Failure to draw up national computer chip strategy is ‘act of self-harm’

Britain's failure to draw up a national computer chip strategy is an “act of self harm”, a group of MPs have warned.

The Commons business committee accused ministers of failing to address its recommendations published in November which included encouraging greater collaboration with countries to safeguard supply and to attract investment.

Darren Jones, a Labour MP and chairman of the committee, said: “The longer they wait, the more there's a lack of clarity.

“We had evidence from British companies before the committee who say, ‘we're British, we started here, we want to stay here. But the Americans keep coming over to us and offering us loads of free things’.

“With 40 days until the Budget, the strategy must be published urgently so that sufficient funds can be put behind it and used effectively.”

In its report published on Friday, the Business Committee also cast doubt on whether government support for the industry would be enough to have any meaningful effect.

Sources have told The Telegraph that around £1bn is expected to be made available to Britain’s chip industry by the Government.

This compares unfavourably with support by other countries for computer chip design and manufacturing companies.

US President Joe Biden announced a $280bn (£229bn) support package for that country’s semiconductor industry in the CHIPS Act, passed last year.

A multi-billion dollar chip fabrication plant, known as a “fab”, is now under construction in Arizona as part of a multinational partnership with an industry-leading business, Taiwan Semiconductor Manufacturing Company.

Britain’s domestic chip industry has mixed feelings towards increased government support for the sector, split between manufacturers who hope to attract more backing for UK fabs and chip design companies.

IQE, a London-listed compound semiconductor manufacturing company, previously called on Rishi Sunak to back the chip industry. Its chief executive Americo Lemos met officials at 10 Downing Street last week.

Other industry sources have called for more investment in supporting design businesses, an area where the UK has traditionally nurtured deep expertise in locations including Cambridge and South Wales.

Mr Jones said he wanted to see ministers supporting the creation of a so-called “open access fab” in South Wales, a chip factory that acts as a contract manufacturer for UK businesses.

A previous open access fab, Newport Wafer Fab, was bought by Chinese-owned company Nexperia in 2021. Last year Grant Shapps, the Business Secretary, ordered Nexperia to sell Newport, citing national security concerns over its ownership.

Meanwhile industry associations are ambiguous about where government funding should be directed. TechUK, which represents major tech companies such as Amazon and Microsoft, told MPs last summer: “While supplies [of microchips] are expected to remain tight until 2023 the UK should resist demands to try and ‘onshore’ semiconductor manufacturing and instead take a more strategic approach to how we support the sector.”

A DCMS spokesman said: "We are committed to supporting the UK's vitally important semiconductor industry. Our strategy will address the recommendations identified by the committee, including opportunities to grow the sector further and make sure we have a resilient supply chain.”