Investment Spotlight: Delving into the Global Fascination
I’m currently at the UK’s newest computer chip plant in Durham, a former ceramic pipe factory transforming into a sophisticated hub for computer chip manufacturing. Based in Cambridge, Pragmatic Semiconductor has already built one production line and secured funding of £182 million ($230 million) for lines three and four, with plans for eight production lines.
The semiconductor industry, crucial for products with on-off switches, has faced disruptions in recent years due to supply chain challenges during the pandemic and geopolitical tensions in Asia, where most of the world’s advanced chips originate.
Pragmatic Semiconductor, the largest semiconductor manufacturer in the UK, uniquely produces flexible chips that can bend. These chips, built on a flexible thin film instead of silicon wafers, offer cost and speed of production advantages. While traditional silicon facilities take years and billions of dollars to build, Pragmatic’s fabrication plant can be 10 to 100 times cheaper, with a production timeline of less than 48 hours compared to months for silicon.
However, flexible chips are not a universal solution, and advanced chips used in phones and computers still require traditional silicon-based manufacturing. The global industry faced a severe shortage of these chips in 2021, highlighting the dependence on a few key suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC), which produces 90% of the world’s most advanced semiconductors.
Governments worldwide respond to this dependency by investing heavily in domestic chip industries. The US Chips Act, the European Union’s €43 billion project, and the UK’s £1 billion investment are examples of initiatives to strengthen domestic chip production. These efforts are also seen in other countries, with India entering the chip manufacturing space.
While the push for domestic chip production is upbeat, challenges such as a shortage of skilled workers and concerns about duplication and wastefulness in the industry must be addressed. The semiconductor industry is evolving, and diversification in manufacturing approaches and applications is expected to play a crucial role in meeting the growing demand for connected devices.
Comment Template