Asked by
To ask His Majesty’s Government what progress they have made
towards engagement with the semiconductors manufacturing sector
concerning funding to support future manufacturing in the United
Kingdom, as set out in the Semiconductor Strategy, published on
19 May.
The Parliamentary Under-Secretary of State, Department for
Science, Innovation and Technology () (Con)
The national semiconductor strategy sets out the Government’s
plan to build on the UK’s strengths to grow our sector, increase
our resilience and protect our security. We will also announce
plans by the autumn to further support the competitiveness of the
semiconductor manufacturing sector, which is critical to the UK
tech ecosystem and our national security. We have engaged, and
continue to engage extensively, with industry. The Government’s
new semiconductor advisory panel met last week to inform our
approach.
(LD)
I thank the Minister for his Answer. I think the concern lies
around the rhetoric that has surrounded the May announcement,
which very much focused on research and design while coupling
that to resilience. As the Minister knows, good design companies
and good research get bought and leave the country, and they do
not necessarily contribute to resilience, whereas manufacturing
does. As the Minister said, we in this country are home to some
very innovative, lower-cost, niche manufacturers, but for those
investors to have the confidence to further those companies, a
strategy needs to be set out. Can the Minister assure your
Lordships’ House that his department is putting maximum pressure
on the Chancellor so that, when his Autumn Statement comes out, a
proper manufacturing strategy for semiconductors in this country
will be forthcoming?
(Con)
The noble Lord raises, as ever, an interesting point, but to
build an advanced silicon fab would, first of all, cost tens of
billions of pounds. It would run into not only costs of operation
but substantial risks of uncompetitive yields and, as we have
seen several times historically, shifts in demand for
semiconductors. I remind the House that, although 40% of the
value chain of semiconductors is represented by manufacturing,
30% is represented by design. It makes sense that our strategy
should build on the country’s strengths, particularly in
design.
(Lab)
My Lords, may I follow up that point and ask a little more about
the detail of who runs this strategy? In addition to the
independent regulator, the CMA, there are, as I understand it,
three government departments directly involved: the Cabinet
Office, the Department for Business and Trade, and DSIT, as
represented by the Minister. The focus of the third leg of the
national strategy engages with export control, hostile takeovers
and mergers. Who is in charge of that, and can the Minister
explain it?
(Con)
Indeed I can, and I recognise the importance of the question
around clarity between these various arms of government. The
ownership of the semiconductor strategy sits squarely with DSIT.
There is a range of Acts—to do with export controls and
protection of investment from states seen to be hostile to
us—that of course come under other departments, but overall
ownership must sit, and continues to sit, within DSIT.
(CB)
My Lords, is the Minister aware that some 90% of all advanced
semiconductors are produced in Taiwan and that 60% of all
semiconductors are produced in Taiwan, mostly by one company?
Given the urgency that has arisen out of the hostile acts taking
place in the South China Sea, can the Minister tell us what we
are doing to bolster supply chain resilience and security? Can he
tell the House the current position on the future of Newport
Wafer Fab, given that a Chinese company attempted to buy it?
(Con)
I am of course aware of the overwhelming market position of TSMC
in Taiwan. It is a manufacturing foundry for semiconductors, but
that is the only slot in the supply chain that it occupies.
Having a foundry by itself is nothing without the vast, complex,
integrated global supply chain of all other companies. On the
second part of the noble Lord’s question, any threat to peace and
stability in the strait of Taiwan is a deeply serious concern for
the Government. We are looking at all scenarios and contingency
planning in preparation for any disruption to that.
(Con)
My Lords, graphene is the thinnest material known to man. It is
about 100 times stronger than steel and has the most exceptional
electrical conductivity. I understand that huge research is being
done on this throughout the world—billions—but there are some
small companies in this country, with the finest brainpower, that
are working on this. Do the Minister and his unit feel that the
conductive capability of graphene is going to be the future for
this world?
(Con)
My noble friend reminds me that I had the pleasure of visiting
the graphene centre at Manchester University just a couple of
weeks ago. I share not only his positive views of the material
but his positive estimate of its future uses. It will play a
significant role in compound semiconductors of many different
kinds, and that is one of the areas of focus for the UK’s
semiconductor strategy.
(PC)
My Lords—
(LD)
My Lords—
(Con)
My Lords, shall we allow the noble Lord, , to contribute and then the
noble Lord, ?
(PC)
I am very grateful. I want to continue on the basis of the
question asked by the noble Lord, Lord Alton, regarding the
specific Newport Wafer Fab factory. I do not think the Minister
got around to answering that fully, and I would be grateful to
have his observations on the issue.
(Con)
I apologise to the noble Lord for not having reached that bit.
The concern about Newport Wafer Fab was that the ultimate owners
of the buyer were Chinese investors; hence, under the NSI Act,
that was blocked. I cannot comment any further on that specific
case because it is under judicial review.
(LD)
My Lords, the Government may have finally published a strategy on
semiconductors, but is investment in our great south Wales
compound semiconductor hub going to be encouraged by his
ministerial colleague Paul Scully’s remarks about not wanting to
recreate Taiwan in south Wales? Also, as has been referred to,
there is the very much delayed decision over the future of
Newport Wafer Fab.
(Con)
What Minister Scully clearly meant was that there is no point
attempting to construct an advanced silicon manufactory at the
cost of tens of billions of pounds at considerable risk to both
investors and the taxpayer when all those who have tried to mimic
TSMC have failed at great expense. It is far better to focus on
our strengths and on the compound semiconductor strategy that
Minister Scully will have spoken about on that occasion. Again,
Newport Wafer Fab is under judicial review and I cannot comment
further.
(Lab)
My Lords, with regard to semiconductor investment, the US has
tabled a package of $50 billion, China a package of $40 billion
and India $10 billion, while the UK has put forward just £1
billion, or $1.2 billion, which is 1/13th of the subsidy given to
railway companies. Can the Minister explain why the Government
show so little ambition? Will he now publish all emails and
minutes relating to the national semiconductor strategy document
so that we can get some insights into its neglect of this vital
field?
(Con)
In respect of the first point, as I say, it is a highly risky
undertaking to construct advanced silicon fabs in the way that
those countries are setting out to do. That is not the right
strategy for the UK. With regard to publishing all the emails
written by the department, perhaps the noble Lord could write to
me and set out his reasons for wanting them and I will be happy
to talk to him.
(Con)
My Lords, can my noble friend estimate what proportion of the
semiconductors in our critical national infrastructure comes from
countries that do not have our best interests at heart?
(Con)
The global integrated supply chain for semiconductors is of a
scale and complexity that make any attempt to answer that
question for any given semiconductor, given the sheer quantity of
them and the number of companies that may or may not have
contributed in some way along the supply chain, futile. I do not
think any human being—or computer, for that matter—could possibly
answer such a question. I am sorry.
