Aims for south east Wales to be at “forefront of conversation” over semiconductor investment

Councils in south east Wales will aim to put the region “to the forefront of conversation” around new investment in the semiconductor industry.

The tiny components are used in electronics and computers ranging from household appliances to military equipment, and the UK Government has labelled the sector one of its five “technologies of tomorrow”.

The ongoing development of a “cluster” of plants in this corner of Wales, including several factories in Newport, means the region can cement its place at the heart of the UK’s new semiconductor strategy, according to a report by Rhys Thomas, the acting director of the Cardiff Capital Region (CCR).

The UK Government has pledged £1 billion to the sector, focusing on research and the development of “next-generation” compound semiconductors – for which the CCR is “well known and lays claim to the world’s first compound semiconductor cluster”, it said.

The CCR is a joint project between the ten local authorities covering South East Wales – Blaenau Gwent, Bridgend, Caerphilly, Cardiff, Merthyr Tydfil, Monmouthshire, Newport, Rhondda Cynon Taf, Torfaen, and the Vale of Glamorgan – focusing on economic development.

It has made the region’s semiconductor sector a “priority industrial cluster” and believes the UK Government’s new investment in the industry will give the CCR a “strong opportunity to take the lead” in research and development.

The CCR acknowledges Westminster’s investment “pales in comparison” to that of the United States and the European Union, where lawmakers have announced reported funding of $280bn and €43bn, respectively.

But there is a reluctance for the UK to enter an international “subsidy race”, the CCR said in its report, adding that there may be opportunities to bid for overseas investment, including a share of a $500 million US fund set aside for partnerships with “key allies”.

The fostering of international relations, particularly with the US, will be one of the CCR’s “priority actions” as it looks to start “leveraging” American funding into South East Wales.

There remains a degree of concern, however, over a recent “downturn” in the market for semiconductors, blamed on a decline in sales of smartphones and other electronics.

That downturn is “expected to last throughout the first half of 2023, with a return to growth being predicted by industry commentators in the second half of the year”.

And in Newport, uncertainty still looms over the future of the Wafer Fab plant after the UK Government ordered owners Nexperia to reverse its takeover, citing national security concerns.