Cashing in our Chips

• A secure supply of high-end semiconductor chips underpins the modern world. 
• Ahead of the Government’s long awaited semiconductor strategy, a new CPS report ‘Cashing in our chips’ sets out how the UK can support the industry without entering into a subsidy arms race.
• While the UK develops its policy, the US, the EU and Taiwan are among those investing billions of dollars – and in the US’ case, imposing sanctions against China’s semiconductor sector – to secure their domestic supplies.
• Writing the report’s foreword, Alicia Kearns MP, Foreign Affairs Select Committee Chair, says these proposals can help reduce our ‘technological dependence on undemocratic states’ while ‘bolstering our economic competitiveness’.
• The report argues the UK can play to its strengths, support the industry with market-led measures, support levelling up ambitions, and boost our resilience to geopolitical shifts.

Amid immense international competition and with increasing geopolitical instability impacting global supply chains, the UK needs to adopt supportive measures to help the semiconductor industry without engaging in a ‘subsidy arms race’, according to a new report from the Centre for Policy Studies.

Recognising the fiscal constraints facing the UK government, ‘Cashing in our chips: How to strengthen the UK’s semiconductor sector’ sets out a series of proposals to boost this key industry that play to the UK’s existing advantages, which have low upfront costs and can be implemented almost immediately. An additional advantage of these measures is that they would benefit other R&D intensive industries and emerging technologies, beyond simply semiconductor manufacturing.

The report urges the Government to:

• Introduce tax and investment incentives for high-intensity R&D industries
• Improve the immigration system for highly skilled STEM graduates and emerging technology firm workers. 
• Add flexibility to the planning system to encourage the construction of scientific infrastructure such as laboratories and manufacturing plants.
• Strengthen the focus on semiconductor policy within Whitehall.

While the government has yet to publish its long-awaited semiconductor strategy, they have identified the sector as high-growth and been clear that semiconductor supply is a national security issue. 

This is echoed by Foreign Affairs Select Committee Chair Alicia Kearns MP in her foreword when she says thinking strategically about how the UK can grow the semiconductor sector is ‘the obvious choice’, adding that these proposals allow the UK to ‘[reduce] dependence and [deliver] policies that strengthen the British economy in the long run.’

Centre for Policy Studies - Friday, 10th February, 2023