Ditching onshoring to create a secure semiconductor supply chain – Information Age

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Ditching onshoring to create a secure semiconductor supply chain image

Research recommends more emphasis on R&D and IP efforts.

A report from Imagination Technologies and Global Counsel calls for the UK to leverage its R&D and IP advantages to create a secure semiconductor supply chain

Drawing from interviews with policymakers and industry leaders across the semiconductor space, the report argues that the UK should move away from “onshoring” for both strategic and economic reasons, and instead double down on a microchip strategy with three core aspects:

  • enhancing research & development;
  • promoting and protecting intellectual property;
  • championing diversification.

COVID-induced supply chain issues resulted in policymakers globally rushing to develop new strategies to increase resilience and expand local manufacturing capabilities through subsidies and tax incentives, with the Ukraine crisis intensifying focus on resilience.

However, the report states that the costs of full onshoring semiconductor production to the UK is not viable given the capital available and economies of scale required.

In addition, this onshoring strategy also requires dependence on domestic production in the semiconductor supply chain, and would work against existing comparative advantage.

“Semiconductors are a hugely valuable and ubiquitous component in modern technologies. We need to think carefully about what the UK’s place should be in the global value chain that underpins them,” said Stephen Adams, senior director at Global Counsel.

“Playing to our strengths and prioritising strategic interdependence can ensure the UK remains a global leader.”

Simon Beresford-Wylie, CEO of Imagination Technologies, commented: “As the UK government develops its widely anticipated in-depth review into the semiconductor sector, this report acts as a starting point for a wider debate about where the UK goes.

“The UK must adopt a holistic approach which takes bold measures to shape the future of design, manufacture and trade.”

Leveraging competitive advantages

Research shows that the UK is a semiconductor design leader in Europe, with the country’s science and technology ecosystem helping to foster over 110 design firms.

Government institutions like the new Advanced Research and Invention Agency (ARIA) and British Business Bank could channel new private and public investment into the most cutting-edge areas of semiconductor R&D.

Trade diplomacy can also play a vital role in the UK’s approach, via collaboration with trusted, like-minded partners who have common approaches to trade policy and IP protection.

The full report from Global Counsel and Imagination Technologies can be found here.

Related:

Coronavirus Diary: the impact on a semiconductor business — Woz Ahmed, chief strategy officer and chief of staff at Imagination Technologies, discusses how the pandemic affected the semiconductor business, while looking at what challenges lie ahead and the way forward.

Supply chain security is broken: what is the next move for CISOs? — Martin Tyley, head of UK cyber at KPMG, discusses how CISOs should go about fixing vulnerabilities within supply chain security.

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