23008_Nearshoring Report

In the UK, the Government are exploring ways in which to “support, encourage and unify” the country’s semiconductor industry to tackle shared challenges and help businesses scale. An ongoing enquiry has identified that the UK has “world leading capabilities in certain fields such as design, intellectual property and compound and advanced material semiconductors” but lacks significant manufacturing capacity and is vulnerable to supply shocks; it also notes that the secure supply of semiconductors affects many industries and a lack of investment could significantly impact the UK’s economic performance. It also notes that the UK is missing out on inward investment at a crucial time and that the Government should be more proactive in its engagement with other governments and with corporates around the world. The UK Government published its long-awaited strategy relating to semiconductors in Spring 2023 but the focus - and GBP 1 billion in funds allocated for incentivising businesses to locate in the UK - is predominantly towards research and design rather than fabrication.

In June 2021, engineering and technology producer Bosch opened a EUR 1.2 billion 72,000 sqm semiconductor plant in Dresden, in Eastern Germany. The highly-automated and digitalised ‘wafer fab’ represents the largest single investment in the company’s history; the focus of the facility is the manufacture of leading-edge microchips for inclusion in a range of products, particularly automotives. Dresden is home to a microelectronics cluster known as “Silicon Saxony” with an evolving ecosystem of suppliers, users, skills and learning which was an important consideration for Bosch in this and other investments in the area. BOSCH

Despite these interventionist policies, there is a broad understanding that self-sufficiency for individual countries or even collectives such as the EU is not achievable and that there is a distribution of sourcing – from raw materials to components and finished products – that will be required. However, the case for locating production nearer to the markets of consumption is strong from an economic and business perspective but also in the face of restrictions to access to products manufactured outside cooperative partner countries.

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