UK Government to Explore How to Boost Semiconductor Industry
13-12-2022 | By Robin Mitchell
The ongoing worldwide semiconductor shortages have made the importance of secure semiconductor supply chains abundantly clear, and in recognition of their significance, the UK government has now announced a new plan to research potential initiatives to boost the semiconductor industry. What challenges does the UK semiconductor industry face, what will the UK government do, and what could be done to encourage semiconductor industries?
What challenges does the UK semiconductor industry face?
The importance of semiconductors cannot be understated; they are used in almost all electronic devices, and electronic devices are used in nearly all aspects of life. Whether making a payment, placing a call, or just walking down the road, an electronic circuit will be involved to some degree, and that circuit will likely be powered by a semiconductor.
And yet, despite the importance of semiconductors, the electronics industry and world governments both had little interest in semiconductor supply security before 2020, and when the COVID pandemic hit, the entire industry was thrust into disarray. But now that millions of products have failed to reach shelves, governments worldwide are scrambling to create their own semiconductor industries that can weather future disruptions.
While countries such as Japan and the US, which have a strong history in semiconductors, have started to build new foundries, the UK is struggling to remain relevant in the semiconductor industry. Of course, some of the industry's biggest names are British such as ARM, but many of these names are fabless companies that design semiconductors but don't actually manufacture them. And this is where the UK faces its first major challenge, foundries. Even though the UK does have several foundries, these are designed for larger technology nodes which include ASICs and analog devices, but none are capable of producing the latest processors.
The second challenge faced by the UK is Brexit, and it hurts the UK semiconductor industry in a significant way. The EU recently introduced their version of a CHIPS act that seeks to improve semiconductor supply chains while encouraging the creation of new foundries by companies such as TSMC. However, as the UK has left the EU, not only is it unable to cash in on CHIPS act incentives, but it also makes the UK separate from the EU. This means that semiconductor strategies by the EU are likely to not include the UK, and this means that future supply chain challenges will see EU nations prioritised over the UK.
The third challenge faced by the UK is logistics and experience. Simply put, the UK is not built for semiconductor foundries, and UK engineers do not have the expertise to manufacture the latest node technology. It is possible that Intel or TSMC could build foundries in the UK and then bring their own expertise into the UK, but this would be immensely expensive and time-consuming. Furthermore, the high cost of living in the UK makes the cost of manufacturing in the UK far too great, something which Taiwan and the US are better suited for.
The fourth challenge foundries face in the UK is the strict environmental protection laws that would interfere with the operation of foundries. While no business should ever pollute its surroundings, the semiconductor industry is particularly nasty due to the use of hazardous compounds, including hydrofluoric acid and polysilicon. In some cases, these can leak and contaminate local areas, and this is something that would not be acceptable in British society.
UK Government to research semiconductor industry viability
In hopes that the UK can cement itself as a country that supports semiconductor industries, the UK government has recently announced a £700,000 grant that will see researchers examine how the UK can incentivise semiconductor industry operations. It is hoped that the incentives will encourage more semiconductor design start-ups (fabless), testing facilities, and semiconductor customers to get together to discuss challenges faced by the wider industry.
It has also been proposed that a new institution could be formed that would spearhead such research and advise the government on how to build a strong semiconductor industry. Other proposals include ease of access to the tools needed to design the latest semiconductors, reduce barriers to entry, and provide better access to the latest packaging technologies. While the UK government has noted that the UK semiconductor industry has grown by 95% between 2012 and 2021, access to physical devices is still challenging.
The research study will explore five specific topics that have been chosen as the most essential; industry coordination, silicon prototyping, open-access manufacturing for compound semiconductors, advanced packaging and intellectual property.
What could be done to help the UK semiconductor industry?
The fundamental issue with the semiconductor industry in the UK isn't the ability to design the latest semiconductors (as we have many fabless companies already) but the ability to manufacture semiconductors. Considering that setting up 3nm foundries in the UK is unlikely, it may be better for the UK to enter into a partnership with the EU or US to get exclusive access to semiconductor foundries.
Failing that, another option may be for the UK government to launch a die storage initiative that identifies the most important semiconductors in the UK market and stock up on spare wafers. As wafers are easy to store and have high die densities, storing 1000 wafers of a high-end mobile processor would take up a small amount of storage but hold millions of devices that could be released during a shortage. Older wafers can be sold at a discount to distributors, who can then package and distribute them to ensure that the most important devices are stocked.
To aid in wafer storage, the UK would also need to introduce packaging foundries that take individual dies and place them into IC packages. This could be a good way to get the UK into the semiconductor supply chain as packaging industries do not require the same degree of complexity as die foundries, and the reduced environmental impact would make such businesses compatible with UK interests. Furthermore, if the UK can establish itself as a strong packaging industry, it would be easier for future foundries to set up shops in the UK where they can be located close to packaging sites.