Report on Compound Semiconductor Cluster (CSconnected)

16th October 2019

A report supporting the Strength in Places bid for accelerating the growth and persistence of the CSconnected Compound Semiconductor Cluster semiconductor cluster (and the world’s first compound semiconductor cluster) has been published.

The 38 page report was written by Professor Robert Huggins, Professor Max Munday and Dr Annette Roberts of Cardiff University.

The report examines the evolution of the compound semiconductor cluster between 2015-2019, the challenges in strengthening the cluster, and the expected benefits for Wales of the further evolution of the cluster. The report examines how existing activity in the cluster, and then further activity supported by the Strength in Places bid, could work to meet place-based economic challenges.

The report concludes that the future challenge for the Welsh economy, and relevant policymakers, is to identify and develop industries that potentially have competitive advantage. Although still embryonic, but growing, the activities in the compound semiconductor cluster represent a real source of such advantage, in an industry that is rapidly growing across the globe. Furthermore, the nature of the industry, especially skills requirements across the spectrum, means that the growth of the cluster would provide economic and social benefits to a broad range of individuals and their households.

Connecting expertise, capacities and capability within both the private sector, public sector and academia has already led to the establishment of a critical mass of activity – which is undoubtedly now the largest concentration of compound semiconductor activity in the UK.

The report finds a strong and distinct alignment between the proposed activities of CS Connected and the strategic priorities of Welsh Government and the Cardiff Capital Region. There has already been investments in the cluster by both of these stakeholders, and these have played an important role in illustrating the strategic direction of public sector economic and innovation/science policy in Wales.

The report finds that the place-based problem addressed through the development of the compound semiconductor industry embraces poor place-based productivity growth, pressure on local manufacturing output and related constraints on new inward investment and export growth. Alongside this, and a related issue, is a poor record of business expenditure on R&D in South Wales. Improved integration of the compound semiconductor activity provides an avenue for addressing these place-based problems.

In 2019 the principal CS Connected firms and organisations accounted for around 1,480 jobs, and private sector members accounted for £464m of sales, much of this (over 90%) relating to overseas exports, mostly destined for markets outside of the EU. The analysis reveals that the CS Connected members supported close to £125m of Welsh GVA.

The full report is available for download here.

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