Backed by the National Economic Fund, the British Business Bank and M&G, Pragmatic Semiconductor is using a modular, low-cost model to scale flexible chip production at a pace Asia and the US will struggle to match.
In the Meadowfield industrial estate outside Durham, a 55,000 sq ft warehouse that spent a decade gathering dust, and the waste of nesting seagulls, has been transformed into one of the most impressive bets on British manufacturing. The gulls were spotted by a hawk called Buzz; drains removed; and within a former PVC pipe factory, the UK’s most desirable volume producer is now in full production.
Pragmatic Semiconductor has twelve months to ship its first commercial orders, the culmination of 14 years of work that began as a Cambridge science project. By the end of the year, the company expects billions of its ultra-thin, 300mm flexible chips to leave the Durham site bound for customers in pharmaceuticals, consumer electronics and fast-moving consumer goods. At the time, management believed Pragmatic would become the UK’s largest semiconductor manufacturer by volume.
The time is specified. The European Commission is expected this week to publish a renewed Chips Act, the latest leg of Brussels’ effort to remove the bloc from American and Asian silicon by supporting home-grown semiconductor capacity. Westminster, too, has put flats building near the top of its modern industrial strategy, with advanced manufacturing positioned as a sector where Britain has what ministers call a “real right to win”.
A different type of chip, and a different type of fabric
Pragmatic’s edge is that it doesn’t play the same game as TSMC, Samsung or Intel. Its thin-film transistor technology completely eliminates silicon, producing FlexICs, flexible integrated circuits, which can track individual items through complex supply chains and provide consumers with the appearance of authentication in a way that QR codes cannot. A bottle of wine can carry its full origins; the package of medicine bought from Temu or Amazon can be verified as genuine rather than fake. Eventually, the chips will power continuous glucose monitors and other small, flexible devices used to prevent type 2 diabetes.
The contrast with the standard fab model is striking. Where a facility in Taiwan or Korea can cost tens of billions and take months to push a wafer through its production cycle, Pragmatic’s modular plant requires less capital and churns out chips in days. Inside a 30-by-20-foot clean room, robots that dive on a ceiling track shoot glass-backed substrates between a metal-oxide deposition machine, a photolithography rig that forces an image of the circuit, and an etching station that chemically etch each layer. The finished wafers, each containing about 50,000 chips, move to an assembly room where they are dialed and assembled into horned circuits. The result from the line looks, disrespectfully, like a bright roll of Christmas paper with a snowflake pattern.
IPO in cross hairs
CEO David Moore, who left Idaho-headquartered Micron in 2023, isn’t concerned with ambition. “Our goal is to be one of the largest semiconductor manufacturing companies in the world,” he said. Pragmatic’s “north star”, he adds, is “a potential IPO”.
In June he is in Europe and China to meet with clients, before turning to the US in July. The reception is warm. “We’re talking to the CEOs and chairmen of those customers. They see it as very important and they don’t see us as a UK-based semiconductor company. They see us as a world leader in FlexIC technology. Now it’s about orders and shipping.”
Moore, however, is careful to play down near-term expectations. Each new construction facility, even the simplified Pragmatic processes, will take 12 to 14 months to bring online. The Durham site has space for seven additional lines, equivalent to “a capacity of tens of billions of ICs per year”. Big revenues are expected this year for the first time, with a “milestone-based” approach to gross margins, break-even and ultimately free cash flow.
Capital, and British industrial strategy in action
The funding base behind that trip is unusually domestic. Pragmatic’s December 2023 raise remains the largest semiconductor round in European history, with around 70 percent of the £162 million coming from UK funds, the National Economic Fund, British Business Bank, public/private fund Northern Gritstone and M&G’s Catalyst fund among them. A subsequent expansion brought the round up to £179 million. It is precisely this kind of patient spending, and the combination of funding that ministers have been pointing to as evidence that the government’s £1bn commitment to the UK microchip industry is starting to bite, as well as previous initiatives that have underpinned Britain’s wave of microchip startups.
In March 2024, HRH The Princess Royal officially opened Pragmatic Park, home to the UK’s first 300mm fabric, the company has committed to 500 new high-skilled jobs over five years.
Ciaran Mulligan, chief investment officer at M&G Life, which oversees £188 billion of client assets, says the case for institutional money is straightforward. “Our scale enables us to invest in private companies, opening up opportunities that you don’t see in the public markets. By getting these investments directly through our asset management teams, we can support growing businesses, creating jobs and innovation.”
The team behind the technology
Founded in Cambridge in 2010 by Richard Price and Scott White, Pragmatic has worked with the Center for Process Innovation in Sedgefield, County Durham, since 2012. Its staff now stands at 350, heavily weighted towards PhD-level researchers across sites in Sedgefield, Durham and Cambridge. The chairman is Peter Herweck, former chief executive of Schneider Electric and, before that, of FTSE 100 software group Aveva, which Schneider is buying for £9.5 billion in 2023. The board includes former Intel chief engineering officer Murthy Renduchintala.
Talent retention in the North East is a silent part of the story. Heather Flint, 31, moved from Lincoln to Newcastle, went on to a PhD in physical chemistry, her research was solar cells designed to be installed in windows, and was considering moving south to Cambridge or overseas when she came across Pragmatic. He says: “Staying up north was very important to me. The R&D team built a role around him. Three years and three promotions later, he’s gone from mechanical development to lead design scientist and now into project management. “Every day there’s something new.”
The company actively recruits graduates for its research and technical roles as well as apprentices for technical jobs. Its youngest member, based in Cambridge, is 21. “In the evening, he builds robots for fun,” said the spokeswoman.
Big picture
Whether Pragmatic ends up in London, New York or both will be one of the most closely watched decisions in British tech over the next 24 months. It is already clear that, by combining a truly novel product, a capital light production model and an unusually British shareholder register, the company has given Westminster a rare working example of its industrial strategy that really works – and has quietly put together the kind of stage where the UK’s national striker can, apparently, take on the giants of Hsinchu, Pyeongtaek and Phoenix.
