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It’s not every day a startup courts royalty. But two weeks ago, at a former plastic piping factory just outside Durham in the North East of England, Princess Anne cut the ribbon on semiconductor startup Pragmatic’s new manufacturing facility. Pragmatic says it will produce billions of chips every year and be one of the largest in the UK by volume of chips produced by 2025.
Why does that matter?
Semiconductors — or chips — are in various devices from smartphones to cars and underpin most modern-day gadgets. They’re also one of the technologies cited as key to European tech sovereignty: the region’s ability to develop and retain key homegrown technologies, which also includes things like quantum, AI and biotech.
There’s a long, long way to go to shore up chip manufacturing over here though. Close to 70% of manufacturing capacity lies in South Korea, Taiwan and China, according to semiconductor lobby group SEMI.
That hasn’t stopped the UK government from taking a punt and signalling that Pragmatic — which produces tiny, flexible chips that can be used as tracking devices in things like packaging — is strategically important.
A £162m Series D the company raised in December last year — one of the largest raises for a chip company in Europe — was anchored by a £60m cheque from the government-owned UK Infrastructure Bank (UKIB). Just months before, UK chancellor Jeremy Hunt also singled out semiconductors as one of the key areas of investment for UKIB.
“We are keen for the bank’s investments in supply chains to support the government’s ambition to achieve greater economic security and supply chain resilience within the bounds of its existing objectives,” he wrote in a letter to UKIB CEO John Flint. “This includes semiconductor manufacturing, where the bank can help accelerate the UK’s domestic capabilities and/or reduce the carbon intensity of their manufacturing.”
What else is the government doing?
A £1bn semiconductor strategy was passed last year, which will see investment made over the next decade into semiconductor infrastructure, security and research and development. Other pots of money have been announced for areas like AI, quantum and biotech — but tech folk have generally been quick to scrutinise.
The founder of chip startup Paragraf, Simon Thomas, told the Guardian that the semiconductor measures were “frankly flaccid”. Last month, a UK deeptech and semiconductor trade association said that the nation's semiconductor companies were at a strategic disadvantage compared to international rivals and wanted change to boost investment.
Other governments have been a little more generous.
Germany has a €1bn growth fund to boost its deeptech and climate tech startups, the French government has been dishing out financial support to its tech sector like never before and the EU’s €43bn Chips Act aims to double the EU’s share of the global microchips market to 20% by 2030.
Across the Atlantic, America’s $369bn climate bill has already enticed European startups stateside, and US officials are encouraging UK chip startups to move their ops across the pond to tap into a $53bn support package.
So, is the UK scuppered? Readers, I want to hear from you. Does the UK government need to stump up more cash for its homegrown tech companies or is it simply operating within its means? Do you work for a UK startup that’s considering leaving to take advantage of more generous financial support packages elsewhere? Is there an approach to public funding support that’s actually working in Europe? Get in touch and let me know.
