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What is the state of the semiconductor industry in the UK

State of the UK Semiconductor Market

The state of the semiconductor industry in the UK

The UK semiconductor industry in 2024 is experiencing unprecedented growth and innovation. Despite challenges such as global supply chain disruptions and uncertainty surrounding Brexit, the industry has shown resilience and adaptability in recent years. With an increasing demand for advanced technology in various sectors including automotive, healthcare, and telecommunications, the UK semiconductor industry is poised for significant expansion.

In recent years, the UK government has recognised the importance of investing in semiconductor research and development, leading to a surge in funding and support for emerging technologies. This has resulted in the establishment of new semiconductor manufacturing facilities and research centres, further solidifying the UK’s position as a key player in the global semiconductor market.

As new technologies such as artificial intelligence, internet of things, and 5G continue to drive demand for semiconductor products, the UK industry is at the forefront of innovation and poised for continued growth in the coming years.

Current Market Overview

While the UK semiconductor market is not without its challenges, particularly when set against the backdrop of larger, more integrated global markets, its specialisation in sectors like obsolete semiconductors provides a unique edge. Continued investment and strategic policy support are crucial as the industry navigates the complex interplay of technological advancements and geopolitical shifts. The coming years will likely see the UK semiconductor market solidify its position both domestically and internationally, leveraging its specialised capabilities to meet evolving technological demands.

The United Kingdom semiconductor market size reached around USD 13.116 billion in 2023. The market is estimated to grow at a CAGR of 6.7% in the forecast period of 2024-2032, reaching a value of USD 18.188 billion by 2032.

Market Outlook

Global Comparisons

Additionally, Brexit has added another layer of uncertainty for UK semiconductor companies. The new trade agreements and regulations could potentially impact the cost and availability of components and disrupt supply chains. This uncertainty has led to companies stockpiling components and materials to mitigate potential risks, which could impact cash flow and increase operational costs.

Despite these challenges, the UK semiconductor industry continues to innovate and evolve. The adoption of advanced technologies such as 5G, artificial intelligence, and Internet of Things (IoT) is driving demand for semiconductor components. Additionally, the UK government has been investing in the industry through initiatives such as the Electronics Resurgence Initiative (ERI) and the Advanced Propulsion Centre (APC), which aim to support research and development in semiconductor technologies.

Overall, the UK semiconductor industry is navigating through a challenging period of volatility and uncertainty. By focusing on niche markets, investing in research and development, and adapting to new trade regulations, companies can continue to thrive in the global semiconductor market.

Impact of Geopolitical Events

The past five years have been particularly tumultuous for the semiconductor industry due to several high-impact geopolitical events. Brexit and the semiconductor industry has had a profound impact on the UK semiconductor sector. The separation from the European Union has led to increased tariffs and trade barriers, affecting the import of semiconductor manufacturing equipment and exports of finished goods. Moreover, the ongoing tensions between the US and China have prompted UK firms to navigate complex international waters carefully to maintain supply chain continuity and compliance with international sanctions and trade regulations.

Additionally, the COVID-19 pandemic introduced unprecedented disruptions in 2020, leading to severe shortages and delays across the industry. These events underscore the vulnerability of the UK’s semiconductor supply chain and highlight the need for strategic planning and investment in local capabilities.

Future Outlook

Looking ahead, the UK semiconductor industry faces both challenges and opportunities. The government’s recent focus on bolstering domestic manufacturing capabilities, as indicated in public statements and policy initiatives, is a positive step toward mitigating some of the challenges presented by global dependencies. The UK’s strategy includes significant investments in research and development and initiatives aimed at attracting foreign investment into its semiconductor sector.

“The UK semiconductor market may be on the increase but are all markets covered – absolutely not – when the defence minister Grant Shapps pledges £5bn to the UK defence spend does that include semiconductors for systems?”

Karen Salmon, CEO, Force Technologies Ltd

Furthermore, as global demand for semiconductors expands into new areas such as automotive technologies, IoT devices, and renewable energy systems, there are substantial opportunities for UK firms specialising in obsolete and niche semiconductor technologies to carve out valuable market segments. If you need help with your obsolescence planning and want to avoid the impact of a future shortage then please talk to us here at Force Technologies.