Scott White of Pragmatic Emphasises the Need for Investment in UK Semiconductor Industry

Recently, Scott White, CEO of Pragmatic, has publicly stated that the UK semiconductor industry requires hundreds of millions, if not billions, in investment for R&D and defence to prevent firms from going abroad due to the vulnerability caused by the global semiconductors shortage. He also emphasised the need for local investment, such as the new ARM-based Wales foundry, to ensure a secure domestic supply chain. What challenges does the semiconductor industry face in the UK, what exactly did Scott White say regarding the industry, and why is it so essential for the UK to keep semiconductor fabrication local?

What challenges does the semiconductor industry face in the UK?

The COVID pandemic of 2020 demonstrated just how vulnerable supply chains across the world really are. While globalism has helped lift billions out of poverty, accelerate economies, and advance technology at unprecedented rates, it also makes the globe highly vulnerable to global and local disasters. For example, a localised natural disaster in a country highly relied upon by the rest of the world for a critical resource can severely impact the rest of the world. While the COVID pandemic was a global disaster, the fact that modern supply chains are long and complex, spanning multiple countries, it didn’t take long for these supply chains to completely grind to a halt.

In the case of semiconductors, the inability to get supply chains operational combined resulted in massive shortages, something which we have covered numerous times here at Electropages. However, the inability to get access to semiconductors actually demonstrated something else, something far more terrifying; a country that can’t get access to the latest semiconductors is highly vulnerable. In the revelation of this fact, countries worldwide have drastically increased funding and incentives for semiconductor industries in an attempt to bring semiconductor manufacturing home. Thus, a country that has semiconductor manufacturing capabilities has the ability to produce resources critical to modern defence and economies. 

While countries such as the US, Japan, and China have historically been prominent players in the field of semiconductors, the UK’s role in semiconductors has been more towards R&D and fabless businesses, relying on foreign nations for high-end semiconductors. That isn’t to say that the UK doesn’t have its own foundries, but they are rarely cutting-edge technology capable of producing high-end processors. However, the UK does have its fair share of cutting-edge research facilities that are actively working towards new technologies, such as Pragmatic, who manufacture flexible semiconductors at a fraction of the cost of traditional devices designed with disposability in mind.

Due to the immense cost of next-generation semiconductor facilities and the extensive training needed, trying to bring foundries into the UK is simply not possible with the current level of government funding. At the same time, there are very few incentives for foundries to set up shop in the UK when the US and EU are all offering large tax credits and reduced red tape. 

Pragmatic calls for increased investment

Not so long ago, we interviewed Scott White, CEO of Pragmatic, to understand what it is that Pragmatic does, the challenges faced with semiconductors, and where the industry is leading. Now, Scott White has publicly stated that the UK government is simply not doing enough to help fund semiconductor development and that without enough funding, semiconductor companies will move abroad.

The government can’t just spend a few tens of millions of pounds on the semiconductor sector, as that isn’t enough to move the needle. It has to be hundreds of millions, or even more than £1bn, to make a substantive difference. It is not about unfair subsidies; it is about having a level playing field with other countries around the world. – Scott White, Pragmatic

Pragmatic, a research and manufacturer in flexible semiconductors, employs over 200 people across the UK, with its HQ at Cambridge and two production facilities in Durham. However, it was also stated that if the economic climate in the UK continues to negatively affect semiconductor foundries, then Pragmatic may have to consider opening up new operations elsewhere around the world. Considering that Pragmatic heavily invests in research and development, the economic impact of moving to the US or EU could be substantial, hence the request for the government to improve funding drastically. 

Why is it essential to keep semiconductor manufacturers in the UK?

The cracks in the UK semiconductor industry are already showing, with one such example being the decision by ARM to list their stocks on the NY Exchange instead of the London Stock Exchange. The attempted sale of a foundry in Wales to China, which was eventually blocked by the government, was another example of foundry businesses losing interest in the UK.

It is unlikely that the UK will ever become a major manufacturer of next-generation semiconductors, and this is not entirely important as the UK will likely depend on its allies such as the US and EU. However, it is critical that the UK retains its own fabless businesses, such as ARM and Pragmatic, as they present the UK with a unique and powerful position; service-based businesses and niche technologies. By refining these two, the UK can focus on developing next-generation devices without needing to invest in foundries via services (such as ARM), while the development of niche technologies puts the UK at the forefront of research and development. 

Generally speaking, it is better to recognise one’s strengths and focus on those instead of trying to compete in areas where one lacks experience. In the case of semiconductors, the UK doesn’t have the expertise needed to create 5nm devices, but it certainly has the creativity and imagination required to develop flexible integrated circuits and intellectual property that will continue to be critical in the semiconductor industry.