UK powers up trillion-pound tech ambition with semiconductor drive

The UK wants to create the world’s first $1 trillion technology business, which will require lifting the economy as a whole. So said Richard Duffy, head of Semiconductor Innovation and Ecosystem in the Department for Science Innovation and Technology, during his opening remarks for the latest Foresight Live event.

The opening panel at the event focused on the convergence of critical technologies in power semiconductors and future mobility. It was moderated by Aby Sankaran Iyer, senior project manager at the innovation and knowledge centre REWIRE at the University of Bristol.

This drive to create a trillion-dollar company is based on the idea that big tech has an outsized impact not just on the economy directly, but also through staff that eventually leave and create new start-ups – a virtuous circle that has played a large part in making Silicon Valley so successful.

“We want to create an ecosystem and a pipeline that can support companies throughout the journey from research through to scale,” Duffy said. The UK currently struggles with scaling companies, with start-ups often exiting before they reach significant scale. That is, in part, about scale up capital, and Duffy highlighted how the newly created National Wealth Fund, capitalised with around £28 billion, is able to co-invest with the private sector  to help tackle this challenge. The government is also exploring ways of working more closely with scale-ups, such as using procurement to support innovation.  

The government has published the Digital and Technologies Sector Plan, which outlines the UK’s ambition to be one of the top three places in the world to start and scale a deep tech business. Particular priorities are AI, advanced communication technologies, quantum, engineering biology, cybersecurity, and semiconductors.

Overcoming the sector’s fragmentation

To succeed, the UK will need an integrated approach. There are about 210 semiconductor companies in the country, and over 600 companies involved in the sector in some form, but with activity fragmented, both scale and critical mass are a challenge. The sector also faces a skills shortage and needs better access to finance, while a long-term strategic approach to innovation is required. But the UK has all the right ingredients: the country already has a robust academic base and strong integrated circuit design expertise, an excellent start-up culture, and a thriving venture capital ecosystem.

Professor Martin Kuball, director of REWIRE, agreed at the event that there is a lot of innovation sitting within universities but noted that its translation into real-world applications remains a challenge. Wind farms, for example, all use converters made in China, and to compete in power semiconductors, the UK will need to figure out where it can have a competitive advantage. Kuball offered high voltage devices or gallium nitride as examples of such areas, saying that EV charging, grid and energy transmission offered “huge business opportunities.”

Tim Mottram, innovation programme lead at Siemens, recognised similar obstacles, saying that proof of concept technology developed in academia needed to be scaled to a point where a company like Siemens is able to purchase up to 300,000 units every day.

On the other hand, Nick Singh, chief technology officer of CSA Catapult, cautioned that focusing too much on specific niches would create more fragmentation. Catapults, he offered, could be linked up to avoid falling into the trap of trying to do everything for everyone, while ensuring that the different regions within the UK can play to their respective strengths.

In some ways, however, the panel illustrated how the needs of smaller and larger companies can differ substantially.

Furqan, CEO of electric vertical take-off and landing aircraft developer Sora Aviation, confirmed that his start-up needs more purchase choices at higher rates than exist currently if the UK is going to capitalise on early momentum in electric aeroplanes. A difficulty for aerospace is that any component will need to adhere to even stricter safety levels than in EVs, but that is also an opportunity for the UK to develop high-value products, he added.

As a start-up, Sora Aviation would benefit from a smaller scale manufacturer, for example, who could design an inverter to the start-up’s specifications – smaller but with a higher efficiency. “We don’t have any influence over Infineon, ST, or any of those companies,” he explained.

Here, the UK government could play a “convening role”, said Duffy. For example, collaborative R&D funding could encourage domestic suppliers to work with start-ups and de-risk those transactions. There are also other levers the state could pull, such as regulation.

Kuball elaborated that the intellectual property should be in the UK, but that the strategy mustn’t be for every semiconductor component to be manufactured domestically, an observation that Furqan agreed with.For a large company like Siemens, however, the opposite is true, countered Mottram. The industry giant doesn’t need small-scale, specialised components, it needs relatively standard components, at a high volume and at the highest quality possible. 

AI, EV charging, and the grid: three opportunities for Britain

For Singh, opportunities abound in areas such as AI, where future 100 megawatt data centres will require a different approach to energy, and it’s as yet unclear how that will be tackled. Defence is an interesting area, too, he said – though the panel largely skirted that politically charged topic – as is the development of direct current grids, where the UK has existing strengths in Bristol, South Wales, and Scotland.

When it comes to EVs, Singh noted that there are no conversations going on about bidirectional charging (where the EV battery can be used to charge a battery in the house, or the energy can be sold back to the grid), even though this would be “interesting from a consumer perspective.”

Getting the public on board will be essential, Singh continued, and EVs present an obvious opportunity: for mass-market adoption, they need to be charged quickly, at scale, and in all weather conditions, and because nobody is currently able to do this, it is an area where the UK could be a leader.

For Furqan, electric vehicles themselves aren’t necessarily an easy way for the UK to excel, because sales have proven that what customers care about most is the cost. He noted how BYD, a Chinese EV manufacturer, saw its UK sales in September rise 880% year-on-year, making it the company’s largest international market.

Instead, the UK should target high-value end-users, such as sustainable aviation. The UK has an opportunity to “leapfrog” other countries by focusing on these sectors, because everyone is developing these technologies. Britain “missed that opportunity on things like battery cells,” and should learn lessons from failures such as Northvolt, the EV battery manufacturer that became Sweden’s largest bankruptcy in March this year, Furqan added.

Duffy added that cheaper energy bills and lower carbon emissions – enabled by better power semiconductors that deliver more efficient and cheaper solar panels – are also a way of getting buy-in from the general population.

Can we close the skills gap?

Singh pondered whether figureheads championing power semiconductors would be needed to engage the public and get young people excited about the technology.

Kuball wished for more press coverage, but also highlighted a former University of Bristol student who went on to work for Infineon in Germany, a company that sends engineers into schools to introduce children to semiconductors with simple but fun and engaging exercises like getting an LED light to turn on.

Mottram agreed that “much more needs to be done in terms of curriculum”, noting also that today’s teachers aren’t equipped to introduce these complex subjects themselves.

The skills gap resonated with the audience. Some offered the idea of engineers using TikTok to target a younger audience, while others explained that they had to recruit abroad. Yet bringing in skilled foreign workers has been made significantly more difficult by Brexit, which has led some industry members in the audience to open offices in the EU and hire staff there instead.

Sankaran questioned whether other sectors were doing a better job of recruiting, although audience members held that others were facing similar struggles. Indeed, a previous Foresight Live panel lamented that telecommunications was “not sexy”.

Duffy ended the discussion on a more positive note, describing a new government programme, the Semiconductor Skills Talent and Education Programme (STEP), which has been set up to increase the number of engineering students by offering bursaries and wraparound content like summer schools and internships.