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In a significant development towards fortifying domestic tech supply chains in northeast England, the UK Infrastructure Bank (UKIB) has unveiled a bold £60 million direct equity investment in Pragmatic Semiconductor. This substantial investment is part of a broader £162 million funding round, a collaborative effort with co-investor M&G's Catalyst, aimed at turbocharging the production of Pragmatic's cutting-edge flexible integrated circuits.
This strategic infusion of capital will expand Pragmatic's manufacturing capacity, establishing up to eight state-of-the-art manufacturing lines at their Pragmatic Park facility in Durham. According to Pragmatic's projections, each of these production lines boasts the capability to churn out billions of chips.
Beyond bolstering manufacturing capabilities, this investment promises to create up to 500 highly skilled jobs. It's a move that's set to play a pivotal role in developing the North-East Advanced Material Electronics cluster, fostering innovation, and ensuring the highest standards of quality in the region.
Pragmatic Semiconductor's pioneering technology is set to impact the environment significantly. By introducing 'smart packaging' into semiconductor production, the company aims to reduce carbon emissions substantially. This innovative approach promises to enhance the prospects of reuse and recycling and revolutionize waste management practices, ushering in an era of circular economy principles.
The timing of this investment aligns perfectly with global concerns about the carbon footprint of semiconductor manufacturing. According to a report published by Greenpeace East Asia in April, the semiconductor industry is projected to emit a staggering 86 million tonnes of CO2 equivalent by 2030. In perspective, it exceeds Portugal's total emissions in 2021.
UKIB's commitment to this investment perfectly aligns with its dual mission – financing projects that drive the transition to a net-zero future while fostering regional, local, and economic growth.
"The Bank has an important role to play in unlocking finance to scale up domestic supply chains, like semiconductors, which are critical to the UK's transition to net zero," said John Flint, CEO of UK Infrastructure Bank.
"Our investment in Pragmatic backs a British business to accelerate the development of a first-of-a-kind technology which not only cuts the carbon emissions of semiconductor production but will drive growth in the local economy in the northeast."
This investment comes from the UK government's ambitious national semiconductor strategy, which earmarks £1 billion for the industry's growth over the next decade. The Autumn Statement also underlined the government's commitment to unlocking new sources of finance for advanced manufacturing.
Moreover, Chancellor Jeremy Hunt singled out semiconductors as an investment opportunity for the Bank in its Statement of Strategic Priorities in September.
Hunt said UKIB's investment in Pragmatic would support efforts to make it even easier for semiconductor manufacturers to launch and grow in the UK.
"Not only will we strengthen Britain's national security, but also reindustrialise the northeast to create high-skill jobs in a sector set to expand further for decades to come," he said.
Technology Secretary Michelle Donelan similarly described the investment as a "pivotal step" in work to build a stronger future for the UK's semiconductor industry by doubling down on British strengths in research and design.
"Today's announcement shows our semiconductor strategy in action," she said. "I am determined to ensure firms like Pragmatic can stay and scale here in the UK, harnessing our unique strengths to unlock innovation, create high-skilled jobs, and cement our status as a global superpower in science and technology."
In addition to the UK Infrastructure Bank, new investors in Pragmatic Semiconductor include Northern Gritstone, LocalGlobe, and Evolution Partners. This investment venture also enjoys the continued support of existing investors such as British Patient Capital, Cambridge Innovation Capital, and Prosperity7 Ventures, the diversified growth fund under Aramco Ventures.
David Moore, Pragmatic's CEO, said the successful Series D round was a "clear testament" to the massive opportunity for the firm's innovative technology to enable item-level intelligence in virtually any object.
"Our global customers value our ultra-thin and flexible form factor, our breakthrough low cost of customisation and rapid production cycles, as well as the lower environmental footprint compared to silicon," he added. "Scaling our manufacturing capacity on the UK's first ever 300mm wafer production lines at our site in Durham will enable us to deliver hundreds of billions of chips to customers worldwide over the coming decade."
Announced as part of the government's National Infrastructure Strategy in 2020 and launched in June 2021, UKIB is operationally independent, with projects assessed by the Bank and approved through an Investment Committee.
This substantial investment marks a pivotal moment in the trajectory of Pragmatic Semiconductor. It promises to have far-reaching implications for the UK's semiconductor industry and the broader economy.
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