It’s a dispiriting and familiar pattern: Britain comes up with world-class ideas and startups, only to see them sold off, moved abroad, or left without the capital to pursue pilot production, customers, and manufacturing.
Prime Minister Burnham wants to change this cycle. In his first speeches as UK leader, he outlined ambitious plans to reindustrialize, emphasizing artificial intelligence, chips, and drones. The targets are spot on. But the unanswered question is whether Burnham can turn good ideas into concrete outcomes.
Success will require close cooperation with European and American allies, encouraging foreign investment, and linking with Western supply chains. Scarce public funds should be invested in Cambridge and other existing successful tech clusters. Public procurement, particularly defense, should create credible lead customers. Private capital must be mobilized from pension funds and the country’s strong aviation companies.
Famed university city Cambridge will be central to any successful UK industrial revival. It contains a globally leading semiconductor research and design cluster that houses the Cavendish Laboratory’s Semiconductor Physics Group, the Cambridge Centre for Gallium Nitride, and the CASCADE Computer Architecture and Semiconductor Design Centre.
The government should not redistribute activity away from Cambridge in the name of “levelling up.” Instead, it should help Cambridge firms grow into large, independent British companies and connect their success to manufacturing, skills, and supply chains in the Northeast, South Wales, the Midlands, Scotland, and beyond.
The UK has already seen that national powerhouses can leak away. Arm, the designer of chips running almost all the world’s smartphones, became one of Britain’s most important technology companies before Japan’s SoftBank acquired and listed it in New York.
Prime Minister Burnham should distinguish between ordinary acquisitions and strategically important companies. He should impose a tough strategic capability test for semiconductor and AI hardware acquisitions. The goal should be to ensure that the next Arm-level company IPOs in London remains independent long enough to scale, and keeps its core R&D, IP, and decision-making in Britain.
The new national innovation center, Semiconductor Catapult, will be the key delivery mechanism. It gives startups access to supply chain integration, design, system testing, and validation. Success should be judged not by the number of reports published, but by how many British firms cross the difficult gap between a promising design and a qualified, manufacturable, customer-funded product.
The UK must also address its financing gap. Although it has world-class early-stage venture capital and a large private equity industry, neither supplies the capital needed to take semiconductor companies from prototype to volume products.
Pension funds should be mobilized. The parliamentary Science and Technology Committee notes that venture capital represents only 0.007% of assets under management for UK and Irish pension funds. The government should make semiconductor scale-up assets investable: create professionally managed co-investment funds, provide first-loss or risk-sharing structures, and give investors access to credible procurement pipelines.
Early signs of movement are visible. Major pension providers have discussed the creation of a UK scale-up fund of more than £1 billion, while the proposed Future Growth Fund could mobilize up to £50 billion of pension capital.
Large, profitable British defense and aerospace firms should play a role. The Treasury could offer targeted tax credits or enhanced capital allowances when companies such as BAE Systems and Rolls-Royce co-invest in UK scale-ups related to their businesses.
Defense should become an anchor customer. A key reform concerns procurement: small firms need rapid trials, clear pathways from prototype to framework contract, and the ability to sell dual-use products in civilian markets without being trapped by classified restrictions.
A good example concerns the Defense Ministry’s acquisition of Octric Semiconductors, securing the UK’s only facility capable of producing certain gallium-arsenide semiconductors. Octric should now be developed as a defense-secure manufacturing platform with commercial spillovers. But it would be a mistake to present Octric as proof that nationalization works. It is a targeted security intervention. The broad strategy must remain the creation of innovation clusters.
Prime Minister Burnham has talked about breaking “red” lines in engaging with Europe. He’s right. The error of Brexit must be corrected. The UK should also seek a formal, reciprocal semiconductor partnership with the European Union: access to European pilot lines and research infrastructure, joint R&D programs, common technical standards, talent exchanges, coordinated export controls, and two-way access for EU firms to UK chip capabilities
This is not a retreat from sovereignty. It is the only serious version of it for the UK to revive its moribund industry and become a trusted and difficult-to-replace partner in the Western tech economy.
Christopher Cytera CEng MIET is a non-resident senior fellow with the Digital Innovation Initiative at the Center for European Policy Analysis and a technology business executive with over 30 years of experience in semiconductors, electronics, communications, video, and imaging.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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