The British government chooses a different semiconductor promotion policy and does not participate in fab competition

The UK's semiconductor industry must focus on niche manufacturing and design rather than seek to challenge international rivals in chip manufacturing, the UK science and technology minister said, admitting "we will not rebuild TSMC in South Wales".

Paul Scully, the UK government’s head of digital economy strategy, told the Financial Times that the UK would not join the race between Asia, Europe and the US to build advanced digital infrastructure backed by billions of dollars of state investment. Chip manufacturing facilities.

By contrast, the government's National Semiconductor Strategy, published in May, intends to provide just £1 billion to UK chip companies over the next 10 years. The funding will focus on existing strengths such as chip design - an area dominated by companies such as Cambridge-based Arm - as China looks to cultivate new winners in the global industry.

"To capitalize on our strengths, the key is advanced packaging and design," he said, arguing the UK should become "an integral part" of the global chip supply chain rather than compete in manufacturing. "We will not rebuild TSMC in South Wales," he said. "That's not going to happen."

Other countries have also made more aggressive attempts to woo the global chip industry, especially as rising geopolitical tensions lead countries to seek access to key components.

The US Chip Act provides $52 billion in incentives to encourage companies to set up manufacturing plants to make chips, while the European Union's European Chip Act promises 43 billion euros in state aid to the industry.

Germany has given Intel billions of dollars in subsidies to build chip factories in the country, hoping to boost economic growth through the project that is expected to create thousands of jobs.

"Because of the increase in demand for semiconductors, if we can do this, we have a huge opportunity," Sculley said. "So we can really take advantage of that, but we're not going to do it just through fabs."

Britain's new strategy comes amid growing concerns that some of the country's most important chip companies have been sold to international investors in recent years.

On Thursday, the government announced the names of members of the long-awaited Semiconductor Advisory Group, which oversees the UK's National Semiconductor Strategy.

The panel will be co-chaired by Scully and Dr. Jalal Bagherli, former CEO of Dialog Semiconductor. Dialog Semiconductor is an Apple chip supplier that was acquired by Japan's Renesas Electronics in 2021 for 4.8 billion euros.

Other members include Eben Upton, founder of Raspberry Pi, the best-selling British computer to date, and Richard Grisenthwaite, chief architect of Arm, which was acquired by SoftBank in 2016 for £24.3bn. Arm plans an initial public offering in New York later this year but has ruled out a London listing.

However, the sale of the Newport Wafer Fab by Chinese firm Nexperia has been hampered by security concerns as the UK government moves under new powers to terminate acquisitions involving strategic national asset deals .

"We want companies to be able to scale up here and if they exit, it would be best to hand it over to a British company," Scully said. "From a financial perspective, we don't want to sell intellectual property unnecessarily, but it's not something we can prevent in any way."

Some members of the new advisory group have been critical of the UK's recent semiconductor policy. Americo Lemos, chief executive of Cardiff-based compound semiconductor wafer maker IQE, has previously told The Times his company could leave the UK for the US or the US if financial incentives from rival governments were better. Europe.

Another panellist, Amelia Armor, a partner at venture capital firm Amadeus Capital Partners, criticized the UK for a lack of ambition in its national strategy and for delivering "disappointing" levels of investment.

Bagherli said it was natural for the industry to ask for more funding but was otherwise aligned with the government on a more focused strategy.

He said: "Many American companies in the semiconductor industry cannot operate if they cannot license Arm. This is technology from the UK. No matter where it comes to market, the IP is here and the design is here."