process for most businesses, even more so for semiconductor companies where the equipment and components required to investigate and build product can be extremely expensive. Add to this the time it takes to deliver and have customers qualify chip components, and the business risk often becomes too high and results in throttling back the R&D focus. Ensuring that companies have the ability to commit to a high level of development activity not only delivers more sustainable businesses but also grows the sector in general, delivering greater future returns for the UK.
Question: Will the R&D tax credits that were removed and then partially restored in the last two budgets be fully restored, improved, or replaced by a policy that similarly incentivises research and development?
The Important but Intangible Crux of the Matter
Although delivering the points highlighted above are, in this instance, targeted at ensuring a successful semiconductor business landscape exists in the UK, they could just as easily be applied to any technology business space in this country.
The delivery of these key factors while standalone, individual requirements to enable business success – directly measurable by their achievement – are magnified in their power when compounded in their provision, beyond their impact in isolation. However, much more importantly than this, what needs to be understood by the UK administration is that delivering these requirements has a much greater impact than just solving the challenges themselves.
Successful businesses, particularly scaling companies, at their core rely on the ability to fulfil 3 main criteria:
- The ability to attract the required capital to grow,
- The ability to attract the required talent to drive the business,
- The ability to attract and serve their customers.
It should not be underestimated how the achievement of the highlighted points impacts these three existential needs. A first glance it may seem intangible but if considering the external lens, what do investors, private capital, want to see? The ability to function well, more preferably with advantageous conditions, in a region of the world that enables their selected investments to thrive. What do employees, particularly talented people want to see? The ability to work in an exciting company where they can grow and achieve their potential. And what do customers want to see? A supply chain that is stable, cost effective and long term.
While capital is always appreciated, none of the above is an ask for direct money from government, they are simply policy concerns.
As would be expected, while the delivery of the key points can supercharge the success of UK businesses, the non-delivery of these points has the equal and opposite effect.
If the UK is serious about creating a landscape where a semiconductor community, ecosystem and more importantly, industry can thrive, then headline monetary figures should take much less focus than resolving the challenges that unlock the capability for business to self-sustain, and grow, in this country.
