Semiconductor sector at risk with cuts to apprenticeships in Wales looming

CUTS to the apprenticeship budget risk stifling the continued success of the semiconductor sector in south-east Wales, an opposition MS warned.

Luke Fletcher, Plaid Cymru’s shadow minister, raised concerns skills shortages could be exacerbated by cuts to apprenticeships in the Welsh Government’s draft 2024-25 budget.

He described cuts to apprenticeship funding as the biggest since devolution began.

Mr Fletcher said: “We know that a skills gap exists and it needs to be addressed urgently. We know it’s slowing down economic development.

“The Institute of Physics tells us as much in a recent report on the semiconductor sector, highlighting that two thirds of physics innovators across the UK and all sectors reported suspending or delaying innovation activities because of skill shortages.

“Apprenticeships provide a viable solution to the skills gap.”

‘Destruction’

Mr Fletcher also questioned why Wales is consistently near the bottom of the table for research and development spending in the UK.

He urged Welsh ministers to commit £3.2m of consequential funding from Westminster spending on innovation to reverse proposed cuts to postgraduate incentive grants.

Vaughan Gething said apprenticeship budget pressures are due to the loss of former EU funds and the “deliberate destruction of all-Wales programmes by the Tories”.

Wales’ economy minister stressed that the Welsh Government will continue to invest in apprenticeships as well as research and development over the next year.

‘Success story’

During a statement on Tuesday January 9, he lauded the semiconductor sector as a success story, saying there is probably a piece of Wales in every mobile phone in the world.

“It could be the facial recognition sensors, with material grown by IQE in St Mellons, or because of goods made using equipment built by KLA in Newport,” he said.

“The Welsh compound semiconductor cluster is at the heart of the technologies that will help us address many of society’s key challenges.”

Mr Gething told MSs that in 10 companies within the cluster, direct and indirect employment increased by 9% last year to 2,600 jobs with many more in the wider sector.

The would-be first minister raised the importance of a degree apprenticeship in semiconductor technology which is being offered by the University of South Wales.

UK strategy

MSs welcomed news of Vishay’s $177m takeover of Newport’s wafer fab and a $100m announcement that KLA will expand its operations, creating hundreds of well-paid jobs.

Natasha Asghar, for the Conservatives, told MSs that the UK Government’s national semiconductor strategy will support the sector in south Wales.

The South Wales East MS said: “The strategy will also see the [UK] Government invest up to £1bn in the next decade, and up to £200m between 2023 and 2025. These are just some of the many steps the UK is taking.”

She also raised the UK Government’s semiconductor advisory panel and ChipStart programme, which aims to support semiconductor start-ups.

Peredur Owen Griffiths accused the UK Government of dragging its feet on approving the takeover of Newport wafer fab.

The Plaid Cymru MS for South Wales East warned: “The fate of a key component of the Welsh economy is being determined hundreds of miles away by a myriad of changing ministers.”

‘Uncertainty’

Raising the prospect of a Labour-led UK Government, John Griffiths asked about potential future collaboration on the semiconductor industry in south-east Wales.

The Newport East MS also highlighted comments from the president of Vishay, which is acquiring Nexperia’s Newport wafer fab, about the importance of the Welsh cluster.

Mr Gething said talks are taking place with the potential occupants of No 10 and No 11 about the semiconductor cluster and its place in a future industrial strategy.

Labour colleague Jayne Bryant, who represents Newport West, criticised the UK Government for creating a “prolonged period of uncertainty”.

She raised the importance of ensuring more people, particularly women and girls, see the semiconductor sector as a route to a great career.