The UK Government has made a decisive move to secure its domestic semiconductor capabilities by acquiring a gallium arsenide semiconductor factory in Newton Aycliffe, County Durham. This strategic acquisition highlights a growing recognition of the critical role semiconductors play in national security, defence, and economic growth.
The factory, previously owned by US firm Coherent Inc., is the only facility in the UK capable of producing these specialist semiconductors, vital for military applications such as Typhoon fighter jets. According to Yahoo News, the facility was at risk of closure after losing key customers like Apple, threatening the UK’s access to this essential technology.
This move signifies a proactive approach by the Government to safeguard its defence supply chain and bolster domestic semiconductor production. Defence Secretary John Healey said, “This acquisition is a clear signal that our government will back British defence production. We’ll protect and grow our UK Defence supply chain, supporting North East jobs, safeguarding crucial tech for our Armed Forces and boosting our national security.” The acquisition will not only protect up to 100 skilled jobs in the North East but also ensure the continued production of these vital components for critical military platforms.
The MoD emphasises the broader significance of semiconductors, stating that they are “vitally important for the modern world we live in, being an essential component for the functioning of almost every electronic device we use, from phones and computers to ventilators and power stations.” This acquisition aligns with the government’s 20-year plan, announced in May 2023, to strengthen the UK’s semiconductor industry. It also underscores the government’s commitment to investing in the company’s future, boosting its capacity to produce gallium arsenide semiconductors and paving the way for the development of even more advanced chips, including those crucial for emerging technologies like artificial intelligence, quantum computing, and 6G.
The global semiconductor market is projected to reach $1 trillion by 2030, and the UK government is keen to capitalise on this growth. As reported by the MoD, “over a trillion semiconductors are manufactured each year, with the global semiconductor market forecast to reach a total market size of $1 trillion by 2030.” This acquisition represents a significant step towards securing the UK’s position in this rapidly expanding market, ensuring its access to critical technologies while supporting its economic growth and clean energy missions. The move also comes ahead of a planned Investment Summit, where the UK government aims to attract further investment and reinforce its commitment to innovation and high-quality jobs.
By taking ownership of this key facility, now renamed Octric Semiconductors UK, the Government is sending a strong message about its commitment to the future of UK semiconductor production. This strategic investment not only addresses immediate national security concerns but also lays the foundation for a more resilient and competitive domestic semiconductor industry, capable of meeting the challenges and opportunities of the 21st century.
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