The Daily Telegraph - Saturday

British chip maker turns to America for subsidies

- By James Titcomb

ONE of Britain’s most prominent microchip companies has applied for a US subsidy after criticisin­g Rishi Sunak’s “flaccid” semiconduc­tor strategy.

Simon Thomas, founder of chip maker Paragraf, is seeking money from Joe Biden’s Chips Act, which is handing out billions of dollars to manufactur­ers in an attempt to onshore supplies.

If the money is secured, it will allow the Cambridge-based company to follow through on warnings that it will relocate to the US.

Paragraf is expected to decide on whether to relocate in the next two years. Last week Mr Thomas called the Prime Minister’s £1bn semiconduc­tor strategy “flaccid”, dismissing his efforts to focus on UK strengths such as research and design instead of competing with the tens of billions in subsidies on offer in the EU and US.

The lack of direct support for chip manufactur­ing has led to warnings that companies will move investment overseas. The US Chips Act contains $39bn (£31bn) in incentives to companies that open a factory there.

Mr Thomas said Paragraf, a Cambridge University spin-out, had applied for funding that would support manufactur­ing in a specific US state.

He said: “Government support is a mas- sive catalyst for inbound investment.

“The ability to go to the US and say ‘we’ve got Chips Act money’, it acts as a multiplier because you can go back to private capital and say, ‘I’ve got this great support from the government.’”

Paragraf has raised around £67m in funding led by UK growth investor Parkwalk Advisors. Its graphene-based chips are used in digital medical tests, electric motors and precision agricultur­e. The taxpayer is also a shareholde­r.

Mr Thomas has expressed frustratio­n about access to talent and delays getting manufactur­ing facilities in the UK connected to the energy grid.

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