The UK government has released a comprehensive report assessing the current landscape of the British semiconductor industry. The study highlights the sector’s revenue profile, workforce distribution, company demographics, global trade activity, and future growth expectations.
In 2022, specialized UK semiconductor companies generated £9.6 billion in revenue—around 2% of global semiconductor revenue. Over 40% (£4.1 billion) came from UK-headquartered companies.
Arm remains the industry’s dominant player, representing 25% of total revenue and 20% of industry employment.
Revenue per employee ranges widely—from £225,000 in micro-enterprises to £750,000 in large ones. On average, specialized semiconductor companies contribute £460,000 in GVA per employee (£305,000 excluding Arm). These companies collectively employ around 15,000 people, with UK-headquartered firms accounting for over 60% of the total.
Industry-wide employment impact is much larger: using SIA multipliers, the sector could support up to 86,000 jobs economy-wide. To date, specialized companies have secured £1.7 billion in grants and financing, though 70% of that funding went to just five firms.
🔬 UK Semiconductor Industry Overview #
The study mapped 623 UK semiconductor-involved companies, consisting of:
- 210 specialized semiconductor companies
- 413 diversified companies operating partly in the sector
Company Demographics #
- 66% of specialized companies are UK-headquartered (n=138).
- 92% of all companies identified are SMEs.
- Specialized companies skew smaller, with 95% classified as SMEs.
- Only 11 large specialized firms account for 63% of revenue and 53% of employment.
- Medium-sized specialized companies average 110 employees each and collectively employ about 5,000 staff.
- UK-headquartered firms are smaller overall: 79% are micro/small, compared with 55% for international firms.
- Specialized semiconductor company formation has remained steady since the early 2000s, averaging 8 new companies per year (2016–2023).
- Recent startups (2020–2023) largely focus on R&D, design, and IP, including Literal Labs, Falkata Semi, and Vector Photonics.
Key Application Areas #
- Telecoms and Computing dominate among UK-headquartered companies (51% engaged).
- Automotive is more prominent among international firms (30% vs. 20% for UK-headquartered).
Geographic Distribution #
- Nearly half of specialized firms are located outside London, South East, and East of England.
- Cambridge (East of England) remains a semiconductor hub due to Arm.
- Wales, despite hosting <10% of companies, contributes 14% of employment and 30% of revenue.
- Scotland accounts for nearly 25% of total revenue.
💰 Revenue and Financial Performance #
- Arm alone accounts for 25% of specialized-company revenue—and 54% among UK-headquartered companies.
- The top 10 UK-headquartered companies generate 88% of UK specialized semiconductor revenue.
- Large firms contribute 62% of sector revenue.
- Average revenue per employee across the industry is around £635,000.
Growth Expectations #
- 90% of surveyed companies expect rapid or moderate growth over the next two years.
- Strongest optimism comes from firms in design, IP, and materials.
- Power electronics—including silicon-based GaN—is highlighted as a major future growth driver.
- Key barriers: funding, scaling support, and scale-up experience.
👥 Employment and Global Trade #
Employment #
- UK specialized semiconductor companies employ around 15,000 technical staff.
- For each technical worker, companies employ 3–4 additional non-technical staff (sales, HR, operations).
- Using the SIA multiplier, the broader UK economy could see up to 86,000 jobs supported by the sector.
International Trade #
- UK companies imported an average of £2.8 billion in semiconductors annually over the past decade.
- Import costs have risen since 2021 due to higher IC unit prices.
- 80% of respondents export products or services.
- Nearly 60% say exports represent over 75% of their sales—showing strong global reliance.
- UK semiconductor export values have modestly increased since 2017.
- Export growth (2019–2023) was driven by:
- Semiconductor manufacturing machinery
- Testing equipment
- Transistors and diodes