A dearth of UK-based investors “qualified” in the semiconductor sector is holding back chip companies, particularly at the early stages, a new report has warned.
According to techUK, scaleups in the British semiconductor industry struggle to find investors who understand the complexities, timelines and the capital required for meaningful growth.
A recent roundtable hosted by the tech trade body found that it is a common belief among those in the chip sector that investors are not sufficiently signposted toward the huge potential of semiconductors, making finding and identifying suitable financiers a struggle.
In its second UK Plan for Chips report – two years after the first iteration was published – techUK urged the government to expand the ChipStart programme into a fully continuous scheme.
The programme was launched in 2023 as a two-year pilot following the release of the National Semiconductor Strategy. The pilot saw £1.3m of public investment resulting in almost £20m being raised by chip startups from the private sector and grants.
The report called for this accelerator to return as a permanent scheme with a longer time frame.
Other recommendations in the report included funnelling cash from public institutions like the National Wealth Fund and British Business Bank towards semiconductor scaleups, use a National Semiconductor Centre to establish long-term representation of the sector and increase funding to support joint research and development initiatives between the tech industry and academia.
The report also warned that to maintain and advance the UK’s position in the global semiconductor market – which is considered of extreme strategic, economic and geopolitical importance – the UK government must forge international partnerships to secure investment and research opportunities.
Britain’s top semiconductor companies include Arm, Pragmatic and Graphcore, which agreed last year to be acquired by Arm-owner SoftBank in a deal under review by the government under the National Security and Investments Act. With a market cap of over £130bn, Arm is also Britain’s most valuable technology company.
“Core value creation lies in semiconductor manufacturing, which has significant potential to boost the UK’s economy. Europe and the US are already investing heavily; competitive incentives in areas such as capital investment are urgently needed to level the playing field,” said Richard Price, CTO of Pragmatic.
“The UK government must act on this report, focusing support on fast-growing businesses to unlock the full potential of the sector and stay competitive in a global market poised to reach $1 trillion by 2030.”