Pragmatic CEO tells UK government, support us or we leave

News | February 14, 2023

By Peter Clarke

Scott White, CEO of Pragmatic Semiconductor, is the latest chip boss to signal to the UK government that it must provide an economic support program or his company will relocate.

White has followed in the footsteps of Americo Lemos, CEO of wafer maker IQE plc in saying that the UK government must produce its Semiconductor Strategy for the UK – and it must support semiconductor-based companies with subsidies and tax breaks.

Pragmatic Semiconductor Ltd. (Cambridge, England) produces thin-film transistors on flexible substrates at a 200mm wafer fab in Sedgefield and with plans to create a 300mm wafer fab.

“It has to make economic sense for companies like ours to continue to operate and manufacture here, and if there are greater potential economic benefits and governmental support packages abroad, then relocation is the only sensible business decision,” White said during an interview with CNBC.

The form of words is similar to those used by Lemos. “We would love to stay in the UK and have committed to grow in the UK. That’s why we are working with the government on the strategy,” the Times quoted Lemos saying. “But we also have to do what shareholders want and go where the money is.” (see UK could lose wafer maker IQE over delayed chip strategy).

Pressure

The semiconductor strategy has been two years in the making and was expected to be delivered in 2022. However, it has been frought with delays. Officially the responsibility of the Department for Digital, Culture, Media and Sport, it is thought that a first draft was rejected by the Treasury on the grounds of expense.

Reports do suggest that the semiconductor strategy will include direct funding by government of startup and scale-up companies as well as incentives for venture capital investment (see UK chip strategy will include taxpayer funding). However, the budget will reportedly be at the level of single-digit billions of pounds and even that has not been agreed with the Treasury.

In this context it can be seen that comments from UK CEOs serve to put the UK government under pressure to speed up the publishing of the strategy and maximize the benefits it contains.

But in a further complication, Prime Minister Rishi Sunak has ordered a departmental restructuring that reduces the scope of the Department for Digital, Culture, Media and Sport (DCMS) and creates a Department for Science, Innovation and Technology (DSIT) to sit alongside a Department for Business and Trade (DBT).

Where responsibility for publishing of semiconductor strategy lies has not been spelled out and could be a source of further delay (see UK government restructures business, science and technology).

The simplest thing might be for the semiconductor strategy to pass to the newly-formed DSIT along with Michelle Donelan who is moving there from DCMS as Secretary of State. However, it would appear to fall more naturally under the DBT as part of its remit to encourage investment.