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Semiconductors boost Welsh economy

8 February 2022

A new report published by Cardiff University’s Welsh Economy Research Unit (WERU) highlights the contribution to the economy by the CSconnected semiconductor cluster – the first of its kind in the world. The cluster’s combined industrial and academic expertise enables a wide portfolio of applications, from resilient communications to advanced healthcare technologies and energy efficient devices that will help achieve net-zero targets. Here, Professor Max Munday, WERU Director, and Chris Meadows, Director, CSconnected, discuss the findings.

“As in 2020, and despite a complex economic backdrop dominated by the COVID-19 pandemic and Brexit, the compound semiconductor sector out-performed the wider economy in a number of key areas, including job growth and exports.

Exports from the sector bucked the overall trend that saw the value of Welsh exports tumble by around 25% over the three years to Q1 2021.

The robust growth of the compound semiconductor community continues to make a significant contribution to the Welsh economy and demonstrates resilience and sustainability that will be positive for the region’s long-term economic prospects. The growing ecosystem embraces private sector firms, academic institutions and government agencies.

Support from UKRI’s Strength in Places Fund provides a great springboard for the region to be at the centre of the next technology revolution, increasing its contribution to the Welsh economy.

Overall, employment in 2021 grew by around 14% year on year to around 1,600 full-time employees with the sector accounting for over 10% of Wales’ total employment in electrical and electronic engineering.

The report also shows that average gross pay across the sector was around 60% higher than the overall average pay in Wales.

Expansion plans already announced across the industry provide a strong indication that growth in employment is expected to accelerate with skills shortages in some parts of the compound semiconductor community becoming more acute.

The Welsh technology sector has outperformed the overall UK technology output over the last three years. The report suggests that that the relatively strong performance of compound semiconductor cluster in the 2019-2021 period reinforced this trend in the Welsh economy, despite poor overall trading conditions in much of Welsh manufacturing.

In terms of direct value to the Welsh economy, it is estimated that the sector directly contributed around £194M of Gross Value Added (GVA), representing around 1.7% of Welsh manufacturing GVA and around 15.4% of GVA in the more tightly defined electronic and engineering sector.

The cluster purchasing of regional goods and services, and payment of wage incomes, indirectly supports a further £83m of GVA – so the cluster, overall, supports directly and indirectly an estimated £277m of Welsh GVA.

We hope that through further collaboration across industry and academia, the cluster will continue to thrive.”

The report was written by Professor Munday, Dr Annette Roberts and Professor Robert Huggins, Cardiff University. It can be downloaded and viewed at CSconnected.com