Julie James, Minister for Skills and Science
This was published under the 2016 to 2021 administration of the Welsh Government
I welcome this opportunity to write to Members and update them on Wales’ progress in developing a global compound semiconductor cluster.
The Welsh Government has put Smart Specialisation at the heart of its Innovation Strategy. This means we are committed to making strategic interventions in industrial sectors where there are 3 pre-conditions:
1st - where Wales already has internationally recognised expertise.
2nd – where we have businesses capable of exploiting this knowledge.
3rd - where there is a significant global market potential to address.
This strategy is helping Wales to explore cutting-edge business opportunities in these sectors, in terms of product development, diversification and new paths to market and we are ensuring innovation is a major enabler for Wales.
The Welsh Government’s support for the semiconductor sector over the last few years is a working example of the strategy. Together with our partners in business and academia, we are aiming at nothing less than the creation of Europe’s 5th semiconductor cluster, and the very 1st dedicated to compound semiconductors. This will be a cluster which is European in scale but global in reach.
Compound semiconductors are essential components inside many of the devices changing the way we live – WiFi, smart phones, GPS, satellite communications and more efficient LEDs.
They will also be crucial for many of tomorrow’s advanced applications, such as:
- electric vehicles with anti-collision sensors
- wearable technology to monitor health
- high-efficiency solar cells to use in space
- the Internet of Things.
The research, development and production of the next generation of compound semiconductors could be a competitive game changer for Wales, enhancing our own economic growth and that of the UK.
Global markets for compound semiconductors are projected to reach $125bn by 2025, a growth rate per application of between 10-20% per annum.
We have been working with the private sector and academia in a triple-helix, delivering 3 substantial projects which form the building blocks to support the business cluster.
The 1st is a £90m Institute for Compound Semiconductor Technology which has been established at Cardiff University’s Innovation Campus and will officially open in 2018. Supported with £12m from the Welsh Government, it will provide ultra-modern facilities, enabling researchers and industry to work together on device fabrication and testing. It will house 116 researchers.
The Director of the Institute is Professor Diana Huffaker, one of the world’s leading experts in compound semiconductors. She was appointed through our Sêr Cymru programme as Chair in Advanced Engineering & Materials at Cardiff University.
The 2nd is the creation of a £42m Compound Semiconductor Centre. This is a joint venture between Cardiff University and IQE plc, one of the world’s leading suppliers of compound semiconductor wafers. It will focus on growing a range of innovative new compound semiconductor materials. The centre, based in St. Mellons, is now operational and currently employs 65 people, with plans to expand.
The 3rd is to develop a Compound Semiconductor Applications Catapult in Wales. Following a dialogue with Innovate UK, Britain’s innovation agency, on the explosive potential and global reach of the sector, and of South Wales’ unique capacity to develop and exploit the opportunities, Innovate UK came to see what we were aiming at and became fully convinced of our business case. As a result, in January the Chancellor of the Exchequer announced £50m over the next 5 years.
This is the 1st Catapult to be headquartered in Wales, alongside partner match funding, it will result in a total £150m investment for the sector. It represents the ultimate endorsement of our strategy and the search is on for a chair and a suitably high-profile location in South East Wales.
The Catapult will focus on helping businesses turn the new materials developed at the institute into applications for new products. Like the other catapults in Britain, it will be a UK-wide facility; industry-led and focussed, with open access for start-ups, SMEs and larger companies.
Altogether, the institute, the centre and the catapult will lead to more than 300 direct jobs. In addition, Cardiff University’s early stage research indicated up to 5,000 new indirect jobs to be created by 2025 amongst existing and new companies which will locate around this hub of knowledge and experimentation. The majority will be skilled, highly paid technology jobs at graduate and postgraduate level.
We can realistically expect Wales’ established companies in the sector such as SPTS, MicroSemi, and IQE, to benefit from the infrastructure to showcase their capabilities and collaborate with new customers. However, the economic benefits to Wales will be much wider. Many industrial sectors now use micro-electronic components. With this infrastructure locally available, many of our SMEs and larger manufacturers will have the opportunity to design bespoke materials and devices, work with global players, and access new markets. This will be crucial for the next generation of low-power, high-performance products for automating the home, healthcare and mobile communications.
The other European semiconductor clusters have shown the following economic benefits:
- They generate new SMEs and grow existing ones
- They stimulate multinational collaboration
- They attract inward investment opportunities
- They speed up academic commercialisation.
We expect the same from our Welsh cluster, and we have already been contacted by international businesses wishing to engage with it.
I am delighted that our exciting vision for the sector has developed so quickly. It will shine a global spotlight on Wales. It is witness to the effectiveness of the triple helix approach and it is an exemplar of how the Welsh Government’s Smart approach to innovation will benefit the people and businesses of Wales.