Bank announces £60 million direct equity investment to boost UK supply chain of semiconductors in the North-East

06 December 2023

The UK Infrastructure Bank has today announced a £60 million direct equity investment into Pragmatic Semiconductor, a world leader in manufacturing flexible integrated circuits, to scale up the domestic supply chain of semiconductors in North East England.

The Bank’s financing is part of a £162 million funding round, alongside co-investor M&G’s Catalyst, to accelerate the production of Pragmatic’s new flexible integrated circuits, creating new manufacturing lines at its Pragmatic Park facility in Durham. Additional new investors include Northern Gritstone and LocalGlobe and Evolution Partners, with existing investors British Patient Capital, Cambridge Innovation Capital and Prosperity7 Ventures (the diversified growth fund under Aramco Ventures) also part of the round.

Pragmatic’s first-of-a-kind technology cuts the carbon emissions of semiconductor production significantly versus traditional silicon chip manufacturing. The novel technology can provide item-level intelligence to trillions of fast-moving consumer goods via smart packaging that will improve reuse and recycling, transforming waste management and enabling a circular economy.

The investment aligns with the Bank’s twin mission to finance projects which support the transition to net zero and support regional, local and economic growth. The expansion of Pragmatic’s North-East facility will support or create 500 highly skilled jobs and contribute to the development of the North-East Advanced Material Electronics (NEAME) cluster as an area for world-class innovation and quality.

John Flint, CEO of UK Infrastructure Bank, said:

"The Bank has an important role to play in unlocking finance to scale up domestic supply chains, like semiconductors, which are critical to the UK’s transition to net zero.

"Our investment in Pragmatic backs a British business to accelerate development of a first-of-a-kind technology which not only cuts the carbon emissions of semiconductor production, but which will drive growth in the local economy in the North-East."

Chancellor of the Exchequer, Jeremy Hunt, said:

"We are going to make it even easier for semiconductor manufacturers to start and grow in the UK, and this investment will support just that.

"Not only will we strengthen Britain’s national security, but also reindustrialise the North-East to create high skill jobs in a sector set to expand further for decades to come."

Technology Secretary, Michelle Donelan, said:

"This is a pivotal step in our work to build a stronger future for the UK’s semiconductor industry, by doubling down on British strengths in research and design.

"Today's announcement shows our semiconductor strategy in action. I am determined to ensure firms like Pragmatic can stay and scale here in the UK, harnessing our unique strengths to unlock innovation, create high-skilled jobs, and cement our status as a global superpower in science and technology."

David Moore, Pragmatic’s CEO, said:

"This successful Series D round is a clear testament to the massive opportunity for our innovative technology to enable item-level intelligence in virtually any object on the planet. Our global customers value our ultra-thin and flexible form factor, our breakthrough low cost of customisation and rapid production cycles, as well as the lower environmental footprint compared to silicon. Scaling our manufacturing capacity on the UK's first ever 300mm wafer production lines at our site in Durham will enable us to deliver hundreds of billions of chips to customers worldwide over the coming decade."

M&G Catalyst’s Global Head of Investments, Niranjan Sirdeshpande, said:

"The UK is blessed with a rich seam of enterprising and disruptive tech firms, but significant amounts of patient capital are needed to help companies like Pragmatic to expand and hone their operations - this is where Private Markets can help. We developed Catalyst to play a leading role in helping businesses to scale their operations, provide expertise and partner with them all the way to success. Long term capital put to work in this way not only supports economic growth but can capture value for people's pensions as we transition to a more sustainable economy. Pragmatic’s technology provides a compelling alternative for many mainstream electronics applications, as well as enabling new applications, which aren’t possible or are too expensive with silicon."

Earlier this year, the government’s national semi-conductor strategy set out an ambition to invest £1bn in the industry in the next decade, with the Autumn statement committing to unlocking new sources of finance for advanced manufacturing. In September, the Chancellor singled out semiconductors as an investment opportunity for the Bank in its Statement of Strategic Priorities.

Further information

About Pragmatic Semiconductor

Pragmatic is the world leader in flexible integrated circuit technology. Founded in 2010, the company is revolutionising semiconductor fabrication with ultra-low-cost, flexible integrated circuit (FlexIC) technology that makes it quick and easy to embed intelligence almost anywhere. FlexICs are thinner than a human hair and, invisibly embedded in objects, enable novel solutions that are simply not possible with conventional electronics.
With rapid cycle times that substantially accelerate time to market, our foundry provides high-volume fabrication at a fraction of the cost of silicon, with a significantly lower environmental impact. The company has built a large-scale manufacturing facility, Pragmatic Park, in Durham. Housing the UK’s first state-of-the-art 300mm fab, it sets the standard for smart, sustainable semiconductor manufacturing. When fully operational, it will be the highest-volume semiconductor manufacturing facility in the UK. Pragmatic is headquartered in Cambridge, UK, with manufacturing operations in the North East.
Pragmatic was advised on the Series D funding transaction by the dedicated private growth capital team at Lazard and by leading global technology law firm Wilson Sonsini Goodrich & Rosati.
Additional information, requests for interview and images can be obtained by email to PR@pragmaticsemi.com

About M&G Investments

M&G Investments is part of M&G plc, a savings and investment business which was formed in 2017 through the merger of Prudential plc’s UK and Europe savings and insurance operation and M&G, its wholly owned international investment manager. M&G plc listed as an independent company on the London Stock Exchange in October 2019 and has £332 billion of assets under management (as at 30 June 2023). M&G plc has customers in the UK, Europe, the Americas and Asia, including individual savers and investors, life insurance policyholders and pension scheme members.
For nearly nine decades M&G Investments has been helping its customers to prosper by putting investments to work, which in turn creates jobs, homes and vital infrastructure in the real economy. Its investment solutions span equities, fixed income, multi-asset, cash, private debt, infrastructure and real estate.
M&G recognises the importance of responsible investing and is a signatory to the United Nations Principles for Responsible Investment (UNPRI) and is a member of the Climate Bonds Initiative Partners Programme.
M&G plc has committed to achieve net zero carbon emissions on its total book of assets under management and administration by 2050 and committed to reduce operational carbon emissions as a corporate entity to net zero by 2030.
For more information, please visit: https://global.mandg.com/