Oral statement (Wales) on Update on Compound Semiconductor Investments - Nov 26

Rebecca Evans MS, Cabinet Secretary for Economy, Energy and Planning: Diolch. I'm pleased to update colleagues today on a number of investments and support measures in the compound semiconductor sector in Wales. The first of these is at Vishay Intertechnology Inc, one of the world's largest manufacturers of discrete semiconductors and passive electronic components. It's announced that, with Welsh Government support, it's investing £51 million in Newport Wafer Fab, the largest UK semiconductor facility. This will bring in new product ranges and secure the future of skilled workers in Newport. This is welcome news for staff at the plant, as well as Members of the Senedd from the Newport area, following ownership turbulence in recent times. The company plans to transform the site to support the transition to electric vehicles, aerospace and other advanced manufacturing applications.433

Meanwhile, a second US-owned company, KLA, has made excellent progress with the construction of its new European headquarters at Imperial Park. With Welsh Government investment in the grid infrastructure at the site, the 215,000 sq ft, $100 million development is creating a state-of-the-art innovation centre and manufacturing facility, and will include clean rooms for research and development and manufacturing. Recruitment of up to 750 employees is already under way. We and Cardiff capital region are actively working with KLA on its future plans, including potential expansion opportunities within the region.434

This compound semiconductor sector showcases how our commitment to green growth can support the wide range of benefits we are determined to deliver for the Welsh economy. Cluster members invest heavily in R&D and business practices targeted to achieve net zero by 2050. They are major employers of well-paid science, technology, engineering and mathematics apprentices and graduates. They export more than 95 per cent of their products and have higher productivity than in manufacturing generally. This is a key enabling technology, with strong global growth projections. Compound semiconductors underpin green growth in nearly every sector, from efficient motors for electric vehicles to controlling wind turbines, LED lighting, and solar panels to transform buildings into power stations.435

A good example of this is a £2.5 million net-zero research project at Swansea University's centre for semiconductor materials. It's pioneering the reduction of building emissions for the semiconductor industry with funding from the former Higher Education Funding Council for Wales. The centre is an active member of the semiconductor cluster and has research agreements with industrial members such as Vishay, which counts a number of Swansea alumni among its executives.436

I welcome the significant investment by both Vishay and KLA, not only because of the long-term commitment to Newport, but also because of the confidence it demonstrates in our holistic and collaborative approach to economic development in Wales. This collaborative approach across public, private and academic sectors, as well as across all tiers of Government, is the model for economic development of the future. This model will ensure the economic benefits of the compound semiconductor cluster are felt right across Wales, not just in the south-east.437

I'm pleased to report that, following the autumn statement last month, the UK Government has confirmed the continuation of the investment zone programme across the UK. The presence of this world-leading cluster, including the research capability of the CS Catapult and our universities, was a key driver in the Welsh Government and UK Government's joint decision that Cardiff and Newport offered the potential to host an investment zone in Wales. Cardiff capital region are developing their proposals for how it will use the £160 million of available funding. I look forward to receiving details of how they propose this investment will create additional jobs and drive economic growth across the region.438

In the meantime, our international strategy continues to showcase the compound semiconductor sector, recognising that it's an area in which Wales excels. Indeed, the collaborative culture of the cluster has proved to be a magnet for inward investors and academic collaborations. Cardiff University hosted a prestigious international technical conference in October on semiconductor power devices, and we will welcome an inward mission by Canadian semiconductor companies in the spring—all important ways to shine a global spotlight on Wales.439

It is, however, essential that Wales offers world-class facilities for those inward investors landing in Wales for the first time and for indigenous companies wanting to grow. I'm pleased to announce that, earlier this year, Welsh Government invested in such a facility. Centre 7 at Cardiff Gate is a 51,000 sq ft building that will act as a hub to attract and accommodate semiconductor businesses and facilitate further collaboration. Work to the building continues to support the prestige of the facility domestically and internationally, which has already reaped rewards. I am pleased to announce the occupation by the first two tenants—US corporation Microlink Devices, and CS Connected, the cluster organisation for the compound semiconductor community. We expect that this hub will also be a centre for future investment in semiconductor software and design, and we have active projects in this area.440

Semiconductor jobs are sticky, with the main sites in Wales having been here for 40 years or more, albeit under different ownerships. KLA has invested over $100 million into its new facility to support both R&D and manufacturing activity in Wales. It has an extensive supply chain, spending over £60 million each year within a 100-mile radius of Newport, buying machined parts, wiring harnesses, electrical components and sub-assemblies. We need to grow that supply chain in Wales to ensure the benefits of the sector are widely felt.441

We're now, after a decade of seeding the cluster, reaping the rewards of our commitment, which we will continue to drive forward. These three substantial announcements demonstrate that we remain committed to investing in and supporting the cluster through the exemplar model of collaborative working and the ability to support green jobs and growth—a clear commitment for the Welsh Government.