Kim Hegarty is director of Linesight
The global chip shortage, which began in 2020, has had a severe impact on a number of industries from electronics to automotive and renewable energy. At the same time, demand for chips has continued to rise, resulting in a global race to localise semiconductor manufacturing to improve the resilience of supply moving forward.
So, how can local UK manufacturers realise their share of this global £460bn industry and ensure Britain remains competitive? The construction and property industry will need to play a key role.
“The global competition for the key materials needed to build semiconductor plants makes careful supply chain management a key necessity”
Semiconductors are the main components of processor chips, which are in everything from computers and smart phones to electric vehicle batteries and photovoltaic cells, and they are being deployed increasingly in a growing number of industries. As our lives become ever ‘smarter’, more chips are required, fuelling growth in this burgeoning market.
With its recognised expertise in chip design, the UK has the potential to become a major player in the chip industry. The first step towards achieving this will be by building the facilities to produce these vital components.
Key considerations
Delivering a facility capable of housing the multimillion-pound technology needed to manufacture millions of chips day in, day out, comes with specific location requirements.
There are several challenges that can present when planning a project of this scale.
Access to utilities, particularly energy and water, is an important consideration: according to research from McKinsey, semiconductor plants use up to 100 megawatt-hours of power per hour. Likewise, a thorough understanding of utilities access and the planning requirements that drive site selection are a vital starting point for any project.
Knowing who else is already in the area is just as crucial. While it might seem counterintuitive to cosy up to competitors, choosing sites that are part of an established industry cluster can help to reduce costs for utilities – as well as allowing improved access to supply chains for components.
When it comes to constructing these facilities, there are important distinctions to note between the different asset types on the market. Integrated device manufacturers design and manufacture chips for single companies, while foundries produce chips under contract for a variety of businesses and therefore need to be able to adapt to variations in chip design and demand.
With pressure on to scale up production, the global competition for the key materials needed to build semiconductor plants makes careful supply chain management a key necessity. Monitoring changes in the global and local markets will allow contractors and clients to identify opportunities to improve the resilience of project budgets and timelines.
Ensuring you have the skilled labour needed to get projects off the ground is a must for contractors. The UK Trade Skills Index shows that the construction and trade industries need 937,000 extra workers by 2032 to meet growing demands. With skills from the high-tech industrial sector in demand from the burgeoning life sciences and data centres industries, upskilling for semiconductor projects needs to start quickly to avoid adding wage pressures to projects. Projects in the US have recently seen delays caused by skills shortages, with workers from overseas being brought in to help meet timelines.
While the UK’s semiconductor strategy builds on the country’s skills in chip design, more can be done to develop the capabilities to deliver the facilities where these chips will be made. The right skills strategy could become another strategic advantage for the UK.
Finally, despite the global need for chips, no project is risk averse and factors like volatile material costs and shortages, along with supply chain disruption require careful monitoring. This is why integrated risk management should be a core proponent of any chip production project. Developing roadmaps for these major capital expenditure projects to account for possible scenarios is incredibly beneficial. It is also vital to identify opportunities for futureproofing projects through the integration of clean energy, thereby ensuring the success and longevity of developments.
With demand for semiconductors set only to grow, the UK has an opportunity to shore up its own supply while fostering a thriving future industry. The first steps to making it happen are continued government support and gearing up the construction and property sector to build the best facilities in the right locations.
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