Government takes over chip factory ‘crucial’ to defence supply chain – safeguarding ‘up to 100 jobs’

The Ministry of Defence (MoD) has announced the takeover of a chip factory in the North East of England, which the department has described as a “crucial” part of the UK’s defence supply chain.

The factory in Newton Aycliffe, near Darlington, is the only secure facility in the UK that has the skills and capability to manufacture gallium arsenide semiconductors, which are used in critical military platforms, such as Typhoon fighter jets.

The facility, owned by US semiconductor company Coherent, Inc. was at risk of closure after Apple dropped the business as a supplier, The Telegraph reported in August, while Italian aerospace company Leonardo was among its customers.

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Coherent was not thought to have any outstanding orders with Leonardo, according to the paper, but its sources suggested the plant may still be needed for future, unspecified programmes.

The government acquisition will safeguard “up to 100” skilled jobs in the region, the MoD has said.

Defence Secretary John Healey, who is touring the plant today and meeting with staff, said in a statement that this acquisition “will be crucial in securing our military’s capabilities for tomorrow”.

“This acquisition is a clear signal that our government will back British defence production,” he added.

“We’ll protect and grow our UK defence supply chain, supporting North East jobs, safeguarding crucial tech for our armed forces and boosting our national security.”

The factory will be renamed Octric Semiconductors UK.

The government said it intends to invest further in the company over the coming years, which will boost UK defence industrial capacity and exports.

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The global semiconductor market is forecast to reach $1trn by 2030. Semiconductors are crucial components in electronic devices like phones, televisions, computers, as well as key infrastructure like power stations.

The MoD says the government “recognises the strategic importance of semiconductors as a critical technology for the future of the UK and a significant enabler of the government’s growth and clean energy missions”.

Rishi Sunak’s Conservative government announced a 20-year plan in May last year to secure the medium-term future of the UK’s semiconductor industry.