[Chip Talk] Effectively Out of the UK Semiconductor Hegemony War?..."Downhill"

Ahead of the Election on the 4th Next Month in the UK... Semiconductor Interest Declines
Failure to Support Companies like ARM and Graphcore
Industry Concerns Over Workforce Securing Due to Net Migration Reduction Pledge

The United Kingdom, a member of the Group of Seven (G7) and the world's fifth-largest economy, appears to have effectively dropped out of the semiconductor dominance race. Although it expressed strong determination last year by announcing plans to foster the semiconductor industry, political issues have prevented significant achievements, investment levels remain minimal, and channels for securing talent are actually narrowing. There is an assessment that the UK's semiconductor policy is on a downward trajectory.

[Image source=EPA Yonhap News]

The Centre for European Policy Analysis (CEPA) referred to the upcoming early general election on the 4th of next month in the UK and, in an article titled "Is Semiconductor Just a Peripheral Issue?", analyzed that "Brexit supporters promised to make the UK a 'technology superpower,' but it seems that ambition has been forgotten while preparing for the election." Although the UK is not considered a key player in the overall semiconductor market like South Korea or Taiwan, it has sought to build semiconductor supply chains just like major countries such as the United States, Europe, Japan, China, and Taiwan.

Christopher Siterra, a senior researcher at CEPA who wrote the article, evaluated that until the 1980s and 1990s, both Conservative and Labour governments prioritized semiconductors in their policies, but now the UK is on a "downhill" path. He explained that when Inmos, the UK's first semiconductor startup, was established in 1978, the Labour government supported it, and when ARM, which became the UK's representative semiconductor design company, was founded over 30 years ago, the Conservative government indirectly supported it.

However, since then, the UK's semiconductor support policies have not been very effective. A representative example is the listing of the UK company ARM on the US Nasdaq. SoftBank, which acquired ARM in 2016, delisted ARM shares from the London Stock Exchange where they had been traded for 18 years and listed them on Nasdaq last year. During this process, then-Prime Minister Boris Johnson and other UK politicians actively tried to keep ARM in London but ultimately failed.

In May last year, the UK government announced it would invest ?1 billion (about 1.8 trillion KRW) to strengthen its domestic semiconductor industry over the next 20 years, but criticism followed immediately. Compared to the US, which plans to invest $52 billion (about 72.3 trillion KRW) in semiconductor manufacturing and research, and the EU, which plans to invest €43 billion (about 64 trillion KRW), the amount was considered woefully insufficient. The Guardian reported right after the announcement that "?1 billion is less than the cost of building a single semiconductor factory." Due to the aftermath of Brexit, the UK semiconductor industry was also excluded from the semiconductor support law established by the EU.

[Image source=Reuters Yonhap News]

There are also criticisms that the UK government has effectively lost Graphcore, a UK semiconductor company once considered a potential rival to AI semiconductor leader Nvidia. Graphcore produces semiconductor intelligence processing units (IPUs) used in AI development and operations. Some have even evaluated Graphcore's IPU as "superior in performance to Nvidia semiconductors."

However, due to US export restrictions to China last year, Graphcore withdrew from the Chinese market, and the market expressed concerns that the company's value had dropped to "zero." Recently, reports have emerged that SoftBank, which acquired ARM, is pursuing the acquisition of Graphcore, putting the UK government in a position where it might lose another leading semiconductor company overseas.

Siterra, who has worked in the semiconductor industry for over 30 years at companies such as Broadcom and STMicroelectronics, criticized the UK government's semiconductor support measures for focusing only on graphics processing units (GPUs) produced by Nvidia, overlooking the innovation of Graphcore, which produces IPUs. He called the situation "a symbol of the UK's lost opportunity" and "a tragic story."

As new semiconductor factories are being built worldwide, major countries such as the US and Japan are also competing to secure talent. While these countries are making efforts to nurture semiconductor personnel by linking with regional universities, it takes time to deploy them on-site, so they are competing to attract limited foreign talent.

In this process, Bloomberg recently reported that the UK is likely to face setbacks in semiconductor talent recruitment as both the Conservative and Labour parties have pledged to reduce net immigration in the upcoming early general election. The number of UK work visa applications peaked at 85,000 in June last year but sharply dropped to 48,000 in March this year. UK semiconductor industry executives have expressed dissatisfaction with the difficulty of securing talent domestically, and the political stance has reportedly led to further frustration.

A UK semiconductor industry insider said, "The UK is self-destructing due to this attitude toward talent," adding, "Making it even harder to secure talent in the most critical industry is not only troublesome but also counterproductive."