Expert Advisory Board Discusses the Strategic Role of Semiconductors in UK Defence and Growth

Our Expert Advisory Board (EAB) met last week to review progress and discuss how the UK semiconductor ecosystem can better support national priorities, particularly defence capability and long-term economic growth.

The Board began by reflecting on the recent Parliamentary Reception, which was widely considered a success. The event generated strong engagement across Parliament and industry and helped reinforce the importance of semiconductors to the UK Government’s Industrial Strategy Key Sectors. Too often the sector risks being placed solely within the Digital Sector Plan, which the APPG recognises barely scratches the surface when we begin to understand just how fundamental semiconductor technology is to the UK’s growth prospects.

The reception in February also marked a natural transition in the APPG’s work. Our first phase focused on unlocking the UK’s economic growth potential. We are now entering the next stage of that work with a greater focus on defence.

This shift reflects the reality of the current geopolitical environment. From instability in the Middle East to growing pressure on global supply chains, and with warfare itself becoming increasingly technology driven, the importance of semiconductor capability within the defence ecosystem has only become more apparent. The discussion therefore focused on how the sector can better communicate its strategic importance to policymakers and ensure semiconductor supply chains are more closely connected to the UK defence industrial base.

Particular attention was given to the role of small and medium sized enterprises. Many of the UK’s most innovative semiconductor companies sit within the SME community, yet connecting these companies into defence procurement pathways remains a persistent challenge. Strengthening these links will be essential if the UK is to fully harness the innovation that already exists across the sector.

Regional defence clusters were highlighted as an important mechanism for doing this. Five clusters have now been established across the UK and are beginning the work of mapping supply chains, bringing together industry partners and creating clearer pathways between SMEs and prime contractors. These clusters have the potential to play an important role in strengthening the UK’s defence technology ecosystem.

The discussion also reinforced the wider contribution of semiconductors across the economy. As we argued in our paper on unlocking UK economic growth, semiconductor technologies sit at the centre of modern industrial capability, underpinning everything from automotive electronics to aerospace and defence systems.

We also reviewed recent engagement with government on the semiconductor sector’s growth paper. Discussions with the Industrial Strategy Unit have been very positive, with clear interest in the sector’s potential to support productivity, economic resilience and long-term national capability. There is an increasing recognition across government that semiconductors are not simply another technology sector but a foundational industry that enables growth across the wider economy.

Members also highlighted several related policy developments, including engagement with the Industry Strategy Council, emerging work around AI growth zones and ongoing activity within the photonics community focused on strengthening the UK technology pipeline.

There is little doubt that the UK semiconductor sector represents one of the most productive and strategically important parts of the economy. Ensuring the sector is properly integrated into defence planning, industrial strategy and wider technology policy will be essential if the UK to capitalise on the long-term benefits.