The UK needs to build its investment in semiconductor chips, a new report has found, as international competition hots up.
Semiconductor shortages have plagued car companies across the world after factories that made the electronic components were forced to close for months on end during the pandemic.
The backlog is still continuing as modern cars are reliant on these chips to control a variety of systems including anti-lock braking and satellite navigation.
But the Government is relying too much on other countries for the production of semiconductors, putting UK firms at ‘significant risk’, according to a report from the Business, Energy and Industrial Strategy Committee.
It said the Government should secure partnerships with strategic allies to secure lucrative investment in the UK chip industry.
MPs on the committee singled out co-operation with the US under the CHIPS Act and engagement with Taiwan as possible areas that could provide opportunities for the industry.
The CHIPS and Science Act is a US federal statute.
Making international partnerships was something to be explored in an overdue semiconductor strategy, the Committee said, adding the Government should publish without any further delay.
The report also proposed that a single Government department should take responsibility for nurturing the semiconductor industry in the UK and for security of supplies.
Darren Jones, Business, Energy and Industrial Strategy Committee. chair, said: “The Government is putting UK companies at significant risk by failing to take action in support of the semiconductor industry.
“Other countries are investing in the resilience of their semiconductor supply chains yet Ministers in the UK can’t even publish their semiconductor strategy on time.
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“Semiconductors are essential components of modern technology and in the infrastructure required to reach net zero. The industry is expecting high growth in the coming decades, which is an opportunity for us to leverage our strategic lead in design and in energy-saving compound semiconductors.”
The Committee’s report says that it is not clear the support currently offered by the Government is at anything like the scale which is needed to make a difference and added the semiconductor strategy should include “facilitating the design and construction of new fabs” – referring to semiconductor production plants.
Supporting an “open fab” in South Wales, that would allow any firm to produce at the facilities, should also be considered, the report said.
Concerned by a worldwide shortage of semiconductors following Covid-19 lockdowns, Governments across the world, particularly in the US and Europe, have been ploughing tens of billions of dollars into semiconductor investment, including establishing new fabs.
Globally, the semiconductor industry is worth more than $500bn and, despite a recent dip in demand, is expected to expand to more than $1trn by 2030.
Compound semiconductors could make up an increasing share of this. They are not only critical for core components in cars but also washing machines and military use to green technologies.
