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Executive Summary

This report presents findings from research undertaken to produce an updated analysis of semiconductor-related economic activity in the UK. Commissioned by the Department for Science, Innovation and Technology (DSIT) in 2026, the study is intended to enable a better understanding of the composition, scale, opportunities and challenges affecting semiconductor-related activity in the UK.

• Semiconductors are foundational infrastructure for the 21st century economy, enabling markets worth over $10 trillion globally and underpinning every UK priority growth sector - advanced manufacturing, digital, clean energy and defence. Global semiconductor sales have grown by ~39% since 2022 to $796bn in 2025, driven primarily by AI compute^{[footnote 1]}.
• The study identifies 705 UK semiconductor companies (295 dedicated, 408 diversified), up from 623 at baseline (2024). 70% of dedicated companies are UK-headquartered and 89% are SMEs; activity remains concentrated in 12 recognised regional clusters spanning design strength (Cambridge, London, Bristol, Southampton) and manufacturing / materials depth (South Wales, Scotland, North East).
• Dedicated companies generated an estimated £10.6bn in revenue, £7.5bn in GVA and directly employed approximately 16,350 people in 2025 - up 7%, 9% and 9% respectively on a like-for-like basis. The sector is estimated to support a total of 26,850 high-value jobs across the economy.
• Economic activity is concentrated within a small number of large companies, which are estimated to account for 73% of revenue and 65% of employment (up from approx. 66% and 53%).
• There is evidence of greater government support for the sector since the publication of the National Semiconductor Strategy, at both national and regional levels, spanning R&D, skills and use of public finance institutions.
• Investment activity has been strong since the 2024 study. Grants and fundraising across the baseline cohort increased by 16% to £1.73bn, with newly identified dedicated companies securing a further ~£400m - heavily weighted to design-led, seed/venture-stage firms in the East of England, London and the South East.
• Industry sentiment remains overwhelmingly positive - 83% of surveyed firms expect growth over the next 3 years and 47% expect rapid growth of >20% p.a. (up from 38% in 2024) - but persistent barriers risk constraining delivery, including the availability of talent, access to scale-up capital, and UK operating costs, particularly energy.