Skills shortages and insufficient research and development are threatening the success of the UK electronics industry, says a new survey by KPMG.
Poor links between universities and industry, and a lack of funding for start-ups are also to blame.
KPMG’s Electronics in Focus report says the industry should forge closer relationships with government and educational bodies, to help develop policies to preserve its strong market position.
The UK electronics sector is the fifth largest in the world with annual sales of £90bn. Though 95% is foreign owned, and there is a trend towards moving low-value assembly work abroad, UK electronics manufacturing grew by 14% annually between 1995 and 1999.
This growth was down to investment in high value-added production: half of all European semiconductors are made in the UK and 70% of the world’s mobile phones contain a UK-made chip.
The survey found that 98% of industry leaders saw the skills shortage as a key problem, with more than half believing the situation will get worse in the next year.
Over nine out of 10 believed working with the education sector could help improve the public perception of the industry. Nearly seven out of 10 called for tax credits on R&D spending, to encourage more research.
UK R&D spending has not kept pace with the growth of the market. ‘The UK has to compete strongly to attract R&D spending by multinationals into the UK,’ according to KPMG.
Difficulty in finding finance is also a handicap. ‘Large electronics companies can develop readily from ‘garage’ beginnings, but only when investment is available to support start-ups,’ the report adds.
Professor David Rhodes, chairman of specialist electronics supplier Filtronic, said: ‘Skills shortages are a grave concern. The numbers of experienced engineers in particular are declining.’
But he added: ‘Research by universities is not significant except for a few places, such as Southampton. I have a strong view that the prime role of universities is to provide good people to go out into industry rather than to provide research.’
On the topic of funding, he said finance is usually available ‘for anything that has a future’.
KPMG’s report was based on round-table talks with leading electronics companies such as ARM, BT Cellnet, IBM, Motorola, Philips and Xerox, followed by a questionnaire sent to all 186 members of the Federation of the Electronics Industry.Electronics in Focus can be viewed at: www.kpmg.co.uk