DSIT semiconductor study finds 703 UK chip companies and flags scale-up capital as a barrier

The government has finished publishing its second study of the UK semiconductor sector, adding the remaining chapters and three new appendices to the online report on 2 September 2026 and deleting the earlier PDF because it had become out of date, according to the publication page on GOV.UK.

The study was commissioned by the Department for Science, Innovation and Technology (DSIT) and carried out by Perspective Economics with TechWorks, IfM Engage, the UK Electronic Skills Foundation and independent technologists. It identifies 703 companies involved in UK semiconductor activity, against 623 in the 2024 baseline study.

Of those, 295 are classed as dedicated companies, meaning firms that design, develop or manufacture semiconductors or supply materials exclusively to the sector, and 408 are diversified companies for which semiconductors are one line of business among several. The dedicated cohort has grown from 210 at baseline.

A sector of small companies with the money in a few large ones

Some 92% of dedicated semiconductor companies are SMEs, and 73% are micro or small businesses averaging 13 employees, together employing around 3,000 people. Seventy per cent of dedicated companies are headquartered in the UK.

The economics run the other way. The 24 dedicated companies classed as large, 8% of the 295, account for an estimated 75% of UK revenues and 61% of employment, up from roughly 66% and 53% at baseline.

Dedicated companies generated an estimated £10.6bn in UK revenue and £7.5bn in gross value added, and directly employed about 16,350 people in 2025 - increases of 7%, 9% and 9% respectively since the baseline. Applying employment multipliers, the study estimates the sector supports a further 10,500 jobs through supply chains and 5,700 in the wider economy, bringing the total to 32,550. Revenue per employee ranges from £240,000 at micro companies to £675,000 at large ones.

Early-stage money is flowing, scale-up money is not

Across the 190 companies present in both studies, grants and fundraising rose 16% from £1.5bn to £1.73bn, with ten companies accounting for 75% of new activity. Newly identified dedicated companies raised a further £400m, 84% of it by design-oriented firms and almost 70% by companies at seed or venture stage. Companies registered in the East of England took 46% of that total, London 26% and the South East 15%.

Public research and innovation funding for semiconductor activity is estimated at £1.8bn by the end of 2025, up from £1.4bn to 2023. Between 2024 and 2025, five topics took just under 60% of new allocations: compound materials (14%), compound semiconductor manufacturing (12.6%), 3D packaging and integration (11.8%), photonic integrated circuit design and fabrication (11%) and memory (7.4%).

What firms told the study is less comfortable. In a TechWorks survey of 94 semiconductor firms conducted in early 2026, 83% of respondents expected growth over the next three years and 47% expected rapid growth of more than 20% a year, up from 38% in 2024. Talent availability was the most frequently cited growth barrier among design companies, appearing in roughly two thirds of responses, with the report noting that the concern is not only graduate supply but finding experienced engineers at senior level in digital and mixed-signal design.

On money, the report is blunt. Early-stage and fabless design businesses reported difficulty securing growth equity and grant funding for hardware-focused businesses, while manufacturing companies cited scale-up capital as their primary growth constraint, with several respondents noting that government support is concentrated on R&D rather than the more capital-intensive scale-up of production. The study records respondents describing a pattern in which success in UK fabless semiconductors tends to end in acquisition rather than sustained independent scaling, which they say undermines long-term depth in the sector.

What support exists now

Since the 2023 National Semiconductor Strategy, the study finds evidence of greater government support at national and regional level, spanning R&D, skills and the use of public finance institutions. That now includes the UK Semiconductor Centre and four Innovation and Knowledge Centres: REWIRE on wide and ultra-wide bandgap power semiconductors (Bristol, Warwick and Cambridge), CORNERSTONE on silicon photonics (Southampton, Glasgow and STFC), CHIMES on heterogeneous integration (Sheffield and Southampton) and NeuroWare on neuromorphic computing, led by UCL.

Separately, the UK AI Hardware Plan published on 8 June 2026 commits over £1.1bn, including £120m for a new AI Hardware Innovation Programme and up to £150m from the British Business Bank into a fund led by Playground Global, which DSIT describes as the single largest fund investment the bank has ever made.

Grant money is live now as well. Innovate UK’s Investor Partnerships call for advanced connectivity and semiconductor SMEs has up to £15m allocated and closes at 11am on 14 October 2026.