Sienna West, Investigative Correspondent
The government’s £1 billion National Semiconductor Strategy, heralded as a revival of British chipmaking, is silent on what really matters: the 30% energy surcharge for fabs, the brain drain to Taiwan, and the taxpayer footing the bill for water scarcity in the South East. While ministers boast about ‘sovereign capability’, the structural failures remain buried.
Britain’s chip industry has not existed at scale since 2017, when Nexperia shuttered its Newport Wafer Fab. Today, the UK relies on Taiwan for 92% of advanced chips. The Strategy aims to change that, with a focus on compound semiconductors and R&D hubs in Cardiff and Manchester. But no one is asking: at what cost?
The first hidden cost is energy. A single leading-edge fab consumes as much electricity as 50,000 homes. The UK’s grid, already strained by net-zero targets, cannot support a cluster of fabs without massive upgrades. The government’s own climate advisors have warned that new industrial loads must be offset by renewables. Yet the Strategy allocates zero funding for grid reinforcement. Local councils in South Wales, where a new fab is planned, are privately furious about the lack of transparency on power demands.
Second is water. A 300mm wafer fab uses 4,000 gallons of ultrapure water per day. The South East of England is already in drought-prone status. By 2030, water stress in the Thames region will be critical. The semiconductor industry’s thirst will compete with agriculture and households. No impact assessment has been published.
Then there’s talent. The UK trains 3,800 electronics graduates annually, but only 700 join the semiconductor sector. The rest go to finance or Big Tech. Meanwhile, Taiwan’s TSMC recruits aggressively from UK universities, offering salaries 40% higher. The Strategy pledges 1,000 PhD fellowships over ten years, but does not tie them to domestic employment. We are subsidising our own brain drain.
The third concern is the model itself. Instead of building homegrown fabs, the government is offering grants to foreign firms like Taiwan’s GlobalWafers and US-based Wolfspeed to set up in the UK. These firms bring their own IP and supply chains. They can leave as soon as subsidies dry up. The 20% investment tax credit is generous, but without clawback clauses, taxpayers risk funding short-term boom and long-term bust.
Finally, what happens to the old fabs? Plessey in Plymouth, once a world leader, now stands empty. Its equipment was sold to China. The government has no plan to repurpose legacy sites. Instead, it focuses on greenfield projects, ignoring the sunk costs of infrastructure that could be revived.
The semiconductor industry is cyclical. Booms are followed by busts. When the next downturn hits, Britain’s fledgling fabs will be the first to close. The Strategy offers no protection: no minimum domestic orders, no state-backed offtake agreements. The UK will have spent billions for a brief moment of ‘sovereignty’.
As one former industry executive told me: “We are building a sandcastle. The tide always comes in.”
