The role of the ministry of defence (MOD) in influencing the commercial performance of the British semiconductor industry

Abstract

The development of the British semiconductor industry took place in a situation of technical lag, in the sense that the initial innovations were made in the United States, and British manufacturers had to struggle to catch up. In the first phase of development, overseas competition was negligible, and firms produced (mainly germanium) devices for the commercial home market, with few exports. This was understandable, since semiconductor manufacturers in Britain were also valve producers, and this activity conformed to an existing pattern. Military requirements stimulated the use of silicon devices, and these were made almost exclusively in America until the early sixties. MOD policy was to buy advanced silicon devices from any politically reliable source in order to meet equipment needs. Large orders were therefore placed with the major manufacturer, Texas Instruments (T.I.), and MOD also encouraged them to site production facilities locally. The result was that T.I. then aggressively entered British commercial markets, quickly achieving market dominance. Also, MOD research establishments concentrated on work of a non‐commercial nature, strongly involving British semiconductor companies in short production runs of specialized high‐price components. As a result, their ability to enter the commercial market was weakened. This policy, together with the continuing MOD procurement of advanced “mainstream” devices from foreign competitors, made the semiconductor companies’ competitive situation worse. By the time silicon‐integrated circuit manufacture became important, this pattern was well established. Subsequent efforts during the seventies and eighties by the Department of Trade and Industry (DTI) and the Department of Industry (DoI) to assist semiconductor component manufacturers on a commercial basis were unsuccessful, since by that time the structural relationship between the MOD and industry had become too firmly established. The only important avenue of expansion then open to British semiconductor companies was to supply components for the somewhat restricted export market of military and telecommunications systems.