The U.K. has exited the European Union, but semiconductor development is emerging as one of the areas where it hopes to partner for better economies of scale — and much-needed funding.
Today, the government announced that it was joining up with the EU’s “Chips Joint Undertaking” as a “participating state” so that organizations in the U.K. can tap into a pool of €1.3 billion (around $1.4 billion) for semiconductor research and development. The U.K. itself said it would put up a more modest £35 million ($44 million) in funding for U.K. efforts over the next few years as part of that.
Of that, £5 million will be provided initially to help organizations — researchers or businesses operating in the U.K. — apply for access to funds, the government said on Wednesday. The additional £30 million will come between 2025 and 2027 to fund further research.
Chips are an essential — and thus very valuable — building block for the development of the future of technology, whether it’s for advances in AI that require massive computing power, or the development of new consumer electronics, or the next generation of cars.
But as a mark of just how fragmented — or more charitably, competitive — the semiconductor development space is at the moment, the government estimated that there are “tens of thousands of U.K. companies” eligible for grants, which are worth up to £450,000 on average.
The deadline for applications, if you’re reading this and are interested, is May 14.
The U.K.’s move underscores how the country has, post-Brexit, had to face up to the fact that in technology it can’t afford to go forth on its own. The news follows tie-ups that the U.K. has inked with countries like Korea (for data sharing), Canada (for science and innovation) and the U.S. (a wide-ranging tech and data deal).
In Europe, the budgets are big, but also a little convoluted. The Chips Joint Undertaking, for example, has an overall budget of about €11 billion from both public and private contributions. It is itself a product of the European Chips Act, approved in 2023 to help the region, longer-term, reduce its reliance on semiconductor imports, particularly in light of geopolitical tensions and how those might play out in the supply chain.
The R&D segment of the undertaking, meanwhile, is described as being a part of Horizon Europe, which is a bigger program for R&D across multiple sectors with a budget of €95.5 billion. The U.K. joined Horizon Europe separately last year and companies that already are getting grants from it include Nova Innovation, which has picked up £17 million to develop tidal energy in Orkney, and “The Floow”, a startup that picked up £3 million for road safety tech.
U.K. Technology Minister Saqib Bhatti, who announced the country’s new partnership at a semiconductor conference taking place in London on Wednesday, said in an interview with TechCrunch that while the obvious benefit to U.K. organizations is access to funding from the EU, its contribution will be cutting-edge research.
Indeed, in the current chip race for more powerful, yet more efficient, chips to handle heavier compute workloads for artificial intelligence and other advanced technologies, the calculation is that R&D will be an even more valuable factor.
“We bring to the table a huge array of talent, a huge array of experience,” he said. “I’m meeting businesses at the moment in the semiconductor industry and the conversation is very much around investing in the U.K. and taking advantage of our ecosystems, getting involved in the R&D sector. We really can’t understate the strength of the R&D aspect of it. We very much come to the table as an equal partner.”
The U.K. has been an important player in the cutting-edge of chip research, but as with other categories of technology hardware, more generally the market has been dominated by a small number of companies and that has taken its toll on this particular ecosystem.
Cambridge-based Arm, a major player in chip reference design, recently saw a successful float as a public company after a proposed sale to global chip giant Nvidia collapsed on antitrust grounds (Nvidia however has quietly amassed a stake in the company regardless).
Graphcore, a promising startup out of Bristol that positioned itself as a major challenger in the market, is reportedly now seeking a buyer at a fraction of its multibillion-dollar valuation.
There remain other interesting smaller, future players, though. In December 2023, Pragmatic Semiconductor, another Cambridge-based chip company, raised $231 million at a $500 million valuation. The U.K. government was among the major investors in that round.
“We are very happy to welcome the UK to the Chips Joint Undertaking as a participating state,” said Jari Kinaret, Chips JU executive director, in a statement. “We are looking forward to working with the UK partners to develop the European industrial ecosystem in microelectronics and its applications, contributing to the continent’s scientific excellence and innovation leadership in semiconductor technologies and related fields.”
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