為何英國人不愛搞晶圓廠？

Why the British got out of fabs

Peter Clarke

In response to a request from a participant in the forum discussion below When the smart money got into/out of manufacturing I have tried to answer the questions: "Why the British had to get out of fabs and end up just with design/IP a la ARM ?" and "Why fabs still survive (if not exactly thrive) in the UK's traditional rival France?"

The detailed reasons are complex, generalizations are usually faulty but I will have a go at putting down my perspective as an observer of the electronics industry from the U.K. since 1984.

A primary reason that fabs failed to thrive in the U.K. is that while the Second World War helped create the U.S. as a global economic superpower it more or less bankrupted the U.K. with implications that were heavy in the 1950s and early 1960s and that continue to this day. A second reason is a long-established arts and humanities versus science division in U.K. society.

I think it is still the case that science and technology are not sufficiently well represented amongst the political and wealthy establishment in the U.K. But maybe that is just the science graduate in me talking.

In the distant past the owners and managers of UK companies usually had a non-scientific background. The likes of ARM, Wolfson, CSR, Vodafone and several others are now glorious but relatively recent exceptions.

Back in 1960s U.K. technology-based company management treated engineers as willing serfs who did not need and should not be given too much money. It was a "make do and mend" mentality left over from the Second World War, and many electronics companies continued to be closely aligned to military interests and defense was the early application for electronics.

These companies often could not comprehend or cope with:

1) international competition

2) the continuous exponential increase in the cost of participation in electronics

Parsimonious and parochial

When faced in the 1960s and 1970s with the choice between spending millions of pounds to compete in thin-film monolithic integrated circuits and thousands of pounds to make thick-film hybrids and PCBs, managements up and down the U.K. chose to do the latter not perceiving any difference but cost.

The difference between the wealth, ambition and entrepreneurial spirit abroad in the United States, and the high salaries paid there, and the meager existence in the United Kingdom at this time, gave rise to a notorious exodus of talent, known as the "brain drain." Included in this were such people as Wilf Corrigan, the son of a Liverpool docker who worked at Motorola and Fairchild and founded LSI Logic. This migration of talent tended to polarize the situation further and help the United States pioneer chip production for higher industrial and professional volumes and the U.K. to fall behind.

I remember visiting a wafer fab in the U.K. in 1984 that had been housed in a building that was decades old, had broken windows and drums of chemicals out the back stored on a concrete standing. It looked like and was as grubby as an automobile bodyshop. U.K. companies were often on space-constrained Victorian sites and few had any appetite for a manufacturing process that required its own building and equipment that cost hundreds of thousands of pounds.

Therefore most of the wafer fabs that were built in U.K. were done so by inward investors sometimes seeking to gain a European location as a hedge against the possibility of an emerging "Fortress Europe."

When faced in the 1980s and 1990s with a choice between spending millions of pounds to design ASICs or almost no non-recurring expense (NRE) to program FPGAs U.K. companies often chose to design using FPGAs.

In 1990 when creating a processor company the option was taken to do it on almost no money, albeit backed by Apple, VLSI Technology, Acorn and a Japanese investment bank. This approach necessitated the creation of the intellectual property business model that has been pursued ever since by ARM.

Are we detecting a parsimonious capital-starved theme here?

one moved to the right, one didn't

And why do indigenously-owned and operated fabs continue at close to the leading edge in France but there are so few fabs in UK?

Well Margaret Thatcher and Pasquale Pistorio are two reasons.

The move to the right in the U.K. under Thatcher's tenure as prime minister from 1979 to 1990 swept away the idea of subsidies for the likes of GEC, Plessey, Ferranti and Marconi and although GEC-Plessey Semiconductors Ltd. became a de facto national champion chip company for a brief period the concept was clearly out of fashion in post-Thatcher UK.

Meanwhile Pasquale Pistorio believed passionately in the power of semiconductors to create wealth, had worked inside a U.S. pioneer of the semiconductor industry, Motorola, and was working with the governments of France and Italy that were left-of-center, believed in state intervention and supported European champions such as Philips, Siemens and STMicroelectronics.

Globalization does appear to be driving the U.S. down the same paths already taken by the U.K. But partly what we are seeing is that venture capital (which the UK never had to any degree for reasons mentioned at the top of the article) is turning to other things. It is turning away from semiconductors for information technology, and towards other things, such as semiconductors for power generation, for energy-efficiency and sustainability.

But, yes, the U.K. does lead the U.S. in terms of getting out of manufacturing. And both are ahead of Taiwan and China. But whether that, is a good, bad or inevitable, is another matter of opinion.