Rishi Sunak is readying a billion pounds to subsidise the UK’s fledgling microchip industry. It sounds big. But the British government is merely reacting to US economic warfare against China. Behind the talk of “friendshoring” and resurgent industrial policy is a struggle to avoid collateral damage in the battle between China and the US for tech supremacy.
The EU plans almost to match the US promise of $52bn (£42bn) in chip subsidies. India is spending $30bn (£25bn) on its semiconductor mission. Mr Sunak looks to be bringing a peashooter to a gunfight. But Britain does not have a complete end-to-end chip supply chain nor does it aspire to have one. Instead, it is following the slipstream of US power. Washington’s strength is that almost all chip factories contain critical tools from US suppliers. The US has isolated Beijing with export control powers that ban transactions between foreign countries and China. Washington’s legislative arsenal was first deployed against China’s Huawei, whose products Britain has also decided to ban.
