Project expected to leverage up to £375 million of private sector investment and create 2,000 high value, high-tech jobs
The Cardiff Capital Region (CCR) Regional Cabinet has agreed to invest £37.9 million to support the development of a compound semiconductor industry cluster in south east Wales.
The funding is being made from the Cardiff Capital Region City Deal’s Wider Investment Fund, and is the first such investment since the £1.2 billion programme was formally signed by the leaders of the ten local authorities in the region on March 1.
The project is expected to leverage up to £375 million of private sector investment over the next five years, and the creation of up to 2,000 high value, high-tech jobs, with the potential for hundreds more in the wider supply chain and cluster development.
A state-of-the art facility will be constructed in the Cardiff Capital Region to house compound semiconductor applications development and high volume compound semiconductor manufacturing, greatly helping the establishment of the world’s first Compound Semiconductor Cluster in the region.
The facility will be owned by the ten councils and the space leased for compound semiconductor manufacturing and applications development. Discussions to agree the location of the site are on-going, but Newport is the likely location.
The deal seeks to position the region as the global leader in compound semiconductor enabled applications, which was initiated by an initial £12 million investment from the Welsh Government.
In 2016, Innovate UK – the UK Government’s innovation agency – announced it will invest £50million to establish a new Compound Semiconductor Catapult Centre of Excellence in Wales which will now locate in the CCR. This new Catapult will build on existing investment by Cardiff University, IQE plc, and Welsh Government.
The project has been subject to a detailed due diligence process to provide expert assurance to decision-makers that outputs are achievable and affordable. Importantly the project is not a grant or a loan – it is a commercial investment with ownership of the foundry remaining with the ten councils.
The proposal seeks to return the original investment plus interest over the life of the project.
Andrew Morgan, leader of Rhondda Cynon Taf County Borough Council, and chair of the CCR City Deal Regional Cabinet, said: “The objective of these commitments is to create a complete compound semiconductor eco-system in South Wales to take advantage of the growing prominence of compound semiconductor technologies.
“This requires the development and integration of a compound semiconductor supply chain in South Wales, with the economic and social benefits that will bring. This is the first tangible demonstration of this City Deal in action – sending a very clear message of a commitment to actions not words.”
Peter Fox, leader of Monmouthshire County Council (the Council leading the project) and Anthony Hunt, leader of Torfaen County Borough Council, who co-leads on CCR City Deal’s business and innovation portfolio, said: “The benefits of clusters are well understood, with Silicon Valley in the US being a prime example. Indeed, there are semiconductor clusters across Europe, namely around Eindhoven, Dresden, Leuven and Grenoble. However, these are based on silicon technologies, hence this is a unique opportunity for Wales to establish the world’s first compound semiconductor cluster and establish ourselves at the forefront of compound semiconductor technology globally.”
Drew Nelson, CEO of IQE PLC said: “We are very impressed to see that council leaders have the vision to make investments like this. IQE already has a very strong presence here, and is looking to invest in creating significant additional production capacity to support the CS cluster over the next 5 years. Our investment will see the next stage of our growth firmly rooted in CCR. If this is an example of the bold leadership that the ten Councils are going to take in the future, then we may truly see South East Wales flourish as a global high tech region.”
First Minister Carwyn Jones welcomed the deal, saying: “I am delighted our £12m investment has kick-started the creation of the world’s first compound semiconductor industry cluster in Newport. This major investment puts Wales at the cutting edge of this exciting technology, which has the ability to change the way we live. As well as boosting Wales’ global reputation as a leader in this field, the new site in Newport will form part of Wales’ growing hi-tech sector, which is expected to create more than 2,000 well paid, highly skilled jobs.
“Today’s announcement is great news for Wales – and the first of many new exciting projects set to make a real difference to the economy of South East Wales and, ultimately, to people’s lives.”
Colin Riordan, vice chancellor of Cardiff University said: “Compound semiconductors are at the heart of our everyday lives, and are found in everything from phones and tablets to satellite communications and laser technologies. The University has invested millions of pounds in partnership with IQE, and today’s announcement is excellent news for innovation, industry and enterprise in south Wales and beyond.
“It offers a real opportunity to build Europe’s first compound semiconductor applications cluster and create a world-class powerhouse to commercialise next generation technologies.”
Kevin Crofton, chairman of the Compound Semiconductor Applications Catapult, said: “We are delighted to be associated with such a bold venture. It is not often that the opportunity presents to be in at the start of something with international credentials; we very much feel that about this project.”
There is detailed work still to conclude but it is hoped that construction work can start in the early summer 2017.
