The UK semiconductor industry

What the sector is made of

The UK sector is overwhelmingly composed of smaller businesses: roughly 92% of dedicated companies are SMEs, and about 70% are UK-headquartered. That structure explains much of the sector's character — deep specialist capability distributed across many firms, rather than a small number of very large integrated manufacturers.

Where the UK is strong

UK strength sits at the high-value, intellectual end of the semiconductor value chain rather than in high-volume leading-edge manufacturing:

• Chip design and semiconductor IP — architectures and reusable design blocks licensed into chips manufactured elsewhere.
• Compound semiconductors — materials such as gallium nitride and silicon carbide used in power electronics, radio frequency and photonics.
• Photonics and integrated photonics — light-based components for communications, sensing and computing.
• Research-led device science — memristors, neuromorphic architectures, silicon quantum electronics, MEMS and hardware security.
• Specialist fabrication and packaging — smaller-scale wafer processing and advanced packaging facilities rather than leading-edge megafabs.

Growth expectations

Industry sentiment in the 2026 study was strongly positive: 83% of surveyed firms expected growth over the following three years and 47% expected rapid growth above 20% a year, up from 38% at the baseline. Set against a global market where sales reached $796 billion in 2025 — approximately 39% higher than 2022, driven largely by AI compute demand — the UK's design, compound semiconductor and photonics strengths sit close to the fastest-growing demand.

The study is equally clear about constraints. Access to capital for scale-up, specialist skills supply, the cost of access to fabrication and the resilience of international supply chains all remain live issues, and are the areas Government policy has most directly targeted.