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Public funding for microchip startups considered in government’s semiconductor strategy

startup funding microchip semiconductor strategy

Public seed-stage funding for British microchip startups and incentives for venture capitalists are among the measures being considered by the government in its upcoming semiconductor strategy, according to reports.

The state-owned British Business Bank, Innovate UK and the National Security Strategic Investment Fund are being considered as channels to provide the taxpayer funding, according to sources who spoke to Bloomberg.

Subsidies would form part of a government-led approach to boost the UK’s semiconductor industry and ensure it is less reliant on East Asia and less exposed to supply chain issues.

UKTN understands that the government’s semiconductor strategy – which has been in development for two years by the Department for Digital, Culture, Media and Sport (DCMS) –  is not yet finalised and that details are subject to change.

Other measures being considered are support for existing semiconductors to scale up and a semiconductor task force to coordinate public and private support for the sector, according to the Bloomberg report.

A government spokesperson said: “We don’t comment on speculation. Our semiconductor strategy will be published in due course.”

Microchips and politics

Semiconductors are ubiquitous in today’s devices, found in everything from cars to fridges. Most of the world’s chips are produced in Taiwan, China and the US.

The UK government has increasingly been scrutinising Chinese involvement in the British semiconductor industry, using national security laws to controversially reverse the £63m takeover of Newport Wafer Fab by a Chinse-owned company.

The European Union and the US have both passed legislation and invested billions to improve domestic semiconductor capabilities.

However, experts warn that delays by the government to launch its own semiconductor strategy risk the UK being left behind.

On Wednesday, leaders in the UK tech community wrote to Prime Minister Rishi Sunak calling on him to publish the long-awaited roadmap as a “matter of urgency”.

Russ Shaw CBE, founder of Tech London Advocates & Global Tech Advocates, and a signatory of the open letter, said: “In the past, the prime minister has pledged to make Britain a technology superpower – now, the tech industry needs him to act decisively on one of the greatest threats to the sector’s growth and outline the future of the UK’s semiconductor industry.”

Trade association techUK, which represents over 900 UK technology companies, outlined a plan this week to boost the country’s semiconductor industry.

Suggested measures include protecting the UK’s position as a leader on chip design, incetivise investment in new fabrication plants, partnering with key allies on R&D, nurture relevant skills and improve access to markets and private capital.

“Semiconductors will be essential to almost all future technology. The US, China and the EU are already acting now to invest in their chips industries the UK must do the same or be left behind,” said Neil Ross, associate director for policy at techUK.

He added: “To do this the UK needs to be strategic and invest where we already lead such as in design and IP. However, we also must target support where the UK can capture parts of the future semiconductor market, such as in compound semiconductors, other non-silicon-based chips and advanced manufacturing techniques.”