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Chips are essential

20 October 2023

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Britain needs to be as self-sufficient as possible in semiconductor chip technology. It’s not yet clear how this core technology is to be developed and safeguarded at a price British workers and industry can afford.

The government published a semiconductor strategy in May but many questions remain about how any of this can be achieved.

Open standards

At present the US claims superiority over the intellectual property needed to design chips. An escalating battle for supremacy over chip technology is being played out between the US and China. Nevertheless, like the internet, that technology was freely available globally. Until now US and Chinese companies worked together on open technical standards.

Since last year US lawmakers have been putting pressure on the Biden administration to restrict companies collaborating across borders. This is on grounds of national security and degradation of US export control laws. In particular they want to make it more difficult to trade with China, which they accuse of dodging sanctions by developing cheap and versatile open source technology.

Biden has been quite open to going along with that policy. And now he has ramped up the restrictions. The US is now trying to restrict companies based there from using the open source computer architecture (RISC-V) which is widely used in China.


And of course the US expects to apply the same restriction to other countries who might want to do business with it. While key US companies have waivers to sell to China, an industry analyst, reported in the Daily Telegraph on 9 October, said it’s much harder for EU and British companies to do so. While conducting a trade dispute with China, the US always wants to stay ahead of competition elsewhere.

The most important company in the British semiconductor industry is Cambridge-based design company Arm Holdings. It does not manufacture processors, but creates and licenses its technology only as intellectual property, charging royalties. Arm-based chips are everywhere, in industrial and consumer products; billions are shipped each year.

But Arm is no longer British-owned, although around half of its 6,000 workforce are still based here. It is now 90 per cent owned by Softbank, a Japanese conglomerate, which bought it in 2016. After a failed takeover by US chipmaker Nvidia, Softbank floated some of the shares on the US Nasdaq stock exchange.

Trade war

Arm licenses its products in China through Arm China, which it partly owns. It successfully competes with open-source computer architecture, as RISC V, – accounting for about a quarter of its global sales. The risk is that Arm will become a pawn in a geo-political trade war. 

Advanced semiconductor technology is critical for developing artificial intelligence. According to analysis by the Daily Telegraph, that’s what’s behind the US stepping up its restrictions on China in respect of exporting both chips and manufacturing capability. The US hopes to limit China’s technical progress and to prevent it being an economic competitor.

Artificial Intelligence

Currently Britain has a strong presence in several aspects of AI, according to Stanford University’s 2023 AI Index Report. The question is whether investment and potential can be realised as benefits for Britain.

The government’s approach is to focus on regulation and a strategy of inward investment. In other words – allowing global capitalists to make profits out of the skills and ingenuity of British workers, before taking the spoils away.