UK urged to come up with microchip strategy

Intel has called on the government to lay out a strategy for the semiconductor industry and not miss out on inward investment.

Intel has called on the government to lay out a strategy for the semiconductor industry and not miss out on inward investment.

The giant American chip company is spending €33 billion in mainland Europe on semiconductor research and manufacturing, with support from the European Union, but has no such plans for the UK.

Western countries want to cut their dependence on semiconductors from Asia to prevent supply shortages similar to those that occurred during the pandemic, which caused widespread disruption to manufacturing. The need has become more acute amid the growing tensions between China and Taiwan, a key producer.

The EU, under its Chips Act announced in February, has earmarked €45 billion towards the aim of making 20 per cent of the world’s microchips in the bloc by 2030. At present only 10 per cent come from the region. Similarly, the United States is spending more than $50 billion as part of its Chips and Science Act, passed in July, to encourage global manufacturers to invest there.

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Britain is conducting two reviews into the sector, which is crucial to the functioning of electronics and infrastructure, but has yet to set out a plan.

Frans Scheper, Intel’s new president in Europe, said: “I think it is good [the UK is] making inquiries, but it needs to take the next step and make investments.” He described semiconductors as “the new oil” and said investment was needed now to safeguard the future. “It’s about security and supply chains,” he said. “I am worried about protecting our IP in the western world and these factories take years to build. You can’t just say, ‘Yeah, there’s a shortage, let’s build a factory.’ They will be vital for [the West] — everything will be built on this processing power.”

Intel’s investment plans include €17 billion for a giant new “fab”, or manufacturing plant, in the German city of Magdeburg, due to start operating in 2027. There will be money across the supply chain in France, Ireland, Italy, Poland, Belgium and Spain.

Scheper said: “Our customers are bullish and if we don’t make investments, there will be bigger shortages. The digital transformation takes huge computer power.”

The Department for Digital, Culture, Media and Sport and the Commons’ business select committee are looking at the strengths and weaknesses of the industry and its supply chain in the UK. However, manufacturers are waiting for an official announcement about the future of the sector.

Scheper said: “The UK is an important market for Intel — we have almost 1,000 people working there. We don’t have any plans to build a new facility in the UK. There’s nothing to say we don’t want to invest there, but let’s be clear: the announced support of the European Union is helping us to make these investments.”

He said that the UK had strong expertise in the design of microchips, mainly clustered around universities, “which is very exciting, and a lot of capital comes out of London, which is important for growing start-ups. But because of the investment, our focus is very much on the EU.”

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UK urged to come up with microchip strategy