LONDON — As the U.K. prepares to overhaul its competition regime, a fierce lobbying battle has broken out between the world’s largest tech companies and their challengers.
Ministers are gearing up to publish new competition legislation in late-April, giving regulators more power to stop a handful of companies dominating digital markets.
But concern over the U.S. tech giants’ influence in Westminster has prompted ministers close to the bill to warn that the new legislation could be watered down.
Two ministers have expressed concerns that Big Tech firms are seeking to weaken the process for appealing decisions made by the country’s beefed-up competition regulator, according to multiple people who were either present at those discussions or whose organizations were represented there. They requested anonymity to discuss private meetings.
One MP said a minister had also approached them to raise concerns, while at an industry roundtable, two ministers spoke of worry about Big Tech firms trying to influence the appeal mechanism.
An industry representative said: “There has been a sh*t load of lobbying from Big Tech, but I don’t know if they’ll succeed.”
Appealing to who?
The Digital Markets, Competition and Consumer Bill will give new powers to a branch of the Competition and Markets Authority called the Digital Markets Unit (DMU). Under the plan, the DMU will be able fine a company 10 percent of their annual turnover for breaching a code of conduct.
The code, which has not yet been published, would be designed to ensure that a company with ‘strategic market status’ cannot “unfairly use its market power and strategic position to distort or undermine competition between users of the … firm’s services,” the government has said.
Jonathan Jones, senior consultant in public law at Linklaters and formerly the head of the U.K. government’s legal department, wrote that the plan would have “very significant consequences” for Big Tech firms and could force them to “significantly alter” their business models.
One of Big Tech’s concerns is that the bill will only allow companies to appeal decisions made by the DMU on whether or not the right process was followed, known as the judicial review standard, rather than the content or merit of the decision. That puts it in line with other regulators and should mean the process is faster, but it also makes it harder to appeal decisions.
Big Tech firms want to be able to appeal on the “merit”, arguing it is unfair that they can’t challenge whether a DMU decision was correct or not. They also argue it won’t necessarily be slower than the judicial review standard.
One of the biggest fears from medium-sized firms is that the biggest tech companies will use strategies to lengthen the appeals process or even get the entire bill delayed | iStock
Tech Minister Paul Scully, who has responsibility for the bill, told POLITICO: “We want to make sure that the legislation is flexible, proportionate and fair to both big and challenger companies. Any remediation needs to be in place quickly as digital markets move quickly.”
One representative of a mid-sized tech firm said: “This is the fundamental point of contention and it will influence whether the bill works for SMEs and challengers against Big Tech.
“The fear is that big companies with big lawyers understand how to eke things out (during the appeals process) so that they’ll keep their market advantage for years. We’ve heard ministers express these concerns too.”
Consumer group Which? is also urging the government to stay with its proposed appeal system. “For the DMU to work effectively, the government must stick to its guns and ensure that the decisions it reaches are not tied up in an elongated appeals process,” said director of policy, Rocio Concha.
‘Investigator and executioner’
But Jones argued that the bill will make the DMU too powerful.
“The DMU will have power to decide who it is going to regulate, set the rules that apply to them, and then enforce those rules,” he wrote. “This makes the DMU effectively legislator, investigator and executioner.”
On the appeal method, Jones argued that it is an “oversimplification” to think that the government’s proposed standard of appeal would be quicker than one based on merits.
Ben Greenstone, managing director of tech policy consultancy Taso Advisory, said: “I can understand the argument from both sides. The largest tech companies are incentivized to push back against this, but my guess is the government will keep the appeals process as it is, because it keeps it in line with the wider competition regime.”
However, he added the bill would work better if some sort of compromise can be found with the biggest tech companies.
The international playbook
One of the biggest fears from medium-sized firms is that the biggest tech companies will use strategies already tried and tested abroad to lengthen the appeals process or even get the entire bill delayed.
In the U.S., the Open App Markets Act has failed to pass following huge spends on lobbying.
Rick VanMeter, executive director of the Coalition for App Fairness, which is based in the U.S. but has U.K. members, said: “In the U.S. we’ve learned that these mobile app gatekeepers’ will stop at nothing to preserve the status quo and squash their competition.
“To be successful, policymakers around the world must see through these gatekeepers’ efforts for what they are: self-serving attempts to retain their market power.”
Google and Microsoft declined to comment. Apple did not respond.
[ad_2]
#Big #Tech #lobbyists #stuck #UKs #landmark #competition #bill
( With inputs from : www.politico.eu )
Belgium’s intelligence service is scrutinizing the operations of technology giant Huawei as fears of Chinese espionage grow around the EU and NATO headquarters in Brussels, according to confidential documents seen by POLITICO and three people familiar with the matter.
In recent months, Belgium’s State Security Service (VSSE) has requested interviews with former employees of the company’s lobbying operation in the heart of Brussels’ European district. The intelligence gathering is part of security officials’ activities to scrutinize how China may be using non-state actors — including senior lobbyists in Huawei’s Brussels office — to advance the interests of the Chinese state and its Communist party in Europe, said the people, who requested anonymity due to the sensitivity of the matter.
The scrutiny of Huawei’s EU activities comes as Western security agencies are sounding the alarm over companies with links to China. British, Dutch, Belgian, Czech and Nordic officials — as well as EU functionaries — have all been told to stay off TikTok on work phones over concerns similar to those surrounding Huawei, namely that Chinese security legislation forces Chinese tech firms to hand over data.
The scrutiny also comes amid growing evidence of foreign states’ influence on EU decision-making — a phenomenon starkly exposed by the recent Qatargate scandal, where the Gulf state sought to influence Brussels through bribes and gifts via intermediary organizations. The Belgian security services are tasked with overseeing operations led by foreign actors around the EU institutions.
The State Security Service declined to comment when asked about the intelligence gathering.
A Huawei spokesperson said the company was unaware of the company’s Brussels office staff being questioned by the intelligence service.
China link
Belgian intelligence officers want to determine if there are any direct ties between the Chinese state and Huawei’s Brussels office, the people said. Of particular interest, they added, are Huawei representatives who may have previously held posts in Brussels institutions with access to a network of EU contacts.
At the core of Western concerns surrounding Huawei — which is headquartered in Shenzhen, China — is whether the firm can be instrumentalized, pressured or infiltrated by the Chinese government to gain access to critical data in Western countries.
Huawei’s EU lobbying offices — one located in between the European Parliament and European Commission and Council buildings and the other a “cybersecurity transparency center” close to the U.S. embassy — have been a major lobbying power in EU policymaking over the past decade. The most recent corporate declarations put the firm among the top 30 companies spending most on EU lobbying in Brussels, with a declared maximum spending of€2.25 million per year. In 2018 — right at the start of the geopolitical storm that struck the firm — it entered the top 10 of lobbying spenders in Brussels.
The company’s Shenzhen headquarters has also strengthened its control over its Brussels office activities over the past decade. In 2019 it replaced its then-head of the EU office Tony Graziano — who had a long track record of lobbying the EU and had led Huawei’s Brussels office since 2011 — with Abraham Liu, a company loyalist who had risen up the ranks of its international operations. Liu was later replaced with Tony Jin Yong, currently the main representative of Huawei with the EU. It has also consistently brought in Chinese staff to support its public affairs activities.
The Chinese telecoms giant last year started ramping down its EU presence, folding its activities across Europe into its regional headquarters in Düsseldorf, Germany, POLITICO reported in November. Part of that shake-up was to let go of some of the firm’s Western strategists, who had worked to push back on bans and blocks of its equipment in the past years.
The scrutiny of Huawei’s EU activities comes as Western security agencies are sounding the alarm over companies with links to China | Tobias Schwarz/AFP via Getty Images
Huawei has continuously stressed it is independent from the Chinese state. “Huawei is a commercial operation,” a spokesperson said. Asked whether the company had a policy to check which of its staff are members of the Chinese Communist Party, the spokesperson said: “We don’t ask about or interfere with employees’political or religious beliefs. We treat every employee the same regardless of their race, gender, social status, disability, religion or anything else.”
One key concern brought up by Western security authorities in past years is that Huawei as a China-headquartered company is subject to Beijing’s 2017 National Intelligence Law, which requires companies to “support, assist, and cooperate with national intelligence efforts” as well as “protect national intelligence work secrets they are aware of.”
Asked how it handles legal requests from the Chinese government to hand over data, the spokesperson referred to the company’s frequently asked questions page on the matter, which states: “Huawei has never received such a request and we would categorically refuse to comply if we did. Huawei is an independent company that works only to serve its customers. We would never compromise or harm any country, organization, or individual, especially when it comes to cybersecurity and user privacy protection.
Eye on EU
Huawei has faced pushback from Belgian security services in past years. The country’s National Security Council in 2020 imposed restrictions on its use in critical parts of 5G networks.
Belgium — while being a small market — is considered strategically important for Western allies because of the presence of the EU institutions and the headquarters of the transatlantic NATO defense alliance.
The Belgian State Security Service’s interest in Huawei follows an increasing interest in China’s operations in the EU capital. In 2022, the service released an intelligence report laying out its findings on the operations of Chinese-backed lobbyists in Brussels. In it, the VSSE hit out at the Chinese state for operating in “a grey zone between lobbying, interference, political influence, espionage, economic blackmail and disinformation campaigns.”
In response to the study, the Chinese embassy in Belgium said the intelligence services “slandered the legitimate and lawful business operation of Chinese companies in Belgium, seriously affecting their reputation and causing potential harm to their normal production and operation.”
It’s not just China. “Undue interference perpetrated by other powers also continues to be a red flag for the VSSE,” the intelligence service said in its report. “The recent interference scandal in the European Parliament is a case in point.”
As far as that case goes, the Belgian authorities have so far charged several individuals in the ongoing criminal investigation into allegations of bribery between Qatar and EU representatives, with police raids yielding €1.5 million in cash.
[ad_2]
#Belgian #intelligence #puts #Huawei #watchlist
( With inputs from : www.politico.eu )
LONDON — Boris Johnson may have coined the phrase, but Rishi Sunak hopes he’s the man who can finally claim to have “got Brexit done.”
The British prime minister will on Monday host European Commission President Ursula von der Leyen in what’s being sold by No. 10 Downing Street as the pair’s “final talks” on resolving the long-running row over post-Brexit trading arrangements in Northern Ireland.
Downing Street has drawn up a carefully choreographed sequence of events following the meeting. Sunak will brief his Cabinet following the late lunchtime face-to-face with the European Commission chief.
He then hopes to hold a joint press conference with von der Leyen to announce any deal before heading to the House of Commons late on Monday to begin his trickiest task yet — selling that deal to Brexiteer MPs on his own Conservative benches, many of whom will be closely watching the verdict of Northern Ireland’s Democratic Unionist Party (DUP).
It’s likely to mark a defining moment in Sunak’s young premiership, which only began in October when he took over a Conservative Party still riven with divisions following the departures of Johnson and Liz Truss in quick succession. If successful, he will hope to draw a line under the rancorous follow-up to Britain’s 2020 departure from the bloc, and herald an era of closer cooperation with Brussels.
But even as Downing Street was drawing up plans for Monday’s grand unveiling, members of Sunak’s own party were voicing skepticism that the prime minister will have done enough to win their backing. And without DUP support, Northern Ireland’s moribund power-sharing assembly could remain collapsed.
Testing times
Since taking office, Sunak has put securing a deal with Brussels on the so-called Northern Ireland protocol near the top of his to-do list.
The post-Brexit arrangement has been a long-running source of tension between the U.K. and the EU, and the two sides have been locked in months of talks to try to ease the operation of the protocol while addressing the concerns of both the DUP and traders hit by extra bureaucracy.
Under the protocol, the EU requires checks on trade from Great Britain to Northern Ireland in order to preserve the integrity of its single market while avoiding such checks taking place at the sensitive land border between Northern Ireland and the Republic of Ireland.
But the DUP sees the protocol as separating Northern Ireland from the rest of the U.K. and is boycotting the region’s power-sharing government until changes are made.
In a statement Sunday night, Downing Street said Sunak wanted “to ensure any deal fixes the practical problems on the ground, ensures trade flows freely within the whole of the U.K., safeguards Northern Ireland’s place in our Union and returns sovereignty to the people of Northern Ireland.”
The Belfast to Dublin motorway crosses the border line between Northern Ireland and the Republic of Ireland | Charles McQuillan/Getty Images
Downing Street has kept the detail of any deal a closely-guarded secret. In an interview on Sky News Sunday, Deputy Prime Minister Dominic Raab talked up the prospect of “more of an intelligence-based approach” to goods checks, and a move away from individual checks at Northern Irish ports. The U.K. and EU have already talked up more access for Brussels to British goods data.
One of the biggest flashpoints for Brexiteer MPs and the DUP will be the status of the Court of Justice of the European Union in governing disputes under the protocol. They see the continued presence of the EU’s top court in the arrangement as a challenge to British sovereignty.
On Sunday, Mark Francois, chairman of the European Research Group of Conservative Euroskeptics, set a high bar for his support, warning any deal must see Northern Ireland treated on the “same basis” as the rest of Great Britain. He warned that even a reduced role for the CJEU over Northern Ireland was not “good enough.”
Raab told Sky that scaling back some of the regulatory checks and paperwork “would in itself involve a significant, substantial scaling back of the role of the ECJ,” and he talked up the idea of a “proper democratic check coming out of the institutions in Stormont,” the home of Northern Ireland’s power-sharing assembly.
Minefield
One potential source of Brexit trouble on Sunak’s benches is Johnson himself, who has already been warning the prime minister not to drop the Northern Ireland Protocol Bill aimed at allowing U.K. ministers to unilaterally sideline the arrangement.
The Sunday Times reported that Johnson, while being lobbied to support a deal to cement relations with U.S. President Joe Biden, responded with the colorful retort: “F*** the Americans!” The same paper cited a “source close to” Johnson who dismissed it as “a jocular conversation in the [House of Commons] chamber that someone evidently misunderstood.”
As another defining Brexit week begins, Sunak appears willing to plow ahead, even without the support of the most hardline Brexiteers in his party. Raab insisted on Sunday MPs would “have the opportunity to express themselves on the deal,” but did not elaborate on whether there will be a House of Commons vote on the arrangement.
Former Chancellor George Osborne, one of the key figures in the campaign to remain in the European Union, urged Sunak to press on and “call the bluff” of the DUP, Johnson and the ERG — or his premiership would be “severely weakened.”
“Having got to this point in the minefield, he has to proceed,” Osborne told the Andrew Neil Show.
[ad_2]
#Rishi #Sunak #final #push #Brexit
( With inputs from : www.politico.eu )
WAREHAM, Dorset — Ukrainian fighter pilots will soon be trained in Britain — but Kyiv will have to wait a little longer for the modern combat jets it craves.
Ukrainian President Volodymyr Zelenskyy left the U.K. Wednesday with a firm British commitment to train fighter jet pilots on NATO-standard aircraft, along with an offer of longer-range missiles.
U.K. Defense Secretary Ben Wallace has now been tasked with investigating which jets the U.K. might be able to supply to Ukraine, Downing Street announced — but Prime Minister Rishi Sunak fell short of making actual promises on their supply, which his spokesman said would only ever be a “long-term” option.
Speaking at a joint press conference at the Lulworth military camp in Wareham, southern England, Sunak said the priority must be to “arm Ukraine in the short-term” to ensure the country is not vulnerable to a fresh wave of Russian attacks this spring.
Standing alongside Zelenskyy in front of a British-made Challenger 2 tank, Sunak restated that “nothing is off the table” when it comes to provision of military assistance to Ukraine, and said fourth-generation fighter jets were part of his conversation with the Ukrainian president “today, and have been previously.”
These talks also covered the supply chains required to support such sophisticated aircraft, Sunak said.
But he cautioned a decision to deliver jets would only be taken in coalition with allies, and said training pilots must come first and could take “some time.”
“That’s why we have announced today that we will be training Ukrainian air force on NATO-standard platforms, because the first step in being able to provide advanced aircrafts is to have soldiers or aviators who are capable of using them,” Sunak said. “We need to make sure they are able to operate the aircraft they might eventually be using.”
The first Challenger 2 tanks pledged by Britain will arrive in Ukraine by next month, Sunak added.
President Zelenskyy ramped up the pressure on Rishi Sunak joking that he had left parliament two years earlier grateful for “delicious English tea”, but this time he would be “thanking all of you in advance for powerful English planes” | Daniel Leal/AFP via Getty Images
Describing his private conversations with Sunak as “fruitful,” Zelenskyy said he was “very grateful” that Britain had finally heard Kyiv’s call for longer-range missiles.
But he warned that without fighter jets, there is a risk of “stagnation” in his country’s battle against Russian occupation.
“Without the weapons that we are discussing now, and the weapons that we just discussed with Rishi earlier today, and how Britain is going to help us, you know, all of this is very important,” he said. “Without this, there would be stagnation, which will not bring anything good.”
Rolling out the red carpet
The U.K. had rolled out the red carpet for Zelenskyy’s surprise day-long visit, which alongside the visit to the military base included talks with Sunak at Downing Street, a meeting with King Charles at Buckingham Palace and a historic address to the U.K. parliament in Westminster.
Only a handful of leaders have made such an address in Westminster Hall over the past 30 years, including Nelson Mandela and Barack Obama.
“We have freedom. Give us wings to protect it,” Zelenskyy told British lawmakers, after symbolically handing House of Commons Speaker Lindsay Hoyle a helmet used by one of Ukraine’s fighter pilots. The message written upon it stated: “Combat aircraft for Ukraine, wings for freedom.”
Zelenskyy’s call was backed by former Prime Minister Boris Johnson, who urged Sunak to meet his request.
“We have more than 100 Typhoon jets. We have more than 100 Challenger 2 tanks,” he said. “The best single use for any of these items is to deploy them now for the protection of the Ukrainians — not least because that is how we guarantee our own long-term security.”
Western defense ministers will gather to discuss further military aid to Ukraine on February 14, at a meeting at the U.S. base of Ramstein in southwest Germany.
Sunak’s spokesman said that while Britain has made no decision on whether to send its own jets, “there is an ongoing discussion among other countries about their own fighter jets, some of which are more akin to what Ukrainian pilots are used to.”
Training day
Britain’s announcement marks the first public declaration by a European country on the training of Ukrainian pilots, and could spur other European nations into following suit. France is already considering a similar request from Kyiv.
Yuriyy Sak, an adviser to Ukrainian Minister of Defence Oleksii Reznikov, praised the U.K.’s decision and said allies “know very well that in order to defeat Russia in 2023, Ukraine needs all types of weaponry,” short of nuclear.
“A few weeks ago, the U.K. showed leadership in the issue of providing tanks to Ukraine, and then other allies have followed their example,” he said. “Now the U.K. is again showing leadership in the pilot training issue. Hopefully other countries will follow.”
The British scheme is likely to run in parallel to an American program to train Ukrainian pilots to fly U.S. fighters, for which the U.S. House of Representatives approved $100 million last summer. In October Ukraine announced a group of several dozen pilots had been selected for training on Western fighter jets.
The first Ukrainian pilots are expected to arrive in Britain in the spring, with Downing Street warning the instruction program could last up to five years. Military analysts, however, say the length of any such scheme could vary significantly depending on the pilots’ previous expertise and the type of fighter they learn to operate.
The U.K. announcement is therefore of “significant value” but “does not suggest the provision of fighter jets is imminent,” said Justin Bronk, a senior research fellow for airpower at the British think tank RUSI.
The British program is likely to involve simulators and focus on providing training on NATO tactics and basic cockpit procedures to Ukrainian pilots who already have expertise in flying Soviet-era jets, Bronk said.
The new training programs come in addition to the expansion in the numbers of Ukrainian early recruits being trained on basic tactics in the U.K., from 10,000 to 20,000 soldiers this year.
‘Unimaginable hardships’
Wednesday’s visit marked Zelenskyy’s first trip to the U.K. since Russia’s invasion almost a year ago and only his second confirmed journey outside Ukraine during the war, following a visit to the United States last December.
The Ukrainian president arrived on a Royal Air Force plane at an airport north of London Wednesday morning, the entire trip a closely guarded secret until he landed.
Recounting his first visit to London back in 2020, when he sat in British wartime leader Winston Churchill’s armchair, Zelenskyy said: “I certainly felt something — but it is only now that I know what the feeling was. It is a feeling of how bravery takes you through the most unimaginable hardships to finally reward you with victory.”
Zelenskyy travelled to Paris Wednesday evening for talks with French President Emmanuel Macron and German Chancellor Olaf Scholz. In a short statement, Zelenskyy said France and Germany “can be game-changers,” adding: “The earlier we get heavy weapons, long-range missiles, aircraft, alongside tanks, the sooner the war will end.”
Macron said Ukraine “can count on France and Europe to [help] win the war,” while Scholz added that Zelenskyy expected attendance at a summit of EU leaders in Brussels Thursday “is a sign of solidarity.”
Dan Bloom and Clea Caulcutt provided additional reporting.
[ad_2]
#train #Ukrainian #pilots #step #sending #fighter #jets
( With inputs from : www.politico.eu )
LONDON — As nations around the world scramble to secure crucial semiconductor supply chains over fears about relations with China, the U.K. is falling behind.
The COVID-19 pandemic exposed the world’s heavy reliance on Taiwan and China for the most advanced chips, which power everything from iPhones to advanced weapons. For the past two years, and amid mounting fears China could kick off a new global security crisis by invading Taiwan, Britain’s government has been readying a plan to diversify supply chains for key components and boost domestic production.
Yet according to people close to the strategy, the U.K.’s still-unseen plan — which missed its publication deadline last fall — has suffered from internal disconnect and government disarray, setting the country behind its global allies in a crucial race to become more self-reliant.
A lack of experience and joined-up policy-making in Whitehall, a period of intense political upheaval in Downing Street, and new U.S. controls on the export of advanced chips to China, have collectively stymied the U.K.’s efforts to develop its own coherent plan.
The way the strategy has been developed so far “is a mistake,” said a former senior Downing Street official.
Falling behind
During the pandemic, demand for semiconductors outstripped supply as consumers flocked to sort their home working setups. That led to major chip shortages — soon compounded by China’s tough “zero-COVID” policy.
Since a semiconductor fabrication plant is so technologically complex — a single laser in a chip lithography system of German firm Trumpf has 457,000 component parts — concentrating manufacturing in a few companies helped the industry innovate in the past.
But everything changed when COVID-19 struck.
“Governments suddenly woke up to the fact that — ‘hang on a second, these semiconductor things are quite important, and they all seem to be concentrated in a small number of places,’” said a senior British semiconductor industry executive.
Beijing’s launch of a hypersonic missile in 2021 also sent shivers through the Pentagon over China’s increasing ability to develop advanced AI-powered weapons. And Russia’s invasion of Ukraine added to geopolitical uncertainty, upping the pressure on governments to onshore manufacturers and reduce reliance on potential conflict hotspots like Taiwan.
Against this backdrop, many of the U.K.’s allies are investing billions in domestic manufacturing.
The Biden administration’s CHIPS Act, passed last summer, offers $52 billion in subsidies for semiconductor manufacturing in the U.S. The EU has its own €43 billion plan to subsidize production — although its own stance is not without critics. Emerging producers like India, Vietnam, Singapore and Japan are also making headway in their own multi-billion-dollar efforts to foster domestic manufacturing.
US President Joe Biden | Samuel Corum/Getty Images
Now the U.K. government is under mounting pressure to show its own hand. In a letter to Prime Minister Rishi Sunak first reported by the Times and also obtained by POLITICO, Britain’s semiconductor sector said its “confidence in the government’s ability to address the vital importance of the industry is steadily declining with each month of inaction.”
That followed the leak of an early copy of the U.K.’s semiconductor strategy, reported on by Bloomberg, warning that Britain’s over-dependence on Taiwan for its semiconductor foundries makes it vulnerable to any invasion of the island nation by China.
Taiwan, which Beijing considers part of its territory, makes more than 90 percent of the world’s advanced chips, with its Taiwan Semiconductor Manufacturing Company (TSMC) vital to the manufacture of British-designed semiconductors.
U.S. and EU action has already tempted TSMC to begin building new plants and foundries in Arizona and Germany.
“We critically depend on companies like TSMC,” said the industry executive quoted above. “It would be catastrophic for Western economies if they couldn’t get access to the leading-edge semiconductors any more.”
Whitehall at war
Yet there are concerns both inside and outside the British government that key Whitehall departments whose input on the strategy could be crucial are being left out in the cold.
The Department for Digital, Culture, Media and Sport (DCMS) is preparing the U.K.’s plan and, according to observers, has fiercely maintained ownership of the project. DCMS is one of the smallest departments in Whitehall, and is nicknamed the ‘Ministry of Fun’ due to its oversight of sports and leisure, as well as issues related to tech.
“In other countries, semiconductor policies are the product of multiple players,” said Paul Triolo, a senior vice president at U.S.-based strategy firm ASG. This includes “legislative support for funding major subsidies packages, commercial and trade departments, R&D agencies, and high-level strategic policy bodies tasked with things like improving supply chain resilience,” he said.
“You need all elements of the U.K.’s capabilities. You need the diplomatic services, the security services. You need everyone working together on this,” said the former Downing Street official quoted above. “There are huge national security aspects to this.”
Referring to lower-level civil servants, the same person said that relying on “a few ‘Grade 6’ officials in DCMS — officials that don’t see the wider picture, or who don’t have either capability or knowledge,” is a mistake.
For its part, DCMS rejected the suggestion it is too closely guarding the plan, with a spokesperson saying the ministry is “working closely with industry experts and other government departments … so we can protect and grow our domestic sector and ensure greater supply chain resilience.”
The spokesperson said the strategy “will be published as soon as possible.”
But businesses keen for sight of the plan remain unconvinced the U.K. has the right team in place for the job.
Key Whitehall personnel who had been involved in project have now changed, the executive cited earlier said, and few of those writing the strategy “have much of a background in the industry, or much first-hand experience.”
Progress was also sidetracked last year by lengthy deliberations over whether the U.K. should block the sale of Newport Wafer Fab, Britain’s biggest semiconductor plant, to Chinese-owned Nexperia on national security grounds, according to two people directly involved in the strategy. The government eventually announced it would block the sale in November.
And while a draft of the plan existed last year, it never progressed to the all-important ministerial “write-around” process — which gives departments across Whitehall the chance to scrutinize and comment upon proposals.
Waiting for budget day
Two people familiar with current discussions about the strategy said ministers are now aiming to make their plan public in the run-up to, or around, Chancellor Jeremy Hunt’s March 15 budget statement, although they stressed that timing could still change.
Leaked details of the strategy indicate the government will set aside £1 billion to support chip makers. Further leaks indicate this will be used as seed money for startups, and for boosting existing firms and delivering new incentives for investors.
U.K. Chancellor Jeremy Hunt | Leon Neal/Getty Images
There is wrangling with the Treasury and other departments over the size of these subsidies. Experts also say it is unlikely to be ‘new’ money but diverted from other departments’ budgets.
“We’ll just have to wait for something more substantial,” said a spokesperson from one semiconductor firm commenting on the pre-strategy leaks.
But as the U.K. procrastinates, key British-linked firms are already being hit by the United States’ own fast-evolving semiconductor strategy. U.S. rules brought in last October — and beefed up in recent days by an agreement with the Netherlands — are preventing some firms from selling the most advanced chip designs and manufacturing equipment to China.
British-headquartered, Japanese-owned firm ARM — the crown jewel of Britain’s semiconductor industry, which sells some designs to smartphone manufacturers in China — is already seeing limits on what it can export. Other British firms like Graphcore, which develops chips for AI and machine learning, are feeling the pinch too.
“The U.K. needs to — at pace — understand what it wants its role to be in the industries that will define the future economy,” said Andy Burwell, director for international trade at business lobbying group the CBI.
Where do we go from here?
There are serious doubts both inside and outside government about whether Britain’s long-awaited plan can really get to the heart of what is a complex global challenge — and opinion is divided on whether aping the U.S. and EU’s subsidy packages is either possible or even desirable for the U.K.
A former senior government figure who worked on semiconductor policy said that while the U.K. definitely needs a “more coherent worked-out plan,” publishing a formal strategy may actually just reveal how “complicated, messy and beyond our control” the issue really is.
“It’s not that it is problematic that we don’t have a strategy,” they said. “It’s problematic that whatever strategy we have is not going to be revolutionary.” They described the idea of a “boosterish” multi-billion-pound investment in Britain’s own fabricator industry as “pie in the sky.”
The former Downing Street official said Britain should instead be seeking to work “in collaboration” with EU and U.S. partners, and must be “careful to avoid” a subsidy war with allies.
The opposition Labour Party, hot favorites to form the next government after an expected 2024 election, takes a similar view. “It’s not the case that the U.K. can do this on its own,” Shadow Foreign Secretary David Lammy said recently, urging ministers to team up with the EU to secure its supply of semiconductors.
One area where some experts believe the U.K. may be able to carve out a competitive advantage, however, is in the design of advanced semiconductors.
“The U.K. would probably be best placed to pursue support for start-up semiconductor design firms such as Graphcore,” said ASG’s Triolo, “and provide support for expansion of capacity at the existing small number of companies manufacturing at more mature nodes” such as Nexperia’s Newport Wafer Fab.
Ministers launched a research project in December aimed at tapping into the U.K. semiconductor sector’s existing strength in design. The government has so far poured £800 million into compound semiconductor research through universities, according to a recent report by the House of Commons business committee.
But the same group of MPs wants more action to support advanced chip design. Burwell at the CBI business group said the U.K. government must start “working alongside industry, rather than the government basically developing a strategy and then coming to industry afterwards.”
Right now the government is “out there a bit struggling to see what levers they have to pull,” said the senior semiconductor executive quoted earlier.
Under World Trade Organization rules, governments are allowed to subsidize their semiconductor manufacturing capabilities, the executive pointed out. “The U.S. is doing it. Europe’s doing it. Taiwan does it. We should do it too.”
Cristina Gallardo contributed reporting.
[ad_2]
#Britains #semiconductor #plan #AWOL #splash #billions
( With inputs from : www.politico.eu )
