Semiconductors play a key role in our day-to-day lives and are crucial for modern living. They are used to make the computer chips at the heart of smart technology including phones, laptops, cars and planes. The UK has strengths in this technology, however, steps are needed to create greater resilience in supply in light of a new geopolitical climate. In this article, Professor David Binks and Dr Daniel Dyer discuss the approach of the National Semiconductor Strategy and make recommendations for how the UK can become an important player in the semiconductor supply-chain.

• Although the semiconductor supply-chain is highly volatile and impacted by geopolitical strategies, the UK can become a strong player in the semiconductor
• Researchers from The University of Manchester have discovered an alternative form of compound semiconductor that maintains light emission efficiency, the applications of which have the potential to become significant markets for UK companies.
• The UK should solidify its global position by leveraging its strength in compound semiconductors technology, consistent with the approach outlined in the National Semiconductor Strategy.

Silicon is the most well-known semiconductor, however compound semiconductors – formed from a combination of elements rather than a single one such as silicon – also play a crucial role and can be used in ways that silicon cannot. Gallium nitride (GaN) is an example of a compound semiconductor that gives us the energy efficient LEDs we use today. The energy efficiency and lifespan of these devices outclasses previous lighting technologies such as incandescent and fluorescent bulbs, which has led it to become the dominant technology for general lighting.

Miniaturisation and colour tunability of this LED technology for use in displays such as TVs and virtual reality headsets – where the LEDs act as the pixels in the screen – is an active area of research. The light-emitting properties of GaN-based LEDs can also be leveraged for high-speed data communication. In addition to its light-emitting properties, the electronic properties of GaN are also advantageous in power electronics, for applications such as smartphone and electric vehicle chargers.

The UK’s industrial strength

The UK is strong in the field of compound semiconductors at every stage of the research, development and manufacturing process – particularly in GaN – within both academia and industry. There is also a strong research and development (R&D) eco-system for compound semiconductors, furthering the understanding of their structural, electrical and optical properties and testing how well electronic devices which use them perform.

Researchers at The University of Manchester are currently studying an alternative form of GaN, which has a cubic rather than the usual hexagonal crystal structure. We have discovered that this form maintains its light emission efficiency at much higher electrical currents than conventional GaN, making it better for high-brightness lighting applications such as car headlights. The rate at which light emission can be switched on and off is also about 100 times faster for cubic GaN than conventional hexagonal GaN, which means that it can be used for higher speed optical data transmission. We are currently investigating how cubic GaN can be used to produce pixels for the next generation of virtual and augmented reality displays. These applications have the potential to become significant markets for GaN technology and for UK companies, contributing to the Government’s growth agenda.

Vulnerabilities and the need for resilience

The manufacture of semiconductor devices, including those based on compound semiconductors such as GaN, is highly globalised with some crossing international borders 70 times during production. The vulnerability of the global supply chain for semiconductors was starkly exposed in the aftermath of the COVID-19 pandemic when the associated disruption was estimated to have reduced global GDP growth for 2021 by 1%.

There has also been a growing recognition of the geopolitical importance of semiconductor technologies for security and military use, such as quantum computing and chips for missiles and drones. This has resulted in export controls by the UK and other jurisdictions, including the USA and EU.

To address concerns about the resilience of the semiconductor sector, identified by the Department for Science, Innovation and Technology (DSIT) as one of the five critical technologies for the UK, the previous Sunak government launched its National Semiconductor Strategy in May 2023. This was designed to enhance supply chain resilience, protect national security, and develop domestic capability. It identified UK strength in areas such as chip design, research and development and intellectual property, as well as compound semiconductors. It aims to build on these strengths by enhancing support for academic and commercial research and development, improving the access of SMEs to prototyping and piloting facilities and ensuring a sufficient pipeline of people with the right knowledge and skills. It also identified access by SMEs to sufficient long-term finance as a particular challenge, with semiconductor technology companies seen as a risky investment due to the long timescale and significant upfront investment required to develop products. The National Semiconductor Strategy initially outlined incentive-based approaches to address this funding challenge such as the Enterprise Investment Scheme and Venture Capital Trust scheme, as well efforts by the Department for Business and Trade (DBT) to attract overseas investors.

How should the UK respond to a less globalised, more transactional world?

For decades, government policy both in the UK and in large parts of the rest of the world had sought to encourage economic growth by promoting competition, reducing tariffs and encouraging international trade. Now, however, the economic consensus is shifting. Driven by geopolitical rivalries, there is a recognition that globalisation has created supply-chain vulnerabilities and ‘left behind’ communities, and the identification of the strategic importance of having domestic capability in some industrial sectors, particularly those related to defence and security. In the two years since the National Semiconductor Strategy was announced, there has been a marked retreat from globalisation and, particularly since the start of the second Trump administration, a readiness to use tariff barriers to achieve political goals at a level not seen since World War II.

It is unlikely the UK could onshore the entire supply chain for semiconductors. Building a plant to produce the most advanced silicon computer chips takes years and around $10 billion. An alternative strategy is to become an important player in its current areas of strength and use that as leverage, to ensure access to the other critical semiconductor technologies from geopolitically aligned nations or blocs, such as the US and the EU. This is entirely consistent with the approach detailed by DSIT in the National Semiconductor Strategy to grow the domestic sector. DSIT has a good track record of supporting research and development, the ‘people pipeline’ and research infrastructure, for example the electron beam facility opened at The University of Southampton in April 2025. However, ensuring the supply of the long-term finance needed to grow the domestic semiconductor industry is more challenging.

The UK Semiconductors Advisory Panel was formed as part of the National Semiconductor Strategy and comprises experts from industry, academia and government. This panel should now be tasked with reviewing whether the approaches identified in 2023 to ensure the semiconductor industry has access to the finance it needs are still adequate in the ‘post-globalisation’ world, with an end goal of constructing large-scale ($1-3 billion) manufacturing plants for compound semiconductor devices here in the UK. If the current set of incentives has not produced clear progress to that goal, then the approach to financing should be urgently overhauled, with approaches such as tax incentives and accelerated regulatory processes being adopted. The review should include an analysis of how the governments of other countries have successfully ensured that similar plants have been built in their territories.

Lastly, the outcome of this review should be incorporated into the “Invest 2035” Industrial Strategy announced by Chancellor of the Exchequer in her Spring Statement of March 2025.