Report
Semiconductors, also known as ‘chips,’ are present in almost every device we use: from day to-day consumer electronics, vehicles, defence, healthcare, to the data centres powering AI. Virtually every piece of digital technology is built upon a bedrock of semiconductors. It is understandable, then, why the semiconductor market is predicted to be worth at least $1 trillion by 2030.
Alongside their foundational role in the modern economy, semiconductors are also part of a global supply chain that has significant susceptibility to external shocks: the semiconductor supply shortage in 2020 was estimated to have reduced global GDP growth by 1%. Alongside economic insecurity, supply chain disruption can also threaten critical national infrastructure, such as power and transport networks, making the semiconductor supply chain essential to UK resillience. As such, semiconductor capabilities have assumed critical importance for many governments.
The mix of vulnerability, necessity, and economic promise presented by semiconductors has led to other governments, such as in the United States, the European Union and China, announcing significant investment into their domestic semiconductor sectors. For example, the European Chips Act announced €43 billion to support semiconductor infrastructure, skills, startups and more across Europe.
In November 2024, the European Commission’s Executive Vice-President for Tech Sovereignty, Security and Democracy, underscored this commitment to semiconductors by recognising their role as a key technology to securing Europe’s future, alongside AI, cloud, quantum and space.
These national strategies, supported by legislation, government investment, and subsidised schemes, are far more competitive than that offered by the UK. The UK must use its existing resources tactically, playing to its globally recognised strengths within the semiconductor value chain to bolster its domestic capabilities and meet the competition presented by these global strategies
