Converging interests: why telecoms holds the key to the UK’s tech strategy

In 2023, the UK government identified five critical technologies that could shape the nation’s future competitiveness: artificial intelligence, engineering biology, quantum technologies, semiconductors, and telecommunications. It was a bold statement of intent. But ambition alone won’t get things done.

The framework forms part of the basis of the UK’s industrial strategy, due to be published this spring. Dr Dave Smith, national technology adviser, says the focus on five technologies is a recognition that as a small country, the UK cannot be good at everything. He also acknowledges that each of the five technologies is missing a critical part – in telecommunications, for example, the UK lacks an original equipment manufacturer, while in semiconductors, the country lacks a chip foundry.

Despite being ranked fifth globally for technology innovation, the UK languishes at 31st when it comes to adoption, according to the World Intellectual Property Organisation’s 2024 index. That gap between R&D promise and real-world impact has become a defining challenge – and nowhere is the tension more apparent than in telecommunications.

Telecoms is the foundation upon which these other technologies will converge. But while it is fundamental to AI delivery, quantum networking, and semiconductor deployment, it is also the sector most reliant on coordination, investment, and long-term planning. In short, if telecoms fails, the rest may never reach scale.

Smith argues that the Research Excellence Framework, which ranks universities on the impact of their research, may push academics into silos, and that mechanisms are needed to enable researchers to secure funding, even if the project doesn’t go deep on one specific aspect. Ultimately, picking the areas where technologies might converge must be the decision of industry experts, not Whitehall. However, Smith adds, the government is keen to understand how telecommunications infrastructure will evolve into 6G and how Open Radio Access Network capabilities in compound semiconductors can play into that.

Software-defined strategic potential

As the telecoms sector looks ahead to 6G and beyond, software is emerging as the most powerful driver of innovation. Professor Dimitra Simeonidou, Director of the Smart Internet Lab at the University of Bristol highlights three major shifts: the growing importance of the network edge over the core, a reversal in traffic trends as consumers upload more than they download, and a decisive move away from rigid, vertically integrated solutions.

Programmable hardware, such as field-programmable gate arrays or chips that can switch from RF to optical interfaces on demand, will still matter, but as support for ever more powerful software. This is a strategic opportunity for the UK, which already has a strong base in software and semiconductor design.

Professor Martin Kuball, who leads an innovation knowledge centre (IKC) at the University of Bristol researching energy savings for data centres, agrees that software is crucial – but points out that hardware presents an opportunity for the university, which has existing strengths in materials. It is an even bigger opportunity for collaboration across borders, he adds. It is already playing out, as researchers are working with Welsh institutions on waveform engineering, while joint efforts with DARPA in the US are advancing high-power RF devices for future 6G networks. These aren’t siloed breakthroughs, they are signals of an ecosystem learning to operate across domains.

Developing clusters and a prototype demonstration centre

Other contributors see an opportunity for policy development in supply chains. Regulators can intervene to create a long-term plan that builds a reliable and resilient supply chain. Their argument, essentially, is that regulation can be a facilitator rather than a barrier.

An obvious convergence of technologies would be between telecommunications, semiconductors, and quantum. Artificial intelligence is also expected to have an impact and telecommunications networks in turn will underpin the delivery of AI applications. 

Toshiba’s trials of quantum key distribution in London are promising, but their value multiplies when embedded in telecom infrastructure. The same is true for AI. Its inferencing models will need the low-latency, energy-efficient networks that next-generation telecoms must deliver. Policymakers, too, are taking note. National security is becoming a horizontal requirement across all five tech priorities.

What is clear is that more investments in regions are needed to enable already evolving clusters. Investment should focus on existing strengths, and tap into already established platforms such as JOINER, which is led by the University of Bristol and underpins the UK’s three telecoms hubs.

Boosting regions will bolster industry investment. Already, the Innovative Optical Wireless Network is a consortium of 150 companies that is looking at aspects like speed, low latency, and low energy efficiency. And Microsoft, for example, is investing in joint research with the University of Southampton, which has strengths in optical technology. Meanwhile, Microsoft’s acquisition of spinout Lumenisity (specialising in hollowcore fibre optics) signals that big tech is watching and willing to invest.

To support this regional development, a national prototype demonstration centre for telecoms to accelerate technologies should be established, argues Nick Singh, the chief technology officer of the Compound Semiconductor Applications Catapult. The centre could be a physical or virtual space and can be a showcase for cluster developments but also points of collaborative need. It will only help fuel innovation.

The South Wales semiconductor cluster, for example, has become something of a benchmark. Built over the past decade by aligning infrastructure investment with research, training, and private sector buy-in, the region is approaching £1bn in annual turnover. It has brought together established, local industry players like semiconductor producer IQE, wafer fab equipment manufacturer KLA, and semiconductor company Microchip.

Skills and scaling – how can spinouts grow?

The primary bottleneck for the telecommunications sector is skilled engineers. There are not enough centres for doctoral training in semiconductors but the problem expands to graduate programmes and, in fact, goes even deeper than that: 500 secondary schools in the UK lack physics teachers, meaning those pupils cannot take it for their A levels, in turn preventing them from studying any related subject.

The numbers for electrical engineering students have remained stagnant for the past 20 years. The gap could be filled by an overseas workforce, which is how the US has counteracted its own challenges. And already at the University of Bristol, one research group is made up of largely non-British students (60% are from India, 30% from other countries, and 10% from the UK).

Skills, or a shortage of them, certainly play a key role in dictating whether or not a spinout can actually scale within UK borders. Scaling telecommunications start-ups is particularly difficult, yet scale is important to bring costs down. While having components manufactured by different players could be a solution, this also comes with the challenge that the components will need to be integrated, and the UK currently lacks a national approach to systems integration for both software and hardware.

Scaling these start-ups is difficult primarily because it takes five to eight years from spinning out to having a commercially viable product. Yet VC firms expect revenues to be generated within the first 12 months. Universities could develop projects further up the TRL scale internally before setting up a start-up, but that creates a prolonged valley of death: how would such projects be supported for potentially years beyond any current public funding mechanisms?

Public procurement can be a way of helping start-ups and spinouts scale, and this may be of particular interest to the government for defence-related technologies. In the US, the government commissions products at a guaranteed price and volume, enabling companies to secure the investment to scale.

Others argue that in every university, valuable pieces of innovation sit on a shelf for years because the research has concluded and there are no resources to take it forward into a real-world innovation. To solve that problem will ultimately require funding, more collaboration with industry, and a culture change among university researchers who lose interest once a paper is published and the grant is spent. The scale of the challenge is as vast as is the opportunity: there are 26 universities in the UK conducting semiconductor research.

UK needs a sustainable roadmap

Industry, in particular, wants clear direction from government. Two years after the semiconductor strategy was published, there are still no implementation plans or roadmap. One roundtable contributor describes the wait for the national semiconductor centre as “planning our warm-up routine for the last Olympics.” 

Without a roadmap, universities and industry also run the danger of building the technology they think is needed – but not the one that is required. The UK Telecoms Innovation Network Semiconductors Expert Working Group’s task has been to put together technology roadmaps showing where semiconductors come into play in telecommunications. The group has identified that the sector would benefit from greater recognition (semiconductors are invisible to the public, meaning it is hard to get skills into the industry); coordination between different actors; scaling up (both in terms of TRLs and MRLs); resilience and security; international partnerships; and infrastructure investment, including in the silicon photonics pilot line.

Any roadmap that is developed needs to be granular, taking into account existing capabilities and specific points where support is required. It needs to answer the question of what good looks like in terms of economic, science and supply chain outcomes. For example, the South Wales cluster’s goal is to generate 6,000 jobs in the sector, dictating how investments are made, how training is delivered and how infrastructure is built.

The roundtable also points out the need to consider the counterfactual: if we don’t do x, y or z, what will we lose? 

But ultimately, the danger is the trap of paralysis by analysis, where endless discussions are held about how to translate findings into an industry strategy.

National security needs to factor into everything

The rise of sovereign security is becoming increasingly important and this will factor into the road the government, universities, and industry choose to pursue going forward. As a medium-sized country, it will never be possible to have a completely integrated supply chain within the UK, but any strategy will require thinking through geopolitical vulnerabilities – what if, for example, China invade Taiwan and access to Taiwanese chip manufacturing capabilities is lost, or what if more sub-sea cables are cut?

This is particularly relevant for the telecommunications sector, following its experience with Huawei and 5G deployment. A key challenge is diversifying the supply chain because even a choice of two different OEMs exposes the country to potential security risks.

The roundtable concludes with a healthy dose of optimism: these geopolitical realities may become an opportunity for the UK. TSMC in Taiwan will want to look at building capacity overseas and the roundtable argues it is “not totally fantastical” that the UK could become a base for the company.

And Lord David Willetts, who chaired the roundtable, ends with one final punchy prediction: the UK Space Agency will create a satellite-based data centre within the next five years.