Source · Select Committees · Business and Trade Committee
Recommendation 9
9
Accepted in Part
Paragraph: 91
We recommend that the forthcoming Semiconductor Strategy should include: • An analysis of the semiconductor...
Recommendation
We recommend that the forthcoming Semiconductor Strategy should include: • An analysis of the semiconductor production and supply chain, recognising different characteristics for different subsectors of the industry, and areas of strength and weakness; • A heatmap, showing where different semiconductor industries and niches are located within the UK, and how they are positioned in relation to the supply of relevant skills, equipment, research capability, and in relation to other factors valued by firms in those industries; and • An account of which industries in the UK and which key products are dependent upon a secure supply of semiconductors at reasonable cost. • In addition, we recommend that the Government produces a risk and resilience strategy for the semiconductor industry alongside its Semiconductor Strategy, as a matter of urgency.
Government Response Summary
The government will publish semiconductor resilience guidance, undertake crisis and contingency planning exercises, work with external suppliers, and evaluate the UK’s future domestic semiconductor manufacturing needs as part of a commissioned research project, falling short of the comprehensive analysis and heatmap requested.
Paragraph Reference:
91
Government Response
Accepted in Part
HM Government
Accepted in Part
The semiconductor supply chain is complex, concentrated and at risk of disruption. The majority of semiconductors arrive in the UK already integrated in their end-use application, installed in cars, phones and fridges, or as components in pre-prepared modules for manufacturing. This makes it incredibly difficult for UK businesses to understand where issues in their supply chains actually emerge, or take action to prevent them. Alongside international action to build better resilience in supply chains, the Government will help UK industries to mitigate the potential impact of future supply chain disruption (including our high-tech manufacturing and infrastructure sectors). The Government will also take action to protect our critical services (essential services, healthcare, critical national infrastructure and defence) from disruptions that could cause risks to life or national security. In order to do so, the Government will: • Publish semiconductor resilience guidance to improve UK SMEs operating within economic sectors existing understanding of the potential risks to semiconductor supply chains and the steps they can take to better prepare for future disruption and minimise their exposure to risks (including through stockpiling, improving supply chain transparency, and consolidating components to reduce exposure). • Establish a government-industry forum and bring together a group to better identify and mitigate supply chain disruptions, to build our collective understanding of what specific sectors are likely to be more vulnerable to shortages. • Undertake a crisis and contingency planning exercise—drawing in cross- government stakeholders and representatives from critical sectors and the manufacturers that support them—to consider the impacts of future major disruptions, alongside possible mitigations. • Work with external suppliers to critical industries, including to the UK’s critical national infrastructure, to understand and address risks to their chip supply, encouraging co-operation and transparency to improve resilience. 8 The Semiconductor industry in the UK: Further Government Response • Evaluate the UK’s future domestic semiconductor manufacturing needs as part of our commissioned research project reporting in the Autumn, to see where a baseline level of manufacturing could provide a low volume of chips for critical infrastructure, recognising that volume manufacturing for all UK requirements is not viable.