Rishi Sunak to unveil semiconductor partnership with Japan

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Rishi Sunak will announce a “semiconductor partnership” with the Japanese government during a visit to Tokyo on Thursday as the UK seeks to reduce geopolitical risk by diversifying its chip supply chain.

The British prime minister’s announcement comes ahead of Friday’s release of a UK semiconductor strategy, which will outline the dangers to the UK’s chip industry from relying too much on a handful of supplier countries including Taiwan.

Sunak said on Thursday that its semiconductor partnership with Japan would include “ambitious R&D cooperation and exchange of expertise,” strengthening each country’s domestic sectors, and strengthening supply chain resilience.

The deal will form part of a broader “Hiroshima Agreement” between the UK and Japan, which provides for closer economic, security, energy and technology cooperation. It will be unveiled as Sunak visits a naval base in Tokyo ahead of the G7 summit in Hiroshima.

The partnership comes as the government is set to finally reveal its plan to develop Britain’s chip sector on Friday. This will lead to £1bn of public spending over the medium term on chips that underpin all modern technologies, from smartphones to cars, according to two people briefed on its contents.

However, the amount pledged by the government is small compared to Washington’s “Chips Act,” which provides $52 billion in subsidies and incentives to encourage semiconductor companies to build manufacturing plants in the United States. The EU also launched its own “European Chips Act” with 43 billion euros of state aid.

Scott White, co-founder of UK group Pragmatic Semiconductor, which is developing low-cost small plants for its ultra-thin chips, said £1bn seemed the “right level” for a country that has an economy and a industry smaller than the United States or Germany. But he added that it needs to be “deployed in a relatively short amount of time to make it really useful.”

“We can easily be profitable without incentives, but if everyone is offering them elsewhere, that makes the cost of production higher here,” said White, who has previously said he would consider a public listing in the US if the government doesn’t. enough to make Britain a financially attractive place for the company to grow.

The UK’s semiconductor strategy will emphasize the need for Britain to reduce its reliance on semiconductor imports from geopolitically sensitive parts of the world such as Taiwan, the world’s largest chip maker, which has long been under threat from its closer neighbor. great, China.

It will address the need to diversify supply chains by working more closely with other international counterparts such as Japan, according to officials familiar with its contents.

The UK government launched its review after the Covid-19 pandemic exposed the fragility of the global semiconductor supply chain, leading to a global shortage. The government intended to publish the plan by autumn 2022.

Last year, the government blocked the acquisition of Newport Wafer FabBritain’s largest semiconductor plant, by Nexperia, a Chinese-owned company, in a sign of growing sensitivity.

The review should state that the UK cannot and should not meet all of its semiconductor needs domestically and should focus its efforts on value-added areas such as research and design, compound semiconductors and ‘advanced packaging’, whereby several chips are combined into a single product.

While the UK plays a marginal role in chip manufacturing, it is home to two of the world’s leading chip design companies, Arm and Imagination Technologies, which account for around 40% of global intellectual property development in the industry.

It is also home to companies developing compound semiconductors, which are made from other materials instead of silicon and represent a promising new area of ​​research.

Additional reporting by Kana Inagaki