A signing ceremony took place last week to ratify the development of a ‘compound semiconductor’ industry cluster in South East Wales.

It follows an agreement made in May by the Cardiff Capital Region (CCR) Regional Cabinet to contribute £37.9 million from the CCR City Deal’s Wider Investment Fund towards the establishment of a major ‘state of the art’ foundry in Newport to support the development of a compound semiconductor industrial cluster in the region.

The facility has the potential to ‘leverage’ £375 million of private sector investment, create up to 2,000 skilled jobs, return the initial investment for use in other schemes, and create hundreds of other jobs throughout the supply chain.

It is the first such investment since the £1.2 billion CCR City Deal programme (www.cardiffcapitalregioncitydeal.wales) was formally signed by the leaders of the 10 local authorities in the region on 1 March.

The foundry will be owned by the 10 Councils in the Regional Cabinet under the ‘special purpose vehicle’ CSC Foundry Limited/LDC Ffowndri, and the space leased to IQE plc for compound semiconductor manufacturing and applications development.

The project is not a grant or a loan, but a commercial investment with ownership of the foundry shared between the 10 Councils.

In 2016, Innovate UK — the UK Government’s innovation agency — announced a £50 million investment to establish a new Compound Semiconductor Applications Catapult in South East Wales which will build on existing investment by Cardiff University, IQE, and the Welsh Government.

Councillor Peter Fox, leader of Monmouthshire County Council and deputy chair of the CCR City Deal Regional Cabinet, said: “This project has the potential to place our region at the heart of this cutting-edge sector and will require the development and integration of a compound semiconductor supply chain in South Wales, with the economic and social benefits that will bring.”

The Compound Semiconductor Cluster will bring together next-generation semiconductor materials with end-user applications such as 5G smart phones, the Internet of Things, tele-health and autonomous vehicles. Compound semiconductors are more complex than silicon technology.