Pragmatic Semiconductor Ltd, a British chip-making startup partially funded by the CIA's venture capital firm In-Q-Tel, is reportedly considering a move abroad, in another sign that the UK’s tech innovators are frustrated with domestic semiconductor strategy.
In an interview with Bloomberg, founder Scott White discussed how the UK government's efforts to fund more domestic chip production may not meet the company's requirements for building more factories.
Cambridge-based Pragmatic Semiconductor is instead mulling a move to the US to take advantage of the country’s landmark CHIPS Act that provides tax breaks for chip makers.
The company may also weigh up taking on extra funding from China, which has been hit by US sanctions as part of the two countries’ ongoing chip war.
Pragmatic, which makes flexible circuit boards that can be embedded into a wide range of products, from clothing to packaging, received US$125mln (£100mln) in funding from In-Q-Tel in December 2022.
Funding has also been received from the UK government’s National Security Strategic Investment Fund and China-based Puhua Capital, though White told Bloomberg that he is intentionally keeping Chinese funding to a minimum.
According to White, US and UK investors are comfortable with the estimated 4.5% Chinese ownership.
“It’s a tricky balancing act… Because there isn’t the ability to raise funding for this kind of business effectively in the UK, you end up going to foreign investors,” said White.
White suggested that, without sufficient domestic backing, Pragmatic could move operations and possibly list overseas.
“If all of our manufacturing ends up being overseas and all of our customers are overseas, it just wouldn’t make any sense,” White said of a London listing.
A move abroad for Pragmatic would be another blow for the UK semiconductor sector following Arm Holdings’ decision earlier this year to list in New York instead of London.
Arm’s IPO is expected to be one of the biggest of 2023 with a potential valuation of US$70bn, making it a massive blow for the London capital markets.
But Arm’s co-founder Jamie Urquhart was unflinchingly pragmatic on the decision.
Britain’s technology strategy “couldn’t be any worse than it is at the moment,” said Urquhart at the time.
“Even now we are waiting for the government to come out with a semiconductor strategy,” Urquhart said. “There’s very little here in the UK and on the things we are worried about, the Chinese already own them.”
Arm is also an investor in fellow Cambridge-based (for now) Pragmatic Semiconductor.