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This POSTnote outlines applications of semiconductor chips. It gives an overview of the supply chain, the UK’s semiconductor industry, vulnerabilities to the supply chain and policy considerations for improving supply chain resilience.

Documents to download

• ‘Supply of semiconductor chips’ report (838 KB, PDF)

DOI: https://doi.org/10.58248/PN721

Semiconductors are one of the five critical technologies in the 2023 Department for Science, Innovation and Technology (DSIT) Science & Technology Framework. Semiconductors are materials used to make small flat chips that carry electric circuits in devices.

Key points

• Semiconductor chips are essential in all electronic devices, including smartphones, cars, healthcare technology and defence technology. They drive the technologies that are expected to be key to the prosperity, security and global competitiveness of the UK, such as artificial intelligence, electric vehicles and communications infrastructure.
• Semiconductor chips are produced through multiple complex stages across different geographic regions. Different regions specialise in different stages, creating interdependencies and vulnerabilities.
• Supply shortages can cause delays in obtaining products, price rises, potential disruptions to essential infrastructure and risks to national security.
• Geopolitical conflicts, natural disasters, skill shortages and national security concerns all have the potential to disrupt supply chains.
• National security risks associated with semiconductors include hostile states gaining access to sensitive technologies and semiconductor-related knowledge that could help build adversaries military capabilities.
• A supply shortage that started in 2020 was estimated to have disrupted global GDP growth by 1% in 2021 and affect 169 sectors, including in consumer electronics, automotives and healthcare.
• In May 2023, the UK Government published the National Semiconductor Strategy to improve supply chain resilience, protect national security, and grow the domestic sector. The Strategy recognised and sought to develop the UK’s strengths in several areas including chip design, research and development and intellectual property, and compound semiconductors.
• Some industries are concerned about the funding in the National Strategy. Academics and industries have identified financial investment, international collaborations and workforce development as important to supply.

Acknowledgements 

POSTnotes are based on literature reviews and interviews with a range of stakeholders and are externally peer reviewed. POST would like to thank interviewees and peer reviewers for kindly giving up their time during the preparation of this briefing, including:

Members of the POST Board*

Dr Joseph Baines, King’s College London*

Professor David Binks, The University of Manchester

Dr Fernando Castro, National Physical Laboratory*

Richard Duffy, Department for Science, Innovation and Technology

Stewart Edmondson, UK Electronics Skills Foundation*

Laura Foster, techUK*

Dr Peter Gammon, University of Warwick*

Dr Julian Germann, University of Sussex*

Professor John Goodenough, University of Sheffield

Professor Andrew Johnston, University of Huddersfield*

Dr Wyn Meredith, Cardiff University

Professor Rachel Oliver, University of Cambridge*

Olivia O’Sullivan, Chatham House*

Dr Steve Rolf, University of Sussex*

Dr Sean Kenji Starrs, King’s College London*

Peter Stephens, Arm*

Charles Sturman, TechWorks*

Elis Thomas, techUK*

Dr Sebastian Wood, National Physical Laboratory*

Professor Mark Zwolinski, University of Southampton

*denotes people and organisations who acted as external reviewers of the briefing.

Related Links

• The semiconductor industry in the UK – BEIS inquiry report
• Is microchip supply a national security issue – Lords Library
• UK semiconductor challenges and solutions – IOP and RAEng
• Strengthening the global supply chain – SIA
• National semiconductor strategy – UK Government

Documents to download

• ‘Supply of semiconductor chips’ report (838 KB, PDF)