Internet of Things, Universities and China, Semiconductor Strategy latest
A Beijing to Britain briefing
Hello,
This week, a group of the UK’s leading semiconductor CEOs and veterans wrote to Prime Minister Rishi Sunak urging him to publish a coherent Semiconductor Strategy, warning that “confidence in the Government’s ability to address this industry’s vital importance is steadily declining with each month of inaction.” Although businesses will always have a vested interest, the strategic case for action is clear. As we explore in today’s briefing, while the United States, European Union, China, Japan and South Korea have all taken state-led action to invest in their semiconductor capabilities, the British Government has gone for a different approach - not taking any real action at all.
Why does this matter? On the micro, because these little chips and electric bits underpin almost the entirety of modern life. And on the macro, because as Katie Prescott noted last year in The Times - “[c]larity, certainty, strategy are what technology businesses want to see.” By looking at how a country approaches a sector like semiconductors, an observer can begin to reach a wider set of views on how that Government is dealing with this new geopolitical and geoeconomic landscape, and how it is navigating between industrial and foreign policy. It reveals how a country is reacting to trends like China’s return to superpower status, or America leaning into protectionism, and how well its top officials understand the sectors and industries that will come to define the coming decades.
It is too soon to see if Chancellor Jeremy Hunt’s speech on Friday, where he asked movers and shakers from those sectors and industries for help turning “the UK into the world’s next Silicon Valley”, will have an impact. But it is notable that this week alone, Kate Bingham (who chaired the Government's successful Vaccine Taskforce) warned that “short-term pressures are crowding out long-term solutions” for life sciences, and The Times ran comments from a series of industry experts expressing alarm over the glacial pace of Government strategising in areas like AI through to financial services. I suspect we will see the concern around the Government’s approach to semiconductors replicated across other industries of the future, like artificial intelligence, biotechnology, genetics, electric vehicles and solar panelling.
Not communicating a clear (and funded) strategy has domestic and international consequences with regard to the United Kingdom’s approach to China. In the case of the former, the Government can appear to be freewheeling, making decisions and interventions randomly, discouraging businesses to invest or grow in the country. In the latter, it leaves the United Kingdom at the mercy of the actions of others, like Japan and the Netherlands joining the United States on semiconductor export controls, or China deciding if it should put a ban on solar panel wafers. Conversely, communicating your direction of travel signals to allies and hostile states, industry and entrepreneurs, shows that you are actively thinking about these issues.
Separately, as the dust settles around Labour’s big foreign policy pitch, one detail remains relatively under-discussed by policy wonks, the media and business folk I speak to. Taking questions after the speech, Shadow Secretary David Lammy reaffirmed that Labour believes genocide is taking place in Xinjiang. Why does this matter? First and foremost, countries have a legal obligation to act when they believe genocide is taking place. The International Court of Justice is clear: “a State’s obligation to prevent, and the corresponding duty to act, arise at the instant that the State learns of, or should normally have learned of, the existence of a serious risk that genocide will be committed.” That means - should Labour win the next General Election - the party will likely face internal and external pressure to show they are acting from the minute their leader walks through the door of Downing Street. Despite the ramifications this could have for businesses, I suspect few have priced in this potential outcome yet.
— Sam Hogg, Editor
Order! Order!
Some of the more eye-catching questions and tweets from Westminster dwellers this week
The Bishop of St Albans (IPAC) asked “His Majesty's Government what discussions they have had with the government of China regarding the independence of Hong Kong’s judicial system.”
Iain Duncan Smith (Conservative, IPAC) tweeted “British Prime Minister @RishiSunak isn’t speaking up about the imprisonment of British citizen and publisher #JimmyLai in Hong Kong. https://t.co/2gCCvGjaUv via @WSJopinion.”