Budget: UK Chip Strategy Still Nowhere To Be Seen. Money For Quantum, AI? Sure

The UK government is upping investment in quantum by £2.5 billion ($3 billion) over the next 10 years, and also putting up £900 million ($1.08 billion) for AI Research and the country’s own exascale computer.

In his 2023 Spring Budget, the nation's finance minister, Chancellor of the Exchequer Jeremy Hunt, had few surprises for the tech industry, with his major announcements having already having been leaked to the press ahead of his speech in Parliament.

For example, reforms to the R&D tax credit for small to medium enterprises have gone ahead as planned. Now, if a SME spends 40 percent or more of their total expenditure on R&D, they will be able to claim a credit worth £27 for every £100 they spend, according to Hunt.

Amid a slew of other tax and spending pledges aimed at boosting the faltering UK economy, Hunt unveiled additional investment beyond the UK’s National Quantum Technologies Programme (NQTP), as well as the funding for a national supercomputer.

“Because AI needs computing horsepower, I today commit around £900 million of funding to implement the recommendations in the independent Future of Compute Review for an Exascale supercomputer,” Hunt said.

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That report pointed out that exascale capability would be an essential component in achieving the UK’s long-term ambitions to be an AI superpower, but noted that the country was lagging behind others. It recommended that the government adopt a phased approach that would build to a public system with full exascale capability by 2026.

This project was rumored last week, as The Register reported at the time, including talk on what form such an exascale system might take if it is to be based purely on British technology developed and built locally.

Hunt also announced the publication of a quantum strategy to “set our vision to be a world leading quantum enabled economy by 2033 with a research and innovation program totaling £2.5 billion.”

That £2.5 billion is spread over 10 years, but is in addition to the £1 billion already allocated to the NQTP. It was also revealed ahead of time by The Financial Times, which disclosed much of the details this week.

In comparison, the National Science and Technology Council (NSTC) in the US requested $844 million for quantum research funding for the 2023 financial year alone.

The challenge is that such research funding is often spread thinly across a wide range of quantum technologies just because they have quantum in the name, according to Chris Schnabel, VP of Product at quantum cybersecurity company Qrypt.

“If the UK’s investment is truly targeted at quantum computing only and doesn’t bleed out to the others, then this can have a significant impact provided that the right incentives are in place to spur private investment,” Schnabel said.

But he pointed out that China is spending $15 billion in quantum and AI research. “When you look at it like that, then both the US and UK are underinvesting - even if that $15 billion is spread quite broadly.”

However, James Palles-Dimmock, CEO of British quantum startup Quantum Motion, claimed the increased budget will put the UK at the forefront for governmental investment.

“It is a big signal that the UK wants to build on the ‘unfair advantage’ that we have thanks to the work of the NQTP and our world leading universities, and that we have a desire to see quantum technologies through to commercialization,” he said.

Greg Clark MP, chair of the Commons Science and Technology Committee, welcomed the new investment commitments in the budget.

"I am pleased the government has announced further backing for quantum technologies. The Science & Technology Committee will be launching an inquiry tomorrow to scrutinize the effectiveness of the Government's quantum plan to date and will now include the £2.5 billion investment announced today and how the UK compares globally in this strategically important area,” Clark said.

Harvey Lewis, partner of Client Technology & Innovation at EY, the company formerly known as Ernst & Young, said the UK is well-positioned to realize the benefits of quantum, but optimism needed to be grounded in reality.

“An important reality that needs to be addressed across an array of emerging technologies is skills. Human-centred innovation is critical to making any transformative technology a success and we must address the shortfall in skills and talent in order for technologies like quantum and AI to be used successfully.”

However, one thing that appeared to be missing from the budget was any mention of the UK’s semiconductor strategy, or any specific funding for this part of industry.

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The government has been repeatedly criticized over delays in publishing its long-awaited semiconductor strategy while other countries push ahead with chip-related investments.

When The Register asked how that was going and when it would take action, a government spokesperson confirmed we wouldn't be seeing it on budget day, and wasn't even prepared to give a timeline: "We are committed to supporting the UK's vitally important semiconductor industry. Our forthcoming semiconductor strategy will set out how the government will improve the sector's access to the skills, facilities and tools it needs to grow. The strategy will be published in due course." ®