New CPS report: Cashing in our chips: how to strengthen the UK's semiconductor sector

Friday, 10 February 2023 12:48

Amid immense international competition and with increasing geopolitical instability impacting global supply chains, the UK needs to adopt supportive measures to help the domestic 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...Request free trial

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.

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The report urges the Government to:

Introduce tax and investment incentives for high-intensity R&D industries such as:
- a bespoke R&D tax credit for companies in sectors that fall within the 'families of UK strength and opportunity' as set out in the Innovation Strategy.
- full expensing for non R&D plant and machinery, in addition to structures and buildings, for key sectors.
- establishing an Emerging Technologies Strategic Investment Fund (ETSIF) within the British Business Bank to court international capital for the UK’s emerging technology 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.'