Brit chip industry wonders if UK budget will put its money where its silicon is

Brit tech industry association Techworks wants to see more support for the UK semiconductor sector in this week's budget to help the nation's chip companies better compete on the global stage. While the mainstream media speculates endlessly about tax cuts, Techworks calls on the Chancellor of the Exchequer – the UK finance …

[elsergiovolador]

The UK offers the lowest level of incentives to any industry among the G7

FTFY

The UK is also probably only country that is de facto subsidising multinational big corporations by way of IR35 against its own domestic business.

The idea is that the UK should stick to fish and chips and leave silicon chips to China and India.

[MyffyW]

Situation Normal

Unless we are talking about McCain oven chips, I wasn't aware we had a significant chip industry. I read the article and I remain to be convinced.

[cookieMonster]

Re: Situation Normal

The UK does not have ANY significant industrial capacity any more. It’s gone. Thatcher started dismantling it, Blaire continued it. It’s over. The UK is now a “services” power house (giggle, snort)

Apologies, but what’s left? Even the strategic nuclear power plants are foreign…

[Anonymous Coward]

Re: Situation Normal

And the service sector had an arm lopped off by the Brexit vote.

Change of direction is needed. The relevant parties aren't making any convincing noises about this.

[Lurko]

Re: Situation Normal

And the service sector had an arm lopped off by the Brexit vote.

Do check your facts, old chap. UK services exports have grown since Brexit. Q3 2015, were £61.075 bn, in Q3 2022 were 109.248 bn, Q3 2023 was £119.320 bn. Either ONS, or even Statista will provide the backup here. Obviously there was a big hole in 2020 caused by China's gift to the world, and those figures quoted should be adjusted for inflation, even so there's no question that post Brexit the UK's services exports have grown considerably.

Don't let that stop you talking the country down though, everybody should have a hobby.

[Yet Another Anonymous coward]

Re: Situation Normal

The FTSE is also doing really well - measured in "£"

So is Zimbabwe, measured in ZMB $

[EvilDrSmith]

Re: Situation Normal

Please define what you mean by 'industrial capacity'.

If you are referring to manufacturing capability, your assertion is commonly expressed, but is wrong.

The UK remains a major global manufacturing nation - around the 8th to 9th most important (depending on year)

https://worldpopulationreview.com/country-rankings/manufacturing-by-country.

That is certainly not to say that everything is rosy, and it is the case that the traditional 'heavy industries' of steel manufacture, ship building and (to a lesser degree) car making have significantly contracted. That is in part due to the policies of various governments, but is mostly because other nations can do this stuff cheaper (and in some cases at least, better) than we can. However, even in these fields, we have not lost all capability (though that does seem to be the intent at the moment, with regard to steel making).

[J.G.Harston]

Re: Situation Normal

If it doesn't break your foot when you drop it, it's not real industry!

[Yet Another Anonymous coward]

Re: Situation Normal

If it wasn't for the Nips (do we have a word for S. Koreans?)

Being so good at building ships

The yards would still be open on the Clyde

[Anonymous Coward]

Unless military supply chains are threatened, expect no support. And even then...

Steelworks, that traditional last bastion of "we need our own production capability" were allowed to go to the dogs. At a time we're we are seeing the largest European war for 70 years.

[elsergiovolador]

It's not a coincidence, but our intelligence services are busy with manufactured culture wars or simply are sitting on their hands.

I wouldn't be surprised if the destruction of steelworks was driven by a few people with second salary from one of our adversaries, basically saying: steel is a thing of the past, modern wars are fought with AI , lasers and drones and fools in government accepted it.

[Anonymous Coward]

Fair point, well made. The incumbents seems to have a penchant for "everything" has to make a profit or let it rot.

This is true to an extent, but not every decision should be made on cash grounds. A working postal system for example, or infrastructure.

[Yet Another Anonymous coward]

So Maggie was a Soviet Agent?

Makes sense, the Iron Curtain Lady

After all Norman Tebbit was an agent of North Korea and Corbin is in Hamas

[Tron]

If our chips are that good...

...they should be able to bag investment. Investors don't turn down a good deal.

There is going to be less tech to invest in, in the future. Once the AI bubble bursts in a year or two, the way the Metaverse and NFT bubbles did, most likely courtesy of government restrictions, the UK's chip producers should find it easier to bag cash, at least from abroad. Since Sterling declined at Brexit, the UK is too poor for this stuff, but it is cheap enough for incoming cash, from any country/company the government doesn't ban from investing.

Brexit Britain is at least 25% (the decline in Sterling) and possibly one third poorer than it used to be. Politicians used to worry about Sterling going down 1%. And it was often dependent upon foreign cash even before Brexit. Money from abroad is going to be essential for investment in the future. Most of our car and steel industries are now owned by foreign companies and SoftBank bought ARM. Poor countries rely on others. The UK is good at innovation but has been badly run by governments for decades, and that is unlikely to change. Accept it and move on.

A lot of poor countries are developing. Brexit Britain is undeveloping (councils going bust, services collapsing). It will be a fight to compete with them, but being dependent upon state handouts will merely create a tech version of British Leyland. And that's not a good thing. We are not an Imperial power any more. Wake up and smell the coffee. Get out there into the global market and bag some investment. If the US and UK governments don't block it, you'll be OK.

[elsergiovolador]

Re: If our chips are that good...

Your assumption would be correct if we have good environment for business.

Unfortunately current government is hostile towards SMEs and regardless of how good the product is, it's basically not investable.

More realistic scenario is that any entrepreneurs with IP that is worth something would rather incorporate elsewhere.

Get out there into the global market and bag some investment.

Most of people I know done exactly that - moved to the US and developed their business there.

[Andy 73]

Re: If our chips are that good...

I'm not sure what you're trying to say here. If the UK is "25% poorer" due to the decline in Sterling, then it's 25% cheaper for the global market to invest in Britain - which do you want it to be?

As it is, FDI in the UK appears to be broadly the same, though we've had massive volatility over the last decade for some very obvious reasons that are global, not domestic in origin. It's also worth reiterating that contrary to popular opinion, manufacturing has not gone away in the UK, but in common with most Western countries, services have massively grown over the last few decades.

Of course poor countries are developing - that's where the cheap labour is. It's what gave China decades of growth (that's now slowing as their labour costs and quality of life increases), and what is driving industries to India and South America. The West will not see growth like that in our lifetimes - which is why investors keep pumping money into meme stocks and technology bubbles. Expecting otherwise is ridiculous.

Nor should it be surprising that the UK is struggling, when most of our political classes have a poor grasp of economics and just want to argue over minor readjustments in the budget. If you want to see serious growth, you need to encourage an environment where many options can be tried without investors and companies having to risk their existence each time. That 'support for risk' is what has allowed America to dominate the tech industry. Conversely, the tendency for political groups in Europe and the UK to want to tightly control the direction of investment and innovation is one strong reason for our relatively poor performance. It turns out politicians are both slow and ineffective when it comes to picking up tech trends.

Unfortunately, as usual the discussion is framed in terms of how many handouts can be directed to the right people rather than how the wider economic environment can support increased activity. In that sense, Brexit Britain is a myth - in or out of the EU, our environment for innovation has not changed due to the usual institutional feet of clay. Arguing over tax breaks and handouts is missing the point that we need more change, not less.

[Roland6]

“lack of funding to support later stage growth … to scale up and become globally competitive”

Well with Brexit we don’t need the funding, as there is no “home” market to support the required growth…

Remember on the of the big business/economic reasons the UK (Thatcher) government initially pushed for the Common Market and then lead the formation of the Single Market was to create a protected market (*) in which UK companies could grow and scale up to become globally competitive…

With respect to chip foundries, well being outside the EU meant the UK missed out on the EU monies to be the host of an EU foundry…

(*) Yes protected, those trade barriers the Brexiteers went on and on about were there for a reason - to benefit UK interests !

[codejunky]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

@Roland6

"With respect to chip foundries, well being outside the EU meant the UK missed out on the EU monies to be the host of an EU foundry…"

So we dont get a polluting foundry (greenies will be happy). At least the UK wont be net contributing to this when we already have high energy costs and are uncompetitive with Asian foundries. Instead thanks to brexit the US and EU can pump tax payer money into competing with Asian foundries and the UK get cheap chips. Sounds like a win.

"(*) Yes protected, those trade barriers the Brexiteers went on and on about were there for a reason - to benefit UK interests !"

Just as the trade barriers that borked our industries and brought us sub-par products until we got foreign cars, technology, etc.

[elsergiovolador]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

and the UK get cheap chips. Sounds like a win

If you don't own the means of production, you are depending on those countries. They may be relatively friendly today but that is not a given.

The longer we don't have any meaningful high tech industry, we are losing more expertise and young people have no reason to study engineering if there are no jobs in that field.

This is essentially a managed decline.

[Doctor Syntax]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

"This is essentially a managed decline."

Mangled.

[elsergiovolador]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

To be fair the clowns at the wheel, can't even do that properly...

[Yet Another Anonymous coward]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

Is there somewhere that we can report this continual anti-clown hate speech on el'reg?

Many clowns are entirely innocent of nothing more offensive than making balloon animals, very few lie in wait in storm drains to lure children, - can we please stop lumping them in with politicians

[codejunky]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

@elsergiovolador

"If you don't own the means of production, you are depending on those countries. They may be relatively friendly today but that is not a given."

That is true. I rely on the farmer, trucker, and god knows how many others only for my food. As a country we depend on other countries for a vast quantity of production. We could own the means of production for everything we have but that takes us back to a peasantry time, Even N.Korea isnt that crazy and depends on the outside. In this case even if we have fabs in this country we still need to import and depend on others for the technology and resources required for these fabs to make anything.

On the flip side the chance that we will be at war with the US, EU and Asia at the same time is pretty low. Just one of those would wipe us out if we dont have support from others.

"The longer we don't have any meaningful high tech industry"

But we do.

"This is essentially a managed decline."

I wont argue with that. But if fabricating mass produced low value at high cost to the country the way to go? The UK still designed stuff, then sent it to cheaper places to produce. We would need to seriously make changes to environmental protection rules as well as build as much cheap coal energy production as possible while removing minimum wage and still we wouldnt be as competitive.

[Andy 73]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

This is a nonsense argument based on the psychology of bullying - "If we don't form a special club together to keep everyone out, they'll be mean to us".

Note particularly that the argument is made only when needed - we rely on foreign countries for fossil fuels and energy generation. We rely on them for fresh fruit, coffee and a good portion of the food on our table. We rely on them for mobile phones, working satellites, TV screens. We rely on them to provide a vast amount of our manufactured goods. We rely on them for rare earth minerals and metals. We rely on them to provide low cost, dirty labour in places we don't have to look too closely at. We rely on them for most of our renewable energy infrastructure.

Where are the calls to create "fortress Britain" and save ourselves from these dependencies? Strangely, the concerns about owning the means of production are seen as completely different to the concerns about immigration - it's funny how we draw the lines according to our political leanings.

[druck]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

we don't have any meaningful high tech industry

You really don't have any clue as to what this country produces.

We have plenty of high tech industry, you don't seem to be able to tell the difference between that an low tech manufacturing.

[Anonymous Coward]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

As usual for the UK: Those with zero knowledge or understanding if technology making sweeping negative pronouncement. It's all a very far cry from the "white heat of technology". Sad. Terminal decline for Post-Brexit Britain.

[codejunky]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

@AC

"Those with zero knowledge or understanding if technology making sweeping negative pronouncement"

There is no need for you to comment. You are not compelled to. Its your choice to do so.

[Roland6]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

> So we dont get a polluting foundry

Yes we don’t get one funded via the EU, which means any chip foundry we build will be in competition with those the EU are funding, so potentially we do get a polluting foundry and so does an EU member - double green misery.

So the sub text to my point 8s that the UK has to decide on what its niches are and invest accordingly. However, we do need to diversify away from financial services…

> Just as the trade barriers that borked our industries

Yet whilst in the EU, the UK’s non-EU exports grew to the point where they exceeded our EU “exports”…

> sub-par products

Those are wholly due to the ineptitude of “British” management and their equally inept trade unions and labour relations their inept management practises nurtured. It’s a shame that old school Tory management (and their counterpart old school unions) is still a thing…

[codejunky]

Re: “lack of funding to support later stage growth … to scale up and become globally competitive”

@Roland6

"Yes we don’t get one funded via the EU, which means any chip foundry we build will be in competition with those the EU are funding, so potentially we do get a polluting foundry and so does an EU member - double green misery."

It doesnt make much difference if it was funded by the UK or EU it is a glorious way to spaff a load of tax payer money to try to compete with a much cheaper and better producer. For the UK the smart move is not to play and with the small amount of funding announced by the gov it seems we are not playing that game.

"So the sub text to my point 8s that the UK has to decide on what its niches are and invest accordingly. However, we do need to diversify away from financial services…"

That we can agree on.

"Yet whilst in the EU, the UK’s non-EU exports grew to the point where they exceeded our EU “exports”…"

And now we are outside the EU we can still do so.

"Those are wholly due to the ineptitude of “British” management and their equally inept trade unions and labour relations their inept management practises nurtured."

Which of course is not exclusive to "British" but is due to a lack of competition.

[Michael Strorm]

"Promised £1 billion ($1.26 billion) in funding over the next decade"

£1 billion sounds- and is no doubt intended to sound- impressive (because it certainly is a large amount of money in absolute terms).

Unless, of course, you're already aware that semiconductor fabrication is extremely expensive, with "billion" already being little more than the base unit and a single fab typically costing several billion alone.

And more importantly, when you remember that this is spread over "the next decade", so the actual investment is only £100m/year- verging on the peanuts you'd find in the two Snickers bar that averages out at per UK resident.

A billion here, a billion nowhere else, pretty soon it adds up to a drop in the ocean. Or in other words, the usual short-termist, token gesture "we have to catch up" attempt at rebuilding the UK's manufacturing base that those same Tories spent decades deindustrialising so that Thatcher could own the unions.

[pimppetgaeghsr]

Wasn't the UKs response to the semiconductor landscape, and in a desperate bid to compensate for letting ARM be sold off, to install a group of Tory-boys on the EMB of Imagination Technologies when the Chinese investment firm that owns it tried to initiate a hostile takeover.