Fuelling the Defence Industrial Strategy innovation goals from South Wales
11th March 2026
In September 2024, the Ministry of Defence (MOD) purchased a semiconductor foundry in Newton Aycliffe, County Durham. This unusual step was not a move to expand capacity, but to prevent collapse of a critical sovereign supply chain. The facility, Octric Semiconductors UK, was the only site in the UK capable of manufacturing gallium arsenide chips for military platforms, including fighter jet avionics. Its previous owners had been looking to sell or close it. The government intervened because losing it was deemed a national security risk.
This highly reactive move was a reminder of how exposed the UK's defence industrial base has become to the loss of critical semiconductor capability. The question the Defence Industrial Strategy (DIS), published in 2025, now has to answer is how Britain moves from reactive crisis management to proactive sovereign resilience.
The DIS sets out an ambitious answer. Its vision is for the UK to be "a leading tech-enabled defence power, with an Integrated Force that deters, fights, and wins through constant innovation at wartime pace" by 2035. As geopolitical tensions continue to be exacerbated, that ambition feels less like a long-term strategy and more like an urgent necessity. The strategy is equally clear that defence must be an engine for economic growth recognising that a military is only ever as strong as the industrial base behind it. It names several frontier technologies, including semiconductors, AI, cyber and quantum, as priority areas with both military and economic growth potential, committing to raise defence spending to 2.5% of GDP by 2027, with a longer-term ambition of 3.5%.
The proactive answer to the resilience question already exists. It is built, operating, and growing in South Wales.
Compound semiconductors as an enabling technology
With recognition that semiconductors are a priority supply chain vulnerability, alongside steel, batteries, rare-earth elements and energetic materials, there is a huge opportunity to lean into the strengths of CSconnected, the world’s most integrated compound semiconductor cluster, situated in South Wales. Compound semiconductors are not just one component among many in modern defence systems, they are the enabling layer across every layer of modern defence technology. Compound semiconductor materials have multiple uses across the sector. Gallium nitride (GaN) powers the high-frequency radio frequency (RF) systems at the heart of radar, electronic warfare, and secure communications. Gallium arsenide (GaAs) underpins fighter jet avionics and missile guidance, with Indium phosphide (InP) enabling the photonic systems used in space and high-speed secure data transmission. Quite simply, you cannot build a tech-enabled fighting force without them.
The DIS prioritises dual-use technology as the route to both military advantage and economic growth, and here again, compound semiconductors are critical enabling components, acting as the definitive dual-use technology. Every defence application has a direct commercial counterpart (RF comms in 5G/6G, power electronics in EVs and clean energy, photonics in AI data centres). This compares directly with tech advancements that have come from defence in the past, such as commercial air travel or the space exploration triggered by defence tech during the Cold War.
The DIS has committed £250M for Defence Growth Deal across the UK built on local-national partnerships to develop sub-sector specialisms while delivering sustainable regional growth. Collaboration with the South Wales compound semiconductor cluster feels synonymous with advancing both the DIS's security and growth objectives. Furthermore, at least 10% of the Defence equipment procurement budget (£289B to 2033) is expected to be spent on future technologies. With directed energy weapons, autonomous systems, and next-generation radars all compound semiconductor dependent, the strategic case for partnership with the South Wales Cluster has never been stronger. The UK is currently strategically dependent on overseas sources for the manufacture of many of these components.
Creating sovereign resilience within the UK
The South Wales Compound Semiconductor Cluster has a wealth of research, innovation and manufacturing capability in compound semiconductors. Cardiff University is renowned as a UK centre of excellence in the development of Gallium Nitride-based Integrated Circuit technology (GaN-based IC technology) for cutting-edge RF communications, with a complementary £100M investment in large-scale, RF and Photonic chip fabrication facilities at the Institute for Compound Semiconductors. Swansea University has invested over £80M in new facilities to position itself as the UK pilot for SiC and GaN Power component technologies at the Centre for Integrated Semiconductor Materials. Both Universities work closely with the Compound Semiconductor Centre, a subsidiary of compound semiconductor materials pioneer IQE, to source novel compound semiconductor materials solutions that underpin the device research programmes. The Compound Semiconductor Applications Catapult has comprehensive facilities for the design, test and module integration of novel Power, RF and Photonic component solutions.
This highly integrated innovation ecosystem feeds a large-scale core industrial manufacturing base, providing the UK’s only fully integrated compound semiconductor supply chain, from wafer growth through to device manufacturing and packaging, with global players such as IQE, Vishay, KLA and Microchip making Newport, Cardiff and Caldicot their manufacturing operations' UK home.
A burgeoning SME community is also evolving either to service the core, or to take advantage of the research, development and innovation (RD&I) infrastructure, such as Microlink Devices, which produces dual use compound semiconductor devices with direct aerospace and applications, and Space Forge, who are developing space-based manufacturing solutions for ultra-high quality semiconductor materials. Also Novomorphic, a semiconductor design company specialising in AI, defence and aerospace.
For the last ten years, members of the compound semiconductor cluster have been collaborating to build a coordinated supporting regional ecosystem with a sophisticated semiconductor talent and skills delivery programme, unrivalled RD&I infrastructure, and incentives to expand and upskill the local supply chain. The cluster has grown to support 3,000 jobs in this period and has a relentless focus on further growth with the ambition to support 6,000 jobs and £1billion industrial output by 2030. This established base of talent and infrastructure, already identified in the DIS regional defence cluster map, is one of the few places in the UK that can take a defence-critical compound semiconductor requirement from specification to production-ready component within one geography.
It is these well-established strengths that provide the foundation for the Wales Defence Growth Deal, signed at Cardiff Castle by Defence Secretary John Healey, First Minister Eluned Morgan and Secretary of State for Wales Jo Stevens in February, which commits £50 million to positioning Wales as the UK's primary launchpad for autonomous defence technology. It widens access to MOD test ranges, including at MOD Aberporth, expands air corridors across central Wales for uncrewed aerial systems testing, and commits to establishing a new Defence Technical Excellence College by September 2027. Critically, it removes the long-standing barrier that required Welsh SMEs to access secure defence contracts through prime contractors, a structural change that directly opens the door for cluster companies to engage with MoD procurement at a scale previously unavailable to them.
Leading the way in the Wales Defence and Security Cluster (WDSC)
CSconnected is a steering group member of the Wales Defence and Security Cluster (WDSC), which launched in Cardiff on 9 March 2026. Backed by the Ministry of Defence and the Defence and Security Accelerator, and part of a UK-wide network of regional defence clusters, the WDSC brings together government, industry, academia and SMEs with a single purpose: to accelerate innovation, strengthen supply chains, and connect Welsh capability to national and international defence and security requirements. For CSconnected, steering group membership is not a symbolic gesture. It is a strategic platform through which the compound semiconductor cluster can engage directly with the defence prime contractors already operating in Wales: Thales, Airbus, Raytheon, General Dynamics, QinetiQ, and Babcock. These are the system integrators whose platforms depend on the components the cluster produces. The WDSC creates a structured forum to align that supply chain deliberately, for the first time.
The scale of the opportunity the WDSC makes visible is striking. Welsh semiconductor output is approximately £500 million per year, but 90% of it is currently exported. The cluster is already producing at significant volume and world-class quality. What has been missing is the structured demand signal and supply chain alignment needed to redirect a greater proportion of that output toward UK sovereign defence requirements. The question is whether it will be resourced and empowered to do so at the pace the Defence Investment Plan demands?
Conclusion
The compound semiconductor cluster provides a gateway for the UK to build the world-leading sovereign capability that underpins its clean energy transition, its defence resilience, its AI infrastructure, and its advanced manufacturing base. That gateway is open, operating, and growing in South Wales right now.
The Wales Defence Growth Deal has been signed. The Wales Defence and Security Cluster launched on 9 March. The Defence Supply Chain Capability Programme is live. The policy architecture to connect the compound semiconductor cluster to the UK's defence industrial ambitions has never been more complete.
What is needed now is pace. With 90% of Welsh semiconductor output currently exported, the sovereign opportunity is being realised elsewhere. Government investment decisions on supply chain alignment, technology roadmaps, and procurement access must be made with the urgency the global semiconductor race demands, and with the recognition that the asset needed to deliver on the Defence Industrial Strategy's most ambitious objectives are already built, already proven, and ready to scale.
About CSconnected
CSconnected is a £43 million project focused on expanding the South Wales compound semiconductor industry. As the world's first compound semiconductor cluster, CSconnected brings together a unique community of academic institutions, prototyping facilities, global high-volume manufacturing capabilities. This collaboration fosters cutting-edge research, innovation and global leadership, positioning Wales and the UK to compete globally in critical sectors such as 5G communications, autonomous and electric vehicles, advanced medical devices, sustainable technology and next-generation consumer electronics.
Through strategic collaborations and continuous investment in research and development, CSconnected is committed to maintaining Wales's position at the forefront of the global semiconductor industry, driving economic growth and technological innovation.
Website: csconnected.com
LinkedIn: CSconnected
Dr Wyn Meredith – chair, CSconnected and founding director, Compound Semiconductor Centre
Dr. Wyn Meredith is Chair of CSconnected and Founding Director of the Compound Semiconductor Centre—an award-winning joint venture between IQE plc and Cardiff University that has driven over £80 million in R&D investment since 2017. With a PhD in blue semiconductor laser development and more than 25 years of industrial experience spanning Ferranti, BT Labs, BAE (formerly Detica), Sharp, IQE, and CST (now Sivers Semiconductors), Wyn is a leading figure in the UK’s compound semiconductor landscape.
Wyn provides strategic leadership for the South Wales cluster, working with industry, academia, and government to secure investment, grow jobs, and build a globally recognised innovation ecosystem. He is a non-exec director of the Compound Semiconductor Applications Catapult and a key figure in several UK-wide initiatives supporting advanced semiconductor R&D and commercialisation. Wyn also serves on the steering boards of major research facilities at Cardiff, Swansea, Sheffield, and NPL, and advises EPSRC on semiconductor technologies in ICT and quantum.
As the cluster enters a critical phase of growth, Wyn advocates for increased regional engagement and targeted investment to unlock the sector’s full potential. He is focused on articulating the long-term economic value of the semiconductor industry, emphasising job creation, high gross value add, and Wales’s strategic role in global supply chains.
Wyn can comment on:
• Strategic investment in compound semiconductors and advanced manufacturing
• Regional economic impact and job creation in high-value tech sectors
• The global relevance of UK semiconductor innovation
• Challenges and opportunities in securing long-term public and private funding
• Policy, infrastructure, and education needs to support tech clusters
For more information:
Contact Zoe Fawcett/Lucy McKerron
csconnected@purplefish.agency
0117 925 1358
