The UK government is reportedly on the brink of spending £100m for key chip component as part of its overall £1bn strategy to make the UK a technological super power. But will this be enough to boost the UK’s semiconductor growth?
With continued volatility in the construction materials market, the price of key commodities like steel and copper could have an impact on the government’s ambitions to scale up chip production.
As manufacturing costs continue to bite despite energy prices easing, the UK needs to navigate a shared pool of supplies and global competition to maintain growth in mission-critical sectors.
A new report from Linesight, a London construction consultancy services, has analysed the expected trends in materials costs for the coming year and their impact on mission critical sector growth.
Commodity prices are down but demand is up
Linesight shows that the price of copper, notable for being a key element of the UK’s green transition, declined by 8.2% in Q2 2023, but is likely to remain volatile due to the growth in the semi-conductor manufacturing, and increased activity in the high tech and energy sectors.
Meanwhile the price of stainless steel has come down slightly by 0.5%, as the cost of raw materials such as nickel have dropped due to increased production levels in Asia.
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“As commodities moderate, price fluctuations will be driven by demand from high potential growth sectors,” says Michael Riordan, Linesight’s managing director. “Solid implementation plans, supported by government investment, are required to ensure that opportunities are maximized, especially in challenging financial environments.”
Linesight’s report says that data centres are predicted to experience an exponential growth that will accompany AI, 5G and IoT expansion in the UK, adding that there is now an urgent need for new sites and locations to be identified, as well as skilled labour, to meet the forecasted digital infrastructure requirements.
Moreover, the UK’s National Semiconductor strategy, with a package of £1bn in funding and support over the next decade, is driving growth projections. Current battery and semiconductor manufacturing projects, valued at over £10bn, are at various stages of planning and execution, and the sector is forecast to grow by 4.1% in 2023.
Meanwhile, the UK’s aim of reaching 100% zero-carbon electricity generation by 2035 is stimulating growth in the renewable energy market. The sector is predicted to grow at a rate of 11.6% in 2023, bolstered by the UK infrastructure bank’s planned investment of £200m in the development of power storage technology.
Lastly, Linesight says that growth remains strong for life sciences, with the UK biotech sector witnessing steady increases in venture investment in Q2, raising £338 million, up 31% from the previous quarter and 22% higher than the same period last year.