Delayed semiconductor strategy risks loss of investment, warns Welsh Economy Minister

Vaughan Gething says continued delay in publication means tech companies and investors more likely to look to US and EU. 

We’re used to the idea of electronic systems containing silicon ‘chips’. Silicon is a cheap and abundant element, easily extracted from sand. But its use is limited, especially as electronics get ever more complex.

An estimated 20% of chips now comprise two or more elements. These compound semiconductors are more expensive to produce but often outperform silicon. What’s more, different compounds produce semiconductors with unique, specific properties. 

For example, the range extension of electric vehicles (EVs) relies on efficient silicon carbide. The high-speed datalinks needed for 5G use chips of gallium-nitride. 

Compound chips are now integral to the LEDs, smartphones and WiFi we use in daily life. They’re also vital to bigger scale tech such as satellite communications and robotics. 

That’s the background. In recent years, thanks to funding from both Welsh and UK governments, South Wales has developed what’s been called a business and academic ecosystem specialising in compound semiconductors. Mr Gething, Minister for Economy in the Welsh Government, claims that several companies would like to invest further in Wales to build on this. 

However, Mr Gething has now been compelled to write to Chloe Smith, UK Secretary of State for Science, Innovation and Technology, to warn that the continued lack of a UK strategy for the sector is a growing problem.  

Mr Gething says: ‘The semiconductor sector requires long-term investment. Companies, and indeed the Welsh Government, need to understand the UK commitment to this industry at the earliest opportunity. If not, investment decisions will be made elsewhere. 

‘I would hope the strategy contains a significant investment commitment by the UK Government that will be proportionate to the commitments being made in the US and EU. In investing in the UK’s strengths, I would wish to see compound semiconductors recognised as a priority for investment, and Wales’ cluster confirmed as a destination for that investment. 

‘The strategy will, I expect, commit to developing our R&D and skills for the sector, but it should also commit to building the infrastructure that enables the industry to grow and develop. It is crucial that the strategy sets out how the UK can support companies in a way that prevents the leakage of activity overseas.’ 

The Minister also drew attention to the Nexperia/Newport Waferfab in Newport. This is one of the UK’s largest waferfabs producing complex circuits, yet its future is now uncertain following a Security and Investment Order. 

The Minister adds: ‘The industry is facing real volatility and the absence of a strategy aggravates the particular uncertainty the workforce in Newport faces and our ability to secure the jobs and skills that are essential to a strong cluster in the long term.  

The Minister called for a meeting with the Secretary of State to discuss the planned next steps for the sector.

In related news, the Welsh Government recently published its new cyber action plan.

Photo by Windell Oskay