Two Years On: How the UK Semiconductor Strategy Can Unlock Its Full Potential
- oscar15253
- 3 days ago
- 3 min read
By Dr Wyn Meredith, Vice-Chairman of the Advisory Board to the APPG and Chair of CSConnected
May 19th marked the second anniversary of the announcement of the UK Semiconductor Strategy, so it is fitting to reflect on where we are and revisit those key drivers that sparked the need for national strategies across the globe.
The importance of semiconductors became clear during the pandemic, when global shortages disrupted industries from car manufacturing to consumer electronics. Since then, the urgency has grown. The war in Ukraine raised new national security concerns, and rising US-China tensions exposed how reliant the West is on Taiwan for advanced chip production. As a result, countries are now prioritising efforts to secure their own semiconductor supply chains to reduce risk and strengthen economic and national security.
Looking ahead, many of the technologies that are driving societal change are also heavily reliant on advances in semiconductor innovation – including the mass adoption of AI, next generation (6G) communications, unlocking practical Quantum systems and the Net Zero transition. Recognising this, the rush to secure the domestic supply of semiconductors has moved up the list of geopolitical priorities, with many countries investing heavily in manufacturing and research & development (R&D) for the purposes of safeguarding long-term sovereignty.
Beyond supply chain resilience, the protection of future industries and securing potential advantage in those new sectors, investing in semiconductors presents a huge market opportunity for the UK. The semiconductor industry is the 4th largest globally, with annual sales exceeding $650 billion and a 15% growth rate per year, and some forecasts suggest it is set to surpass $1Tpa by 2030. The UK already has a significant foothold; UK semiconductor firms generated £9.6bn in revenues (2022), 2% of global revenues, £4.1bn (40% of total) from UK-headquartered companies, supporting 27,000 jobs.
So far, the Government’s strategic interventions have focussed on playing to perceived national strengths and trying to rebuild the research ecosystem. This includes funding two new Innovation and Knowledge Exchange Centres at specific Universities, supporting new fabless design start-ups, modest support for industry innovation, and participation in international R&D partnerships, totalling about £80M commitment over the next 5 years.
But here is the problem: none of these interventions go far enough and ultimately fall short of what our global peers are doing. Major countries like US, EU, Japan, South Korea, China, and Taiwan aren’t just backing R&D, they are also investing in big industrial scale-ups, which serve as the primary driver for the return on a domestic strategic investment. They are funding capacity, infrastructure, and supply chain expansion, guided by clear metrics: economic impact, sovereignty, and strategic value. A welcome step is that the UK has designated semiconductor tech eligible for investment via the UK Infrastructure Bank, but this alone does not come close to matching the industrial incentives seen elsewhere.
Moreover, high-value manufacturing built around domestic semiconductor capability presents a huge reindustrialisation opportunity. Take the US Chips Act: for every one semiconductor job, it expects to create 5.6 jobs across the wider manufacturing economy.
We do have a track record of delivering coherent industrial strategies at this level in the UK. For example, The Advanced Propulsion Centre, launched in 2013, mobilised £1.55bn in public-private investment for net-zero automotive technologies. It worked because it was holistic in scheme: capital, R&D, and supply chain all pulling in the same direction.
The UK semiconductor industry can benefit from a model just as bold, the opportunity is here and now, and not 10 years from now.
To give credit where it's due, the UK Government's PR efforts around semiconductors has not waned and remain a key political focus. A new National Semiconductor Centre was first announced in May 2024 and in April 2025 semiconductor technology was reaffirmed as one of 5 critical technologies in the UK’s Science and Technology framework. And semiconductors aren’t a side note – they underpin all eight industry sectors defined in the UK’s Industrial Strategy Green Paper (Nov 2024).
Let it be said, there is high expectation from the UK industry that 3 years of consultation must now deliver a real, coherent, joined-up ecosystem. Research, skills, innovation, scale-up and global partnerships all need to be aligned with the speed and scale this opportunity demands.