In the late 1990s, as the echoes of globalisation reverberated following the fall of the Berlin Wall, a bold slogan adorned the walls of Newcastle station, welcoming passengers: “Fish Into Chips – From Mackerel Economy To Micro Technology. Invest In North Tyneside – Siemens Did.” This quirky play on words marked the launch of a grand vision – a £1.1 billion microchip factory in Wallsend, a testament to the UK’s industrial prowess and global ambitions. The project was brokered with taxpayer funding and the backing of then-Prime Minister John Major, embodying a sense of British pride on the international stage.
Amid the fervor, a lavish inauguration took place in May 1997, graced by Queen Elizabeth herself, coinciding with Tony Blair’s momentous election victory. This project, initiated by the German industrial giant Siemens, was hailed as a harbinger of micro technology’s triumph over the traditional “Mackerel Economy.” Yet, less than a year and a half later, the same factory was shuttered, 1,000 jobs vanished, and millions in taxpayer support remained unpaid.
Jonathan Blackie, who spearheaded the endeavor as the top civil servant for the region, recollects, “It didn’t go down very well. It was open for about two years, but we spent a fortune on it. I was pretty much in the thick of it, from arrival to construction, then departure. Sunrise to sunset.”
Fast-forward to 2023, and the UK is revisiting the realm of microtechnology, driven by an investment competition involving economic heavyweights such as the US, EU, and China. The pandemic’s impact on semiconductor supply chains exposed vulnerabilities, triggering a frenzy of investment aimed at bolstering domestic production. However, this endeavor faces the headwinds of geopolitical tensions, particularly between the US and China, as both strive to gain supremacy in vital industries.
In this climate, Rishi Sunak’s administration unveiled a £1 billion 10-year plan for semiconductor research, design, and production in the UK. However, this strategy faces stiff competition, including the US’s $52 billion Chips Act and the EU’s €43 billion subsidy pool. The UK’s historical offshoring and industry decline present challenges, as underscored by Newcastle’s brief foray into the sector. Despite possessing around 25 “fabs” (microchip factories), the UK’s slice of the global semiconductor pie is a mere 0.5%.
The UK government recognizes the significance of microchips, as demonstrated by its intervention in the Newport Wafer Fab takeover. Yet, it hesitates to match the substantial incentives of other nations. Paul Scully, the digital economy minister, underscores the importance of focusing on the UK’s strengths in chip design, exemplified by Cambridge-based Arm.
While challenges loom, companies like Pragmatic Semiconductor, with facilities in Cambridge and County Durham, are expanding across borders to seize foreign incentives, exemplifying the tug-of-war between national identity and economic pragmatism.
The semiconductor industry’s trajectory has been a tale of economic and geographical forces. Taiwan, once a newcomer, has risen to global dominance, with its crown jewel, Taiwan Semiconductor Manufacturing Company (TSMC), holding half of the world market share. The pandemic’s disruption exposed the perils of concentrated production, triggering contemplation of the trade-offs between cost and security.
Looking back, the UK’s history of industrial transformation is marked by ambitious foreign investments and their mixed legacies. Siemens and Fujitsu’s departures from microchip ventures contrast with the ongoing presence of such endeavors in regions like the north-east, where a foundation for future growth remains.
As the UK charts its course in the semiconductor arena, the challenges and opportunities are multifaceted. The imperative lies in balancing incentives with innovation, leveraging historical strengths, and shaping an environment where grand ribbon-cutting ceremonies lead to enduring success, ensuring that future generations of Britons continue to push boundaries in technology and industry.
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