Pragmatic Semiconductor to bring major leap in domestic chip production

Smart packaging is a key application for Pragmatic’s flexible chips, which are produced using thin-film transistor (TFT) technology through a silicon-free manufacturing process. These chips are also integral to products like wearables, sensors, and flexible controllers, finding applications across consumer goods, industrial sectors, and healthcare.

Pragmatic has announced that its new facility can accommodate up to nine fabrication lines. Following a significant investment of £182 million ($229 million) at the end of last year, aimed at boosting production capacities, the company plans to use this funding to construct the third and fourth fabrication lines at Pragmatic Park.

The funding round was spearheaded by investment managers M&G and the UK Infrastructure Bank, a state-owned development bank supported by HM Treasury.

This optimistic scenario marks a stark contrast to the situation a year ago when Pragmatic, along with other UK chip startups, was considering moving operations abroad due to perceived inadequate government support for the domestic semiconductor industry. This was at a time when both the US and EU were pledging substantial financial support to bolster their own semiconductor sectors.

“It has to make economic sense for companies like ours to continue to operate and manufacture here, and if there are greater potential economic benefits and government support packages abroad, then relocation is the only sensible business decision,” Pragmatic’s then CEO Scott White said at the time.

That much-needed support materialized in May last year when the government unveiled its semiconductor strategy, committing £1 billion ($1.24 billion) over ten years to bolster the UK’s chipmakers. The strategy prioritizes areas considered strengths of the UK, such as chip design, research and development, and compound semiconductors.

Initially met with criticism for being insufficient and overdue, this approach has since been acknowledged by some as targeting the right areas, although there remains a consensus that a larger investment would have been preferable.

“The UK has a very supportive ecosystem for providing early stage funding, but it becomes challenging for businesses looking for later stage capital,” said Niranjan Sirdeshpande, Global Head of M&G’s Catalyst strategy and a Pragmatic board member.