Issued by: Ministry of Defence

A semiconductor factory has been acquired by Ministry of Defence in Newton Aycliffe, County Durham, boosting UK defence capabilities.

The UK’s Armed Forces will be further bolstered as a crucial supply chain to UK defence has been secured today, after the government acquisition of a key semiconductor factory in the north-east.

Defence Secretary John Healey visited the site today, which is the only secure facility in the UK with the skills and capability to manufacture gallium arsenide semiconductors. These types of specialist semiconductors are used in a number of military platforms, including to boost fighter jet capabilities.

This acquisition will not only safeguard the future of the facility, which is critical to the defence supply chain and major military programmes and exports, but also secures up to 100 skilled jobs in the North East.

Semiconductors are vitally important for the modern world we live in, being an essential component for the functioning of almost every electronic device we use, from phones and computers to ventilators and power stations. The importance of semiconductors to military applications means the technology can allow the military to fill the gaps to support their future needs.

The announcement comes ahead of the Investment Summit next month which will make clear that the UK is “open for business” as the UK government resets relations with trading partners around the globe and creates a pro-business environment that supports innovation and high-quality jobs at home and supports our mission to deliver growth.

The acquisition will also boost UK defence industrial capacity and exports, as the government intends to invest in the company over the coming years.

On the visit, the Defence Secretary welcomed the acquisition and spoke to staff directly.

Defence Secretary John Healey said:

"Semiconductors are at the forefront of the technology we rely upon today, and 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. 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 semiconductor factory in Newton Aycliffe has been acquired by the government from its previous parent company Coherent Inc and will be named Octric Semiconductors UK.

This strategic investment will ensure the facility is capable of producing gallium arsenide semiconductors as well as more powerful semiconductors in the future, which will include the latest technology.

Over a trillion semiconductors are manufactured each year, with the global semiconductor market forecast to reach a total market size of $1 trillion by 2030. Semiconductors also underpin future technologies, such as artificial intelligence, quantum and 6G.

This 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.

Work has already started to implement best practice governance that will ensure appropriate financial oversight to secure the company’s future success.

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