Only a semiconductor revolution can save the flagging British automobile industry
In 1974, a failing New Mexico calculator maker took a gamble. Laden with debt after a brutal price war and a botched IPO, Micro Instrumentation and Telemetry Systems decided to enter the microcomputer market. Its offering was the Altair 8800, the first commercially successful personal computer that would spark the microcomputer revolution. Inside each device was something even more remarkable: one of the world’s first semiconductor chips.
Since then, demand for semiconductor chips has skyrocketed. More than 1.15 trillion semiconductors were manufactured in 2021, amounting to $440bn in global sales.
But this demand is no longer being driven by personal computers, or even phones. Instead, these chips are going into cars – traditional, hybrid, and electric – to power everything from digital dashboards and built-in satellite navigators, to smart LED lighting and fuel efficiency systems.
While the UK played a vital role in the development of computer chips in the second half of the twentieth century, many British companies have since relocated their manufacturing to Asia, seduced by lower shipping costs and a cheaper workforce.
Now a global semiconductor shortage – fueled by a pandemic-induced supply chain crunch and increased geopolitical tensions – has put the brakes on car production and shown how vulnerable British auto manufacturing is to external shocks. The UK semiconductor industry doesn’t have enough agility to respond to rapidly increasing demand.
This is a huge opportunity for the UK to become a global leader in semiconductor chip manufacturing. We have political stability and a relatively low-cost workforce of outstanding engineers, who are supported by technical colleges and universities specialised in the required cutting-edge fields.
But, as things stand there is no definitive consensus or strategy for the development of homegrown semiconductors. To turbocharge this industry and grasp this opportunity, there’s much we can do.
Firstly, industry leaders must work closely with the government to create both short-term and long-term strategies for the sector. These should provide actionable statements formed from value-chain analysis, with financial and operational support from government to enable the industry to build its competitive advantage.
Secondly, we must leverage and encourage the development of clusters. Clusters promote a better understanding of what the industry needs, driving innovation, investment, and talent from both home and abroad. These clusters can also drive forward the UK’s levelling up agenda creating thriving economies in regions that desperately require investment.
Thirdly, the industry should capitalise on the UK’s leading research and innovation ecosystem. Our universities and academics are working at the forefront of semiconductor research. Early adoption of new technologies would enable the UK to get ahead of global competition.
Lastly, we must encourage education on the importance and relevance of semiconductors, electronics, and engineering. Industry and academia should collaborate to provide opportunities for young people to develop their interest in electronics starting at a primary school level, through to undergraduate courses and apprenticeships enabling the next generation to pursue careers in semiconductors. Relevant postgraduate study should also be implemented to develop key areas of technical knowledge and understanding to contribute to innovation-led businesses and future semiconductor research and development. These steps are vital to securing the future skills pipeline within the sector.
If we couple this strategy with the well established UK automotive industry, there is huge potential to drive a resurgence of our proud automotive heritage and to unleash a new wave of manufacturing and jobs. The UK is perfectly placed to turbocharge growth in chip manufacturing – we just need the will to make it happen.